10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
June 30, 2022
Or
☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from _____ to _____

Commission File Number: 001-38272

EVOQUA WATER TECHNOLOGIES CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		46-4132761
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
210 Sixth Avenue		15222
Pittsburgh,	Pennsylvania
(Address of principal executive offices)		(Zip Code)

(724) 772-0044

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	AQUA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

There were 121,486,702 shares of the registrant’s common stock, par value $0.01 per share, outstanding as of July 27, 2022.

EVOQUA WATER TECHNOLOGIES CORP.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements		3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Item 3	Quantitative and Qualitative Disclosures About Market Risk		62
Item 4	Controls and Procedures		62
PART II - OTHER INFORMATION
Item 1	Legal Proceedings		63
Item 1A	Risk Factors		63
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		63
Item 3	Defaults Upon Senior Securities		63
Item 4	Mine Safety Disclosures		63
Item 5	Other Information		63
Item 6	Exhibits		64

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward‑looking statements by our use of forward‑looking terminology such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “progress,” “potential,” “predict,” “projection,” “seek,” “should,” “will,” or “would,” or the negative thereof, or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets, our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance, statements regarding our restructuring actions and expected restructuring charges and cost savings, statements regarding our cash requirements, working capital needs and expected capital expenditures, statements regarding our expectations for fiscal 2022, customer demand, supply chain challenges, material availability, price/cost, labor shortages, inflation, and general macroeconomic conditions, and statements related to the COVID-19 pandemic and its ongoing impact on our business contained in this Report are forward‑looking statements.

All of these forward‑looking statements are based on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward‑looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the Securities and Exchange Commission (“SEC”) on November 17, 2021, and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report may cause our actual results, performance or achievements to differ materially from any future results, performance, or achievements expressed or implied by these forward‑looking statements or could affect our share price. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward‑looking statements include, among other things:

•general global economic and business conditions, including the impacts of the COVID-19 pandemic, geopolitical conflicts, such as the conflict between Russia and Ukraine, and potential recessionary conditions;

•our ability to execute projects on budget and on schedule;

•material, freight, and labor inflation, commodity and component availability constraints, and disruptions in global supply chains and transportation services;

•the potential for us to incur liabilities to customers as a result of warranty claims or failure to meet performance guarantees;

•our ability to meet our own and our customers’ safety standards;

•failure to effectively treat emerging contaminants;

•our ability to continue to develop or acquire new products, services, and solutions that allow us to compete successfully in our markets;

•our ability to implement our growth strategy, including acquisitions, and our ability to identify suitable acquisition targets;

•our ability to operate or integrate any acquired businesses, assets, or product lines profitably;

•our ability to achieve the expected benefits of our restructuring actions;

•delays in enactment or repeals of environmental laws and regulations;

•the potential for us to become subject to claims relating to handling, storage, release, or disposal of hazardous materials;

•our ability to retain our senior management, skilled technical, engineering, sales, and other key personnel and to attract and retain key talent in increasingly competitive labor markets;

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•risks associated with international sales and operations;

•our ability to adequately protect our intellectual property from third-party infringement;

•risks related to our contracts with federal, state, and local governments, including risk of termination or modification prior to completion;

•risks associated with product defects and unanticipated or improper use of our products;

•our ability to accurately predict the timing of contract awards;

•risks related to our substantial indebtedness;

•our increasing dependence on the continuous and reliable operation of our information technology systems;

•risks related to foreign, federal, state and local environmental, health and safety laws and other applicable laws and regulations and the costs associated therewith;

•our ability to execute on our strategies related to environmental, social, and governance matters, and achieve related goals and targets, including as a result of evolving standards, laws, regulations, processes, and assumptions, delayed scientific and technological developments, increased costs, and changes in carbon markets; and

•other risks and uncertainties, including those listed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021, and in other filings we may make from time to time with the SEC.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward‑looking statements. The forward‑looking statements contained in this Report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward‑looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward‑looking statements contained in this Report, they may not be predictive of results or developments in future periods.

Any forward‑looking statement that we make in this Report speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward‑looking statements, whether as a result of new information, future events, or otherwise, after the date of this Report.

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Part I - Financial Information

Item 1. Financial Statements

INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Evoqua Water Technologies Corp.
Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and September 30, 2021	4
Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2022 and 2021	5
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended June 30, 2022 and 2021	6
Unaudited Consolidated Statements of Changes in Equity for the Three and Nine Months Ended June 30, 2022 and 2021	7
Unaudited Consolidated Statements of Changes in Cash Flow for the Nine Months Ended June 30, 2022 and 2021	9
Unaudited Supplemental Disclosure of Cash Flow Information for the Nine Months Ended June 30, 2022 and 2021	10
Notes to Unaudited Consolidated Financial Statements	11

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Evoqua Water Technologies Corp.

Consolidated Balance Sheets

(In thousands)

	(Unaudited)
	June 30, 2022		September 30, 2021
ASSETS
Current assets	$	832,220	$	678,458
Cash and cash equivalents	137,839		146,244
Receivables, net	293,471		277,995
Inventories, net	232,459		158,503
Contract assets	101,899		72,746
Prepaid and other current assets	64,877		21,871
Income tax receivable	1,675		1,099
Property, plant, and equipment, net	400,367		374,988
Goodwill	471,688		407,376
Intangible assets, net	315,983		290,075
Deferred income taxes, net of valuation allowance	4,788		8,285
Operating lease right-of-use assets, net	52,954		45,521
Other non‑current assets	93,618		64,188
Total assets	$	2,171,618	$	1,868,891
LIABILITIES AND EQUITY
Current liabilities	$	457,162	$	405,989
Accounts payable	198,180		164,535
Current portion of debt, net of deferred financing fees and discounts	16,064		12,775
Contract liabilities	66,943		55,883
Product warranties	7,198		8,138
Accrued expenses and other liabilities	162,474		160,367
Income tax payable	6,303		4,291
Non‑current liabilities	$	1,052,166	$	880,683
Long-term debt, net of deferred financing fees and discounts	909,763		730,430
Product warranties	3,994		2,966
Obligation under operating leases	43,832		37,935
Other non‑current liabilities	79,766		92,909
Deferred income taxes	14,811		16,443
Total liabilities	$	1,509,328	$	1,286,672
Commitments and Contingent Liabilities (Note 19)
Shareholders’ equity
Common stock, par value $0.01: authorized 1,000,000 shares; issued 123,150 shares, outstanding 121,486 at June 30, 2022; issued 122,173 shares, outstanding 120,509 at September 30, 2021	$	1,232	$	1,223
Treasury stock: 1,664 shares at June 30, 2022 and 1,664 shares at September 30, 2021	(2,837)		(2,837)
Additional paid-in capital	600,403		582,052
Retained earnings (deficit)	19,698		(11,182)
Accumulated other comprehensive income, net of tax	43,794		11,415
Total Evoqua Water Technologies Corp. equity	$	662,290	$	580,671
Non-controlling interest	—		1,548
Total shareholders’ equity	$	662,290	$	582,219
Total liabilities and shareholders’ equity	$	2,171,618	$	1,868,891

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue from product sales	$	267,957	$	218,427	$	740,300	$	600,908
Revenue from services	171,368		151,254		492,021		437,530
Revenue from product sales and services	$	439,325	$	369,681	$	1,232,321	$	1,038,438
Cost of product sales	(185,742)		(152,591)		(524,867)		(428,173)
Cost of services	(117,451)		(100,061)		(331,928)		(291,972)
Cost of product sales and services	$	(303,193)	$	(252,652)	$	(856,795)	$	(720,145)
Gross profit	$	136,132	$	117,029	$	375,526	$	318,293
General and administrative expense	(61,426)		(50,837)		(186,231)		(146,048)
Sales and marketing expense	(40,634)		(35,871)		(116,942)		(103,629)
Research and development expense	(3,857)		(3,413)		(11,060)		(9,929)
Total operating expenses	$	(105,917)	$	(90,121)	$	(314,233)	$	(259,606)
Other operating income	951		1,662		4,023		2,653
Other operating expense	(136)		(260)		(426)		(618)
Income before interest expense and income taxes	$	31,030	$	28,310	$	64,890	$	60,722
Interest expense	(8,440)		(11,224)		(24,969)		(28,292)
Income before income taxes	$	22,590	$	17,086	$	39,921	$	32,430
Income tax expense	(5,027)		(3,887)		(8,896)		(7,672)
Net income	$	17,563	$	13,199	$	31,025	$	24,758
Net income attributable to non‑controlling interest	—		44		145		134
Net income attributable to Evoqua Water Technologies Corp.	$	17,563	$	13,155	$	30,880	$	24,624
Basic income per common share	$	0.14	$	0.11	$	0.26	$	0.21
Diluted income per common share	$	0.14	$	0.11	$	0.25	$	0.20

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Net income	$	17,563	$	13,199	$	31,025	$	24,758
Other comprehensive (loss) income
Foreign currency translation adjustments	(5,643)		591		(1,858)		22,605
Unrealized derivative gain (loss) on cash flow hedges, net of tax	5,435		(3,524)		33,746		6,569
Change in pension liability, net of tax	156		266		491		640
Total other comprehensive (loss) income	$	(52)	$	(2,667)	$	32,379	$	29,814
Less: Comprehensive income attributable to non‑controlling interest	—		(44)		(145)		(134)
Comprehensive income attributable to Evoqua Water Technologies Corp.	$	17,511	$	10,488	$	63,259	$	54,438

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Unaudited Consolidated Statements of Changes in Equity

(In thousands)

	Common Stock			Treasury Stock			Additional Paid‑in Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Non‑controlling Interest		Total
	Shares	Cost		Shares	Cost
Balance at September 30, 2021	122,173	$	1,223	1,664	$	(2,837)	$	582,052	$	(11,182)	$	11,415	$	1,548	$	582,219
Equity based compensation expense	—	—		—	—		5,203		—		—		—		$	5,203
Issuance of common stock, net	199	2		—	—		822		—		—		—		$	824
Dividends paid to non-controlling interest	—	—		—	—		—		—		—		(100)		$	(100)
Net income	—	—		—	—		—		5,987		—		101		$	6,088
Other comprehensive income	—	—		—	—		—		—		8,359		—		$	8,359
Balance at December 31, 2021	122,372	$	1,225	1,664	$	(2,837)	$	588,077	$	(5,195)	$	19,774	$	1,549	$	602,593
Equity based compensation expense	—	—		—	—		5,386		—		—		—		$	5,386
Issuance of common stock, net	394	4		—	—		(1,358)		—		—		—		$	(1,354)
Net income	—	—		—	—		—		7,330		—		44		$	7,374
Other comprehensive income	—	—		—	—		—		—		24,072		—		$	24,072
Balance at March 31, 2022	122,766	$	1,229	1,664	$	(2,837)	$	592,105	$	2,135	$	43,846	$	1,593	$	638,071
Equity based compensation expense	—	—		—	—		5,750		—		—		—		$	5,750
Issuance of common stock, net	384	3		—	—		2,548		—		—		—		$	2,551
Acquisition of non-controlling interest	—	—		—	—		—		—		—		(1,593)		$	(1,593)
Net income	—	—		—	—		—		17,563		—		—		$	17,563
Other comprehensive loss	—	—		—	—		—		—		(52)		—		$	(52)
Balance at June 30, 2022	123,150	$	1,232	1,664	$	(2,837)	$	600,403	$	19,698	$	43,794	$	—	$	662,290

See accompanying notes to these Unaudited Consolidated Financial Statements

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	Common Stock			Treasury Stock			Additional Paid‑in Capital		Retained Deficit		Accumulated Other Comprehensive (Loss) Income		Non‑controlling Interest		Total
	Shares	Cost		Shares	Cost
Balance at September 30, 2020	119,486	$	1,189	2,195	$	(2,837)	$	564,928	$	(62,664)	$	(20,472)	$	1,919	$	482,063
Equity based compensation expense	—	—		—	—		3,019		—		—		—		$	3,019
Issuance of common stock, net	1,264	13		1	—		14,250		—		—		—		$	14,263
Dividends paid to non-controlling interest	—	—		—	—		—		—		—		(250)		$	(250)
Net income	—	—		—	—		—		6,433		—		44		$	6,477
Other comprehensive loss	—	—		—	—		—		—		(3,611)		—		$	(3,611)
Balance at December 31, 2020	120,750	$	1,202	2,196	$	(2,837)	$	582,197	$	(56,231)	$	(24,083)	$	1,713	$	501,961
Equity based compensation expense	—	—		—	—		3,214		—		—		—		$	3,214
Issuance of common stock, net	692	13		(532)	—		(21,377)		—		—		—		$	(21,364)
Dividends paid to non-controlling interest	—	—		—	—		—		—		—		(100)		$	(100)
Net income	—	—		—	—		—		5,036		—		46		$	5,082
Other comprehensive income	—	—		—	—		—		—		36,092		—		$	36,092
Balance at March 31, 2021	121,442	$	1,215	1,664	$	(2,837)	$	564,034	$	(51,195)	$	12,009	$	1,659	$	524,885
Equity based compensation expense	—	—		—	—		4,228		—		—		—		$	4,228
Issuance of common stock, net	395	4		—	—		5,630		—		—		—		$	5,634
Dividends paid to non-controlling interest	—	—		—	—		—		—		—		(100)		$	(100)
Net income	—	—		—	—		—		13,155		—		44		$	13,199
Other comprehensive loss	—	—		—	—		—		—		(2,667)		—		$	(2,667)
Balance at June 30, 2021	121,837	$	1,219	1,664	$	(2,837)	$	573,892	$	(38,040)	$	9,342	$	1,603	$	545,179

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Unaudited Consolidated Statements of Changes in Cash Flows

(In thousands)

	Nine Months Ended June 30,
	2022		2021
Operating activities
Net income	$	31,025	$	24,758
Reconciliation of net income to cash flows provided by operating activities:
Depreciation and amortization	93,881		83,707
Amortization of deferred financing fees (includes $0 and $1,333 write off of deferred financing fees)	1,393		2,814
Deferred income taxes	1,332		994
Share-based compensation	16,339		10,461
(Gain) loss on sale of property, plant, and equipment	(684)		2,456
(Gain) loss on sale of business	(193)		193
Foreign currency exchange losses (gains) on intercompany loans and other non-cash items	11,235		(4,628)
Changes in assets and liabilities
Accounts receivable	3,222		18,931
Inventories	(44,566)		(18,261)
Contract assets	(30,092)		12,059
Prepaids and other current assets	(23,951)		(21,869)
Accounts payable	27,367		(10,587)
Accrued expenses and other liabilities	2,494		23,065
Contract liabilities	11,356		9,337
Income taxes	1,596		(2,489)
Other non‑current assets and liabilities	(14,820)		(28,083)
Net cash provided by operating activities	86,934		102,858
Investing activities
Purchase of property, plant, and equipment	(58,700)		(54,147)
Purchase of intangibles	(2,361)		(1,206)
Proceeds from sale of property, plant, and equipment	2,383		1,108
Proceeds from sale of business, net of cash of $0 and $0	356		897
Acquisitions, net of cash received $0 and $0	(206,471)		(21,059)
Net cash used in investing activities	(264,793)		(74,407)
Financing activities
Issuance of debt, net of deferred issuance costs	245,236		747,877
Repayment of debt	(64,007)		(837,082)
Repayment of finance lease obligation	(9,965)		(10,173)
Proceeds from issuance of common stock	7,921		18,096
Taxes paid related to net share settlements of share-based compensation awards	(6,274)		(1,315)
Distribution to non‑controlling interest	(100)		(450)
Net cash provided by (used in) financing activities	172,811		(83,047)
Effect of exchange rate changes on cash	(3,357)		3,119
Change in cash and cash equivalents	(8,405)		(51,477)
Cash and cash equivalents
Beginning of period	146,244		193,001
End of period	$	137,839	$	141,524

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Unaudited Supplemental Disclosure of Cash Flow Information

(In thousands)

	Nine Months Ended June 30,
	2022		2021
Supplemental disclosure of cash flow information
Cash paid for taxes	$	5,544	$	7,536
Cash paid for interest	$	19,076	$	20,643
Non‑cash investing and financing activities
Finance lease transactions	$	10,404	$	12,300
Operating lease transactions	$	18,482	$	11,699

See accompanying notes to these Unaudited Consolidated Financial Statements

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Evoqua Water Technologies Corp.

Notes to Unaudited Consolidated Financial Statements

(In thousands, except per share data)

1. Description of the Company and Basis of Presentation

Background

Evoqua Water Technologies Corp. (referred to herein as the “Company” or “EWT”) is a holding company and does not conduct any business operations of its own. The Company was incorporated on October 7, 2013. On November 6, 2017, the Company completed its initial public offering (“IPO”).

The Business

EWT provides a wide range of product brands and advanced water and wastewater treatment systems and technologies, as well as mobile and emergency water supply solutions and service contract options through its branch network. Headquartered in Pittsburgh, Pennsylvania, EWT is a multinational corporation with operations in the United States (“U.S.”), Canada, the United Kingdom (“UK”), the Netherlands, Germany, Australia, the People’s Republic of China, Singapore and India.

The Company is organizationally structured into two reportable operating segments for the purpose of making operational decisions and assessing financial performance: (i) Integrated Solutions and Services and (ii) Applied Product Technologies.

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. Unless otherwise specified, all dollar and share amounts in these notes are referred to in thousands.

The interim Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021 (“2021 Annual Report”), in preparing these Unaudited Consolidated Financial Statements, with the exception of accounting standard updates described in Note 2, “Recent Accounting Pronouncements.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2021 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation.

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2. Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification (“ASC”) 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) (“Topic 606”), as if the entity had originated the contracts, rather than adjust them to fair value at the acquisition date. The guidance is effective for fiscal years beginning after December 15, 2022 and is to be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and also issued subsequent amendments to the initial guidance (collectively, “Topic 848”). Topic 848 became effective immediately and expires on December 31, 2022. Topic 848 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve their hedge accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. Topic 848 provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform if certain criteria are met. The Company adopted Topic 848 during the nine months ended June 30, 2022 and the adoption did not have a material impact on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

3. Variable Interest Entities

Treated Water Outsourcing (“TWO”) was a joint venture between the Company and Nalco Water, an Ecolab company (“Nalco”), in which the Company held a 50% partnership interest. The Company acquired the remaining partnership interest in TWO from Nalco on April 1, 2022. See Note 4, “Acquisitions and Divestitures” for further discussion. Prior to acquisition, the Company was obligated to absorb all risk of loss up to 100% of the joint venture partner’s equity. As such, the Company fully consolidated TWO as a variable interest entity (“VIE”) under ASC Topic No. 810, Consolidation.

The following provides a summary of TWO’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining partnership interest in TWO on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $1,380)	$	3,202
Property, plant, and equipment	903
Goodwill	2,206
Total liabilities	(1,009)

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	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	843	$	1,641	$	2,511
Total operating expenses	(748)		(1,440)		(2,217)
Income from operations	$	95	$	201	$	294

On October 1, 2019, the Company acquired a 60% investment position in San Diego-based Frontier Water Systems, LLC (“Frontier”). The Frontier acquisition was a VIE because it had insufficient equity to finance its activities due to key assets being assigned to the Company upon acquisition.  The Company was the primary beneficiary of Frontier because the Company had the power to direct the activities that most significantly affect Frontier’s economic performance.

In addition, the Company entered into an agreement to purchase the remaining 40% interest in Frontier on or prior to March 30, 2024. This agreement (a) gave holders of the remaining 40% interest in Frontier (the “Minority Owners”) the right to sell to Evoqua up to approximately 10% of the outstanding equity in Frontier at a predetermined price, which right was exercisable by the Minority Owners between January 1, 2021 and February 28, 2021 (the “Option”), and (b) obligated the Company to purchase and the Minority Owners to sell all of the Minority Owners’ remaining interest in Frontier at the fair market value at the time of sale on or prior to March 30, 2024 (the “Purchase Right”). The Company acquired an additional 8% equity interest in Frontier in April 2021. On April 1, 2022, the Company purchased the remaining 32% outstanding equity in Frontier. See Note 4, “Acquisitions and Divestitures” for further discussion.

The following provides a summary of Frontier’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining equity interest in Frontier on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $2,095)	$	12,495
Property, plant, and equipment	2,113
Goodwill	1,798
Intangible assets, net	8,265
Total liabilities	(9,425)

	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	4,945	$	13,363	$	7,793
Total operating expenses	(4,448)		(12,135)		(8,587)
Income (loss) from operations	$	497	$	1,228	$	(794)

4. Acquisitions and Divestitures

Acquisitions support the Company’s strategy of delivering a broad solutions portfolio with robust technology across multiple geographies and end markets. The Company continues to evaluate potential strategic acquisitions of businesses, assets and product lines and believes that capex-like, tuck-in acquisitions present key opportunities within its overall growth strategy.

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On April 1, 2022, the Company acquired the remaining 32% interest in Frontier from the Minority Owners for a purchase price of $10,396, which the Company had accrued for as the Purchase Right as of March 31, 2022, making Frontier a wholly-owned subsidiary of the Company. This followed the Company’s initial acquisition of a 60% equity interest in Frontier in October 2019 and the Company’s acquisition of an additional 8% equity interest in Frontier in April 2021. The total amount paid for the acquisition of Frontier, including those amounts paid in prior periods, was $22,771.

Also on April 1, 2022, the Company acquired the remaining 50% partnership interest in TWO from Nalco for a purchase price of $1,099.

On December 20, 2021, the Company and its indirect wholly-owned subsidiaries Evoqua Water Technologies LLC (“EWT LLC”) and Evoqua Water Technologies Ltd. (together with EWT LLC, the “Buyer”) entered into an Asset Purchase Agreement (the “Agreement”) with Cantel Medical LLC, Mar Cor Purification, Inc., and certain of their affiliates (collectively, the “Sellers”), each wholly-owned subsidiaries of Steris plc, pursuant to which the Buyer agreed to acquire certain assets of the Sellers and assume certain liabilities of the Sellers that are owned or used or arise in connection with the global operation of the Sellers’ renal business (the “Mar Cor Business”) for an aggregate purchase price of $196,300 in cash at closing (the “Purchase Price”), subject to customary adjustments, including for working capital (the “Transaction”). On January 3, 2022, the Company completed the Transaction to acquire the Mar Cor Business for $194,976 paid in cash at closing, following adjustments. The Company utilized cash on hand and borrowed an additional $160,000 under the 2021 Revolving Credit Facility (as defined below) to fund the Transaction. The Mar Cor Business is included within the Integrated Solutions and Services segment.

The Purchase Price includes a $12,300 earn out, which is being held in escrow and will be paid, pro rata, to the Sellers if the Mar Cor Business meets certain sales performance goals through December 31, 2022 (the “Earn Out”). Any portion of the Earn Out not paid to the Sellers during the first year following closing of the Transaction will be returned to the Buyer. A Monte Carlo simulation was performed to determine the fair value of an Earn Out asset for the amount expected to be received back from escrow based on the forecasted achievement of the sales performance goals associated with the Earn Out as of the acquisition date. See Note 6, Fair Value Measurements, for further discussion. In addition, approximately $12,965 of the Purchase Price was placed into an escrow account, of which $9,815 is to secure general indemnification claims against the Sellers and $3,150 is for net working capital adjustments. During the nine months ended June 30, 2022, the Company incurred approximately $3,178 in acquisition costs, which are included in General and administrative expense on the Unaudited Consolidated Statements of Operations.

The acquisition of the Mar Cor Business has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. These preliminary estimates are subject to revision during the measurement period as additional analyses are performed and third-party valuations are finalized, and these differences could have a material impact on the accounting for the business combination.

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Receivables, net	$	21,275
Inventories, net	32,479
Earn Out asset	7,824
Other current assets	1,732
Property, plant, and equipment, net	19,343
Goodwill	68,714
Intangible assets, net	57,094
Other non-current assets	7,434
Total assets acquired	215,895
Current liabilities	(15,377)
Non-current liabilities	(5,542)
Total liabilities assumed	(20,919)
Net assets acquired	$	194,976

During the nine months ended June 30, 2022, the Company completed the divestiture of the resin regeneration assets in Germany (the “Germany Regen Business”) for $356 in cash at closing, resulting in a gain of $193 recognized on the sale. The Germany Regen Business was a part of the Applied Product Technologies segment.

5. Revenue

Performance Obligations

The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations if the product has an alternative use and the Company does not have an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. The Company maintains a backlog of confirmed orders, which totaled approximately $344,633 at June 30, 2022. This backlog represents the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that the majority of these performance obligations will be satisfied within the next twelve to twenty-four months.

Disaggregation of Revenue

In accordance with Topic 606, the Company disaggregates revenue from contracts with customers into source of revenue, reportable operating segment, and geographical regions. The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Information regarding the source of revenue:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue from contracts with customers recognized under Topic 606	$	396,354	$	320,218	$	1,096,883	$	903,325
Other(1)	42,971		49,463		135,438		135,113
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

(1)     Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842), primarily attributable to long term rentals.

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Information regarding revenue disaggregated by source of revenue and segment is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Integrated Solutions and Services
Capital	$	72,535	$	63,336	$	210,339	$	166,055
Aftermarket	59,033		31,852		150,602		91,499
Service	165,843		144,499		476,356		420,984
Total	$	297,411	$	239,687	$	837,297	$	678,538
Applied Product Technologies
Capital	$	98,782	$	92,692	$	274,444	$	259,877
Aftermarket	37,607		30,547		104,915		83,477
Service	5,525		6,755		15,665		16,546
Total	$	141,914	$	129,994	$	395,024	$	359,900
Total Revenue
Capital	$	171,317	$	156,028	$	484,783	$	425,932
Aftermarket	96,640		62,399		255,517		174,976
Service	171,368		151,254		492,021		437,530
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Information regarding revenue disaggregated by geographic area is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
United States	$	362,268	$	291,113	$	1,009,615	$	829,925
Asia	32,996		31,987		91,943		81,568
Europe	28,122		28,749		82,392		81,561
Canada	13,422		14,210		39,831		36,025
Australia	2,517		3,622		8,540		9,359
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Contract Balances

The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company receives payments from customers based on a billing schedule as established in its contracts.

Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Change in contract assets and liabilities are due to the Company’s performance under the contract.

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The tables below provide a roll-forward of contract assets and contract liabilities balances for the periods presented:

	Nine Months Ended June 30,
Contract assets(a)	2022		2021
Balance at beginning of period	$	72,746	$	80,759
Recognized in current period	294,794		232,750
Reclassified to accounts receivable	(265,324)		(244,766)
Foreign currency	(317)		600
Balance at end of period	$	101,899	$	69,343

(a)     Excludes receivable balances which are disclosed on the Consolidated Balance Sheets.

	Nine Months Ended June 30,
Contract Liabilities	2022		2021
Balance at beginning of period	$	55,883	$	26,259
Recognized in current period	271,227		245,049
Amounts in beginning balance reclassified to revenue	(44,718)		(18,496)
Current period amounts reclassified to revenue	(215,366)		(216,972)
Foreign currency	(83)		1,075
Balance at end of period	$	66,943	$	36,915

6. Fair Value Measurements

As of June 30, 2022 and September 30, 2021, the fair values of cash and cash equivalents, accounts receivable, and accounts payable approximated carrying values due to the short maturity of these items.

The Company measures the fair value of pension plan assets and liabilities, deferred compensation plan assets and liabilities on a recurring basis pursuant to ASC Topic No. 820, Fair Value Measurement. ASC Topic No. 820 establishes a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value driver is observable.

Level 3: Unobservable inputs in which little or no market data is available, therefore requiring an entity to develop its own assumptions.

The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (“NAV”) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to measure the fair value of these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy.

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	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of June 30, 2022
Assets:
Pension plan
Cash	$	—	$	316	$	—	$	—
Global Multi-Asset Fund	12,639		—		—		—
Government Securities	1,459		—		—		—
Liability Driven Investment	4,275		—		—		—
Guernsey Unit Trust	2,255		—		—		—
Global Absolute Return	1,418		—		—		—
Deferred compensation plan assets
Cash	—		1,034		—		—
Mutual Funds	—		13,106		—		—
Earn-out assets related to acquisitions	—		—		—		10,543
Interest rate swaps	—		—		36,500		—
Foreign currency forward contracts	—		—		107		—
Liabilities:
Pension plan	—		—		(41,483)		—
Deferred compensation plan liabilities	—		—		(20,361)		—
Total return swaps—deferred compensation	—		—		(137)		—
Long‑term debt	—		—		(928,629)		—
Foreign currency forward contracts	—		—		(75)		—
Commodity swaps	—		—		(7)		—

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	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2021
Assets:
Pension plan
Cash	$	—	$	831	$	—	$	—
Global Multi-Asset Fund	15,244		—		—		—
Government Securities	5,158		—		—		—
Liability Driven Investment	2,793		—		—		—
Guernsey Unit Trust	2,387		—		—		—
Global Absolute Return	2,225		—		—		—
Deferred compensation plan assets
Cash	—		1,251		—		—
Mutual Funds	—		17,806		—		—
Interest rate swaps	—		—		3,127		—
Foreign currency forward contracts	—		—		24		—
Liabilities:
Pension plan	—		—		(46,013)		—
Deferred compensation plan liabilities	—		—		(24,382)		—
Total return swaps—deferred compensation	—		—		(130)		—
Long‑term debt	—		—		(752,988)		—
Interest rate swaps	—		—		(303)		—
Foreign currency forward contracts	—		—		(102)		—
Commodity swaps	—		—		(19)		—
Earn-out liabilities related to acquisitions	—		—		—		(150)
Purchase Right	—		—		—		(8,305)

The pension plan assets and liabilities and deferred compensation plan assets and liabilities are included in Other non‑current assets and Other non‑current liabilities at June 30, 2022 and September 30, 2021. The unrealized loss on mutual funds was $2,111 at June 30, 2022.

The Company records contingent consideration arrangements at fair value on a recurring basis, and the associated balances presented as of June 30, 2022 and September 30, 2021 are earn-outs related to acquisitions. The fair value of earn-outs related to acquisitions is based on significant unobservable inputs including the achievement of certain performance metrics. Significant changes in these inputs would result in corresponding increases or decreases in the fair value of the earn-out each period until the related contingency has been resolved. Changes in the fair value of the contingent consideration obligations and assets can result from adjustments in the probability of achieving future development steps, sales targets and profitability and are recorded in General and administrative expenses in the Unaudited Consolidated Statements of Operations. During the three and nine months ended June 30, 2022, the Company recorded a decrease in the fair value of the earn-out liability related to the prior year acquisition of Water Consulting Specialists, Inc. (“WCSI”) of $25 and $150, respectively. As a result of the Mar Cor Business acquisition on January 3, 2022, the Company recorded an Earn Out asset for $7,824 which represented the fair value of amounts expected to be received back from escrow based on the forecasted achievement of certain sales performance goals at the acquisition date. During the three and nine months ended June 30, 2022, the Company recorded an increase in the fair value of the Earn Out asset of $2,719 based on updated forecast information. As of June 30, 2022 and September 30, 2021, earn-out liabilities related to acquisitions totaled $0 and $150, respectively, and are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets. As of June 30, 2022 and September 30, 2021, earn-out assets related to

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acquisitions total $10,543 and $0, respectively, and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

In addition, the Company had a liability recorded for the Purchase Right to purchase the remaining 32% interest of Frontier. During the nine months ended June 30, 2022, the Company recorded an increase in the fair value of the Purchase Right liability of $2,091, which was recorded to Interest expense on the Unaudited Consolidated Statements of Operations. The Purchase Right was exercised by the Minority Owners on April 1, 2022 resulting in the purchase of the remaining interest of Frontier for $10,396 and the settlement of the Purchase Right liability recorded. As of June 30, 2022 and September 30, 2021, $0 and $8,305, respectively is included in Other non‑current liabilities related to the Purchase Right on the Consolidated Balance Sheets.

7. Accounts Receivable

Accounts receivable are summarized as follows:

	June 30, 2022		September 30, 2021
Accounts receivable	$	300,121	$	282,819
Allowance for credit losses	(6,650)		(4,824)
Receivables, net	$	293,471	$	277,995

The movement in the allowance for credit losses was as follows for the nine months ended June 30, 2022:

Balance at September 30, 2021	$	(4,824)
Charged to costs and expenses	(1,423)
Write-offs	190
Foreign currency and other	(593)
Balance at June 30, 2022	$	(6,650)

8. Inventories

The major classes of Inventories, net are as follows:

	June 30, 2022		September 30, 2021
Raw materials and supplies	$	119,853	$	86,469
Work in progress	36,296		19,842
Finished goods and products held for resale	85,709		59,624
Costs of unbilled projects	2,909		2,277
Reserves for excess and obsolete	(12,308)		(9,709)
Inventories, net	$	232,459	$	158,503

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9. Property, Plant, and Equipment

Property, plant, and equipment consists of the following:

	June 30, 2022		September 30, 2021
Machinery and equipment	$	401,670	$	388,352
Rental equipment	261,644		246,257
Land and buildings	77,473		70,048
Construction in process	71,303		59,737
	812,090		764,394
Less: accumulated depreciation	(411,723)		(389,406)
Property, plant, and equipment, net	$	400,367	$	374,988

The Company entered into secured financing agreements that require providing a security interest in specified equipment and, in some cases, the underlying contract. As of June 30, 2022 and September 30, 2021, the gross and net amounts of those assets are as follows:

	June 30, 2022				September 30, 2021
	Gross		Net		Gross		Net
Machinery and equipment	$	86,133	$	63,931	$	73,632	$	57,036
Construction in process	44,121		44,121		30,504		30,504
	$	130,254	$	108,052	$	104,136	$	87,540

Depreciation expense and maintenance and repairs expense for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Depreciation expense	$	21,089	$	19,170	$	61,131	$	56,450
Maintenance and repair expense	7,808		4,603		21,402		14,565

10. Goodwill

Changes in the carrying amount of goodwill are as follows:

	Integrated Solutions and Services		Applied Product Technologies		Total
Balance at September 30, 2021	$	233,830	$	173,546	$	407,376
Business combinations and divestitures	68,708		(34)		68,674
Foreign currency translation	(701)		(3,661)		(4,362)
Balance at June 30, 2022	$	301,837	$	169,851	$	471,688

As of June 30, 2022 and September 30, 2021, $223,834 and $159,730, respectively, of goodwill was deductible for tax purposes.

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11. Debt

Long‑term debt, including accrued interest, consists of the following:

	June 30, 2022		September 30, 2021
2021 Term Loan, due April 1, 2028 (1)	$	470,250	$	473,837
2021 Revolving Credit Facility, due April 1, 2026 (2)	211,113		37,268
Securitization Facility, due April 1, 2024 (3)	138,013		150,061
Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07%	116,796		93,375
Notes Payable, due July 31, 2023 (4)	—		402
Total debt	936,172		754,943
Less unamortized deferred financing fees	(10,345)		(11,738)
Total net debt	925,827		743,205
Less current portion	(16,064)		(12,775)
Total long‑term debt	$	909,763	$	730,430

(1)The interest rate on the 2021 Term Loan was 3.56% as of June 30, 2022, comprised of 1.06% LIBOR plus a 2.50% spread. Includes accrued interest of $0 and $25 at June 30, 2022 and September 30, 2021, respectively.

(2)The 2021 Revolving Credit Facility includes $206,000 outstanding with an interest rate of 3.64% as of June 30, 2022, comprised of 1.69% LIBOR plus a 1.95% spread, and $5,000 outstanding with an interest rate of 5.70%. as of June 30, 2022, comprised of 4.75% Prime Rate plus a 0.95% spread. During the nine months ended June 30, 2022, the spread on the 2021 Revolving Credit Facility was reduced from 2.25% at September 30, 2021 as a result of a Sustainability Pricing Adjustment per the 2021 Credit Agreement. Includes accrued interest of $113 and $268, at June 30, 2022 and September 30, 2021, respectively.

(3)The interest rate on the Securitization Facility was 3.04% as of June 30, 2022, comprised of 1.79% LIBOR plus a 1.25% spread. Includes accrued interest of $113 and $61 at June 30, 2022 and September 30, 2021, respectively.

(4)In March 2022, the outstanding balance of the Notes Payable due July 31, 2023, was repaid in conjunction with the Company’s acquisition of TWO. See Note 4, “Acquisitions and Divestitures” for further discussion.

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2021 Credit Agreement

On April 1, 2021, EWT III entered into a Credit Agreement (the “2021 Credit Agreement”) among EWT III, as borrower, EWT II, as parent guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and ING Capital, LLC, as sustainability coordinator. The 2021 Credit Agreement provides for a multi-currency senior secured revolving credit facility in an aggregate principal amount not to exceed the U.S. dollar equivalent of $350,000 (the “2021 Revolving Credit Facility”) and a discounted senior secured term (the “2021 Term Loan”) in the amount of $475,000 (together with the 2021 Revolving Credit Facility, the “Senior Facilities”). The 2021 Credit Agreement also provides for a letter of credit sub-facility not to exceed $60,000.

The 2021 Credit Agreement contains customary representations, warranties, affirmative covenants, and negative covenants, including, among other things, a springing maximum first lien leverage ratio of 5.55 to 1.00. The Company did not exceed this ratio during the nine months ended June 30, 2022, does not anticipate exceeding this ratio during the year ending September 30, 2022, and therefore does not anticipate any additional repayments during the year ending September 30, 2022.

The following table summarizes the amount of the Company’s outstanding borrowings and outstanding letters of credit under the 2021 Revolving Credit Facility as of June 30, 2022 and September 30, 2021.

	June 30, 2022		September 30, 2021
Borrowing availability	$	350,000	$	350,000
Outstanding borrowings	211,000		37,000
Outstanding letters of credit	9,529		10,112
Unused amounts	$	129,471	$	302,888

Receivables Securitization Program

On April 1, 2021, Evoqua Finance LLC (“Evoqua Finance”), an indirect wholly-owned subsidiary of the Company, entered into an accounts receivable securitization program (the “Receivables Securitization Program”) consisting of, among other agreements, (i) a Receivables Financing Agreement (the “Receivables Financing Agreement”) among Evoqua Finance, as the borrower, the lenders from time to time party thereto (the “Receivables Financing Lenders”), PNC Bank, National Association (“PNC Bank”), as administrative agent, EWT LLC, as initial servicer, and PNC Capital Markets LLC (“PNC Markets”), as structuring agent, pursuant to which the lenders have made available to Evoqua Finance a receivables finance facility (the “Securitization Facility”) in an amount up to $150,000 and (ii) a Sale and Contribution Agreement (the “Sale Agreement”) among Evoqua Finance, as purchaser, EWT LLC, as initial servicer and as an originator, and Neptune Benson, Inc., an indirectly wholly-owned subsidiary of the Company, as an originator (together with EWT LLC, the “Originators”).

The Receivables Securitization Program contains certain customary representations, warranties, affirmative covenants, and negative covenants, subject to certain cure periods in some cases, including the eligibility of the receivables being sold by the Originators and securing the loans made by the Receivables Financing Lenders, as well as customary reserve requirements, events of default, termination events, and servicer defaults. The Company was in compliance with all covenants during the nine months ended June 30, 2022, does not anticipate becoming noncompliant during the year ending September 30, 2022, and therefore, subject to limitations arising from collateral availability, does not anticipate any additional repayments during the year ending September 30, 2022.

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Equipment Financings

During the nine months ended June 30, 2022, the Company completed the following equipment financings:

Date Entered	Due	Interest Rate as of June 30, 2022		Principal Amount
June 30, 2022	July 31, 2029(1)	4.81	%	$	12,356
June 30, 2022	May 31, 2029(2)	4.25	%	4,086
March 18, 2022	March 17, 2029	4.67	%	1,839
March 16, 2022	July 31, 2029(1)	4.81	%	1,317
March 15, 2022	April 1, 2029	4.74	%	4,788
December 30, 2021	December 30, 2028	3.94	%	2,207
December 23, 2021	July 31, 2029(1)	4.81	%	3,742
				$	30,335

(1)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through August 1, 2022 based on an interest rate of 4.81% including a 1.06% LIBOR plus a 3.75% spread as of June 30, 2022. The Company entered into an interest rate swap with an effective date of August 1, 2022 to mitigate risk associated with this variable rate equipment financing, see Note 12, “Derivative Financial Instruments” for further discussion.

(2)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through December 30, 2022 based on a 1.50% Secured Overnight Financing Rate plus a 2.75% spread.

Deferred Financing Fees and Discounts

Deferred financing fees and discounts related to the Company’s long-term debt were included as a contra liability to debt on the Consolidated Balance Sheets as follows:

	June 30, 2022		September 30, 2021
Current portion of deferred financing fees and discounts(1)	$	(1,891)	$	(1,866)
Long-term portion of deferred financing fees and discounts(2)	(8,454)		(9,872)
Total deferred financing fees and discounts	$	(10,345)	$	(11,738)

(1)Included in Current portion of debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets.

(2)Included in Long-term debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets.

Amortization of deferred financing fees and discounts included in interest expense was $467 and $437 for the three months ended June 30, 2022 and 2021 and $1,393 and $1,481 for the nine months ended June 30, 2022 and 2021, respectively.

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Repayment Schedule

Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of June 30, 2022, are presented below:

Fiscal Year
Remainder of 2022	$	4,293
2023	18,215
2024	155,025
2025	18,714
2026	22,030
Thereafter	717,895
Total	$	936,172

12. Derivative Financial Instruments

Interest Rate Risk Management

The Company is subject to market risk exposure arising from changes in interest rates on the senior secured credit facilities as well as variable rate equipment financings, which bear interest at rates that are indexed against LIBOR. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to mitigate its exposure to rising interest rates. As of June 30, 2022, the notional amount of the Company’s interest rate swaps was $531,000.

Foreign Currency Risk Management

The Company’s functional currency is the U.S. dollar. By operating internationally, the Company is subject to foreign currency translation risk associated with converting the foreign operations’ financial statements into U.S. dollars transactions denominated in currencies other than the U.S. dollar (“foreign currencies”). The Company is also subject to currency risk from transactions denominated in foreign currencies. To mitigate cross-currency transaction risk, the Company analyzes significant exposures where it has receipts or payments in a currency other than the functional currency of its operations, and from time to time may strategically enter into short-term foreign currency forward contracts to lock in some or all of the cash flows associated with these transactions. The Company uses foreign currency derivative contracts in order to manage the effect of exchange fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. As of June 30, 2022, the notional amount of the forward contracts was $14,025.

Equity Price Risk Management

The Company is exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Equity price movements affect the compensation expense as certain investments made by the Company’s employees in the deferred compensation plan are revalued. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge a portion of this exposure and offset the related compensation expense. As of June 30, 2022, the notional amount of the total return swaps was $4,966.

Credit Risk Management

The counterparties to the Company’s derivative contracts are highly-rated financial institutions. The Company regularly reviews the creditworthiness of its financial counterparties and fully expects the counterparties to perform under their respective agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. The Company records all derivative instruments on a gross basis in the Consolidated Balance Sheets. Accordingly, there are no offsetting amounts that net assets against liabilities.

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Derivatives Designated as Cash Flow Hedges

The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Prepaid and other current assets	$	13,656	$	3,127
Foreign currency forward contracts	Prepaid and other current assets	43		6
Interest rate swaps	Other non‑current assets	22,844		—

		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Accrued expenses and other current liabilities	$	—	$	303
Foreign currency forward contracts	Accrued expenses and other current liabilities	75		102
Commodity swaps	Accrued expenses and other current liabilities	7		19

The following represents the amount of gain (loss) recognized in Accumulated other comprehensive income (loss) (“AOCI”) (net of tax) during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Interest rate swaps	$	5,798	$	(4,157)	$	32,746	$	5,111
Foreign currency forward contracts	(135)		67		(53)		(265)
Commodity swaps	(16)		(16)		12		(16)
	$	5,647	$	(4,106)	$	32,705	$	4,830

The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of (Loss) Gain	2022		2021		2022		2021
Cost of product sales and services	$	(25)	$	9	$	(104)	$	(4)
General and administrative expense	—		—		(7)		(72)
Selling and marketing expense	—		—		—		(39)
Interest expense	237		(591)		(930)		(1,624)
	$	212	$	(582)	$	(1,041)	$	(1,739)

Based on the fair value amounts of the Company’s cash flow hedges at June 30, 2022, the Company expects that approximately $26 of pre-tax net gains will be reclassified from AOCI into earnings during the next twelve months. The amount ultimately realized, however, will differ as exchange rates vary and the underlying contracts settle.

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Derivatives Not Designated as Hedging Instruments

The following represents the fair value recorded for derivatives not designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Foreign currency forward contracts	Prepaid and other current assets	$	64	$	18
		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Total return swaps—deferred compensation	Accrued expenses and other current liabilities	$	137	$	130

The following represents the amount of loss recognized in earnings for derivatives not designated as hedges during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of Loss	2022		2021		2022		2021
General and administrative expense	$	(793)	$	—	$	(834)	$	—
	$	(793)	$	—	$	(834)	$	—

13. Product Warranties

A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows:

	Current Product Warranties				Non-Current Product Warranties
	Nine Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Balance at beginning of the period	$	8,138	$	6,115	$	2,966	$	1,724
Warranty provision for sales	4,705		5,680		1,772		1,577
Settlement of warranty claims	(4,987)		(3,826)		(593)		(701)
Foreign currency translation and other	(658)		94		(151)		29
Balance at end of the period	$	7,198	$	8,063	$	3,994	$	2,629

14. Restructuring and Related Charges

To better align its resources with its growth strategies and reduce its cost structure, the Company commits to various restructuring plans as necessary. The Company has undertaken various restructuring initiatives, including activities to reduce the cost structure and rationalize location footprint following the sale of the Memcor product line, transitioning from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide, and various initiatives within the Integrated Solutions and Services segment to drive efficiency and effectiveness in certain divisions.

The Company currently expects to incur in future periods approximately $2,700 to $3,700 of costs related to restructuring programs initiated in prior periods.

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The table below sets forth the amounts accrued for the restructuring components and related activity:

	Nine Months Ended June 30,
	2022		2021
Balance at beginning of the period	$	304	$	970
Restructuring charges following the sale of the Memcor product line	942		4,649
Restructuring charges related to two-segment realignment	413		830
Restructuring charges related to other initiatives	3,232		1,856
Release of prior reserves	(290)		(296)
Write off charges	—		(966)
Cash payments	(3,551)		(6,349)
Other adjustments	(6)		8
Balance at end of the period	$	1,044	$	702

The balances for accrued restructuring liabilities at June 30, 2022 and September 30, 2021, are recorded in Accrued expenses and other liabilities on the Consolidated Balance Sheets. Restructuring charges primarily represent severance charges and other employee costs, fixed asset write-offs, and certain relocation expenses. The Company expects to pay the remaining amounts accrued as of June 30, 2022 during the remainder of fiscal 2022.

The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations:

	Nine Months Ended June 30,
	2022		2021
Cost of product sales and services	$	1,352	$	4,341
General and administrative expense	2,403		1,675
Sales and marketing expense	83		348
Research and development expense	1		(15)
Other operating expense, net	458		690
	$	4,297	$	7,039

The Company continues to evaluate restructuring activities that may result in additional charges in the future.

15. Employee Benefit Plans

The Company maintains multiple employee benefit plans.

Certain of the Company’s employees in the UK were participants in a Siemens defined benefit plan established for employees of a UK-based operation acquired by Siemens in 2004. The plan was frozen with respect to future service credits for active employees, however the benefit formula recognized future compensation increases. The Company agreed to establish a replacement defined benefit plan, with the assets of the Siemens scheme transferring to the new scheme on April 1, 2015.

The Company’s employees in Germany also participate in a defined benefit plan. Assets equaling the plan’s accumulated benefit obligation were transferred to a German defined benefit plan sponsored by the Company upon the acquisition of EWT from Siemens. The German entity also sponsors a defined benefit plan for a small group of employees located in France.

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The components of net periodic benefit cost for the plans were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Service cost	$	215	$	287	$	674	$	858
Interest cost	100		81		315		240
Expected return on plan assets	(122)		(88)		(383)		(262)
Amortization of actuarial losses	156		266		491		640
Pension expense for defined benefit plans	$	349	$	546	$	1,097	$	1,476

The components of pension expense, other than the service cost component which is included in General and administrative expense, are included in the line item Other operating expense in the Unaudited Consolidated Statements of Operations.

16. Income Taxes

Year-to-date income tax expense or benefit is the product of the most current projected annual effective tax rate (“PAETR”) and the actual year-to-date pretax income (loss) adjusted for any discrete tax items. The income tax expense or benefit for a particular quarter, except for the first quarter, is the difference between the year-to-date calculation of income tax expense or benefit and the year-to-date calculation for the prior quarter. Items unrelated to current period ordinary income or (loss) are recognized entirely in the period identified as a discrete item of tax.

Annual Effective Tax Rate

The PAETR, which excludes the impact of discrete items, was 23.1% and 19.7% as of the nine months ended June 30, 2022 and 2021, respectively. For the nine months ended June 30, 2022, the PAETR was higher than the U.S. federal statutory rate of 21.0% primarily due to the mix of earnings between countries, most of which have higher statutory rates than the U.S., which was mostly offset by the impact of maintaining a valuation allowance that is provided on U.S. deferred tax assets. The current year PAETR was higher than the prior year’s rate due to an increase in projected pretax book income in countries with higher statutory tax rates.

The Company continues to maintain a full valuation allowance on U.S. federal and state net deferred tax assets (excluding the tax effects of deferred tax liabilities associated with indefinite lived intangibles) for the period ending June 30, 2022 as a result of pretax losses incurred since the Company’s inception in early 2014. The Company believes it is prudent to retain a valuation allowance until a more consistent pattern of earnings is established and net operating loss carryforwards begin to be utilized.

Current and Prior Period Tax Expense

For the three months ended June 30, 2022, the Company recognized income tax expense of $5,027 on pretax income of $22,590. The rate of 22.3% differed from the U.S. statutory rate of 21.0% as the mix of earnings between countries, most of which have higher statutory tax rates than the U.S., was mostly offset by the impact of maintaining a U.S. valuation allowance that is provided on U.S. deferred tax assets.

For the three months ended June 30, 2021, the Company recognized income tax expense of $3,887 on pretax income of $17,086. The rate of 22.7% differed from the U.S. statutory rate of 21.0% principally due to the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets.

For the nine months ended June 30, 2022, the Company recognized income tax expense of $8,896 on pretax income of $39,921. The rate of 22.3% differed from the U.S. statutory rate of 21.0% as the mix of earnings between countries, most of which have higher statutory tax rates than the U.S., was mostly offset by the impact of maintaining a U.S. valuation allowance that is provided on U.S. deferred tax assets.

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For the nine months ended June 30, 2021, the Company recognized income tax expense of $7,672 on pretax income of $32,430. The rate of 23.7% differed from the U.S. statutory rate of 21.0% principally due to the unfavorable impact of discrete items related to an adjustment for prior periods and recording an uncertain tax position related to a tax audit in a foreign jurisdiction which were partially offset by the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets.

At June 30, 2022 and 2021, the Company had gross unrecognized tax benefits of $1,663 and $1,805 respectively.

17. Share-Based Compensation

The Company designs equity compensation plans to attract and retain employees while also aligning employees’ interests with the interests of the Company’s shareholders. In addition, members of the Company’s Board of Directors (the “Board”) participate in equity compensation plans in connection with their service on the Board.

The Company established the Evoqua Water Technologies Corp. Stock Option Plan (the “Stock Option Plan”) on March 6, 2014. The plan allows certain management employees and the Board to purchase shares in the Company. Under the Stock Option Plan, the number of shares available for award was 11,083. As of June 30, 2022, there were approximately 2,177 shares available for future grants, however, the Company does not currently intend to make additional grants under the Stock Option Plan.    

In connection with the IPO, the Board adopted, and the Company’s shareholders approved, the Evoqua Water Technologies Corp. 2017 Equity Incentive Plan (the “Equity Incentive Plan”), under which equity awards may be granted in the form of options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, dividend equivalent rights, share awards, and performance-based awards (including performance share units and performance-based restricted stock).

During the nine months ended June 30, 2022, the Company granted RSUs and performance share units under the Equity Incentive Plan to certain employees of the Company. The final number of performance share units that may be earned is dependent on the Company’s achievement of performance goals related to organic revenue growth dollars and average adjusted EBITDA margin over a three-year measurement period ending September 30, 2024. The final number of performance share units that may be earned is also subject to a total stockholder return (“TSR”) modifier, which operates by increasing or decreasing the total number of shares earned by up to 25% based on the Company’s TSR relative to the TSR of the U.S. constituents of the S&P Global Water Index. In order to receive shares earned at the end of the performance period, the recipient must remain employed by the Company or its subsidiaries through the end of the three-year period (except in the event of retirement, death, disability or, in certain circumstances, related to change in control).

As of June 30, 2022, there were approximately 3,958 shares available for grants under the Equity Incentive Plan.

Outstanding option awards vest ratably at 25% per year, and are exercisable at the time of vesting. The options granted have a ten-year contractual term.

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A summary of the stock option activity as of June 30, 2022 is presented below:

(In thousands, except per share amounts)	Options	Weighted Average Exercise Price/Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 30, 2021	5,090	$	13.87	5.9 years	$	120,611
Granted	2	46.75
Exercised	(529)	10.57
Forfeited	(32)	20.94
Outstanding at June 30, 2022	4,531	$	14.21	5.3 years	$	82,939
Options exercisable at June 30, 2022	3,477	$	11.97	4.5 years	$	71,433
Options vested and expected to vest at June 30, 2022	4,516	$	14.18	5.3 years	$	82,792

The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended June 30, 2022 was $16,282.

A summary of the status of the Company's unvested stock options as of and for the nine months ended June 30, 2022 is presented below.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	1,901	$	6.69
Granted	2	24.22
Vested	(817)	6.54
Forfeited	(32)	6.66
Unvested at end of period	1,054	$	6.82

The total fair value of options vested during the nine months ended June 30, 2022, was $5,346.

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The following is a summary of the RSU activity for the nine months ended June 30, 2022.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Outstanding at September 30, 2021	1,209	$	22.77
Granted	327	44.94
Vested	(504)	22.21
Forfeited	(37)	26.35
Outstanding at June 30, 2022	995	$	30.19
Expected to vest at June 30, 2022	966	$	29.95

The following is a summary of the performance share unit activity for the nine months ended June 30, 2022, assuming target award level.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	469	$	16.92
Granted	124	52.50
Unvested at end of period	593	$	23.39
Expected to vest	551	$	23.28

Expense Measurement and Recognition

The Company recognizes share-based compensation for all currently outstanding awards and, in future periods, will recognize compensation costs for the unvested portion of awards based on grant date fair values. Total share-based compensation expense was $5,818 and $5,526 during the three months ended June 30, 2022 and 2021, respectively, of which $5,750 and $4,228 was non-cash, respectively. Total share-based compensation expense was $17,220 and $11,816 during the nine months ended June 30, 2022 and 2021, respectively, of which $16,339 and $10,461 was non-cash, respectively. The unrecognized compensation expense related to stock options, RSUs, and performance share units (measured at a target award level) was $5,591, $24,133 and $9,905, respectively at June 30, 2022, and is expected to be recognized over a weighted average period of 1.7 years, 1.9 years and 2.0 years, respectively. The Company received $7,921 from the exercise of stock options during the nine months ended June 30, 2022.

Employee Stock Purchase Plan    

Effective October 1, 2018, the Company implemented an employee stock purchase plan (the “ESPP”) which allows employees to purchase shares of the Company’s stock at 85% of the lower of the fair market value on the first or last business day of the applicable six-month offering period. These purchases are offered twice throughout each fiscal year, and are paid by employees through payroll deductions over the respective six month purchase period, at the end of which the stock is transferred to the employees. On December 21, 2018, the Company registered 11,297 shares of common stock, par value $0.01 per share, of which 5,000 are available for future issuance under the ESPP. During the three months ended June 30, 2022 and 2021, the Company incurred compensation expense of $298 and $249, respectively, in salaries and wages with respect to the ESPP, representing the fair value of the discounted price of the shares. During the nine months ended June 30, 2022 and 2021, the Company incurred compensation expense of $717 and $652, respectively. These amounts are included in the total share-based compensation expense above. On October 1, 2021 and April 1, 2022, 60 and 48 shares, respectively, were issued under the ESPP.

18. Concentration of Credit Risk

The Company’s cash and cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Accounts receivable are derived from revenue earned from customers located in the U.S. and internationally and

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generally do not require collateral. The Company’s trade receivables do not represent a significant concentration of credit risk at June 30, 2022 and September 30, 2021 due to the wide variety of customers and markets into which products are sold and their dispersion across geographic areas. The Company does perform ongoing credit evaluations of its customers and maintains an allowance for potential credit losses on trade receivables. As of and for the three and nine months ended June 30, 2022 and 2021, no customer accounted for more than 10% of net sales or net accounts receivable.

The Company operates predominantly in nine countries worldwide and provides a wide range of proven product brands and advanced water and wastewater treatment technologies, mobile and emergency water supply solutions, and service contract options through its Integrated Solutions and Services and Applied Product Technologies segments. The Company is a multi-national business but its sales and operations are primarily in the U.S. Sales to unaffiliated customers are transacted with the Company location that maintains the customer relationship.

19. Commitments and Contingencies

Guarantees

From time to time, the Company is required to provide letters of credit, bank guarantees, or surety bonds in support of its commitments and as part of the terms and conditions on water treatment projects.  In addition, the Company is required to provide letters of credit or surety bonds to the Department of Environmental Protection or equivalent in some states in order to maintain its licenses to handle toxic substances at certain of its water treatment facilities.

These financial instruments typically expire after all Company commitments have been met, a period typically ranging from twelve months to ten years, or more in some circumstances.  The letters of credit, bank guarantees, or surety bonds are arranged through major banks or insurance companies. In the case of surety bonds, the Company generally indemnifies the issuer for all costs incurred if a claim is made against the bond. 

The following summarizes the Company’s outstanding letters of credit and surety bonds as of June 30, 2022 and September 30, 2021, respectively.

	June 30, 2022		September 30, 2021
Revolving credit capacity	$	60,000	$	60,000
Letters of credit outstanding	9,529		10,112
Remaining revolving credit capacity	$	50,471	$	49,888
Surety capacity	$	262,090	$	250,000
Surety issuances	129,021		147,845
Remaining surety available	$	133,069	$	102,155

The longest maturity date of letters of credit and surety bonds in effect as of June 30, 2022 was March 20, 2030.

Litigation

From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation is commenced against it arising from or related to: product liability; personal injury; trademarks, trade secrets, or other intellectual property; shareholder disputes; labor and employee disputes; commercial or contractual disputes; breach of warranty; or environmental matters. Claimed amounts may be substantial but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral awards. While it is not feasible to predict the outcome of these matters with certainty, and some lawsuits, claims, or proceedings may be disposed or decided unfavorably, the Company does not expect that any asserted or un-asserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its results of operations, or financial condition.

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20. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:

	June 30, 2022		September 30, 2021
Salaries, wages, and other benefits	$	67,837	$	79,110
Obligation under operating leases	14,321		13,316
Obligation under finance leases	12,560		12,093
Deferred revenue	11,499		5,241
Third party commissions	10,464		10,031
Taxes, other than income	6,711		4,575
Insurance liabilities	3,466		3,720
Provisions for litigation	1,446		2,938
Severance payments	1,044		304
Fair value of liability derivatives	219		554
Earn-outs related to acquisitions	—		150
Other	32,907		28,335
	$	162,474	$	160,367

21. 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.

The Company has two reportable operating segments, Integrated Solutions and Services and Applied Product Technologies. 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, original equipment manufacturers (“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.

Corporate activities include general corporate expenses, elimination of inter-segment transactions, interest income and expense, and certain other charges. Certain other charges may 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 and certain integration costs), and share-based compensation charges. 

Since certain administrative and other operating expenses and other items 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.

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Reportable operating segment revenue and operating profit for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Total revenue
Integrated Solutions and Services	$	310,431	$	245,414	$	868,506	$	690,370
Applied Product Technologies	166,779		149,434		464,137		419,122
Total revenue	477,210		394,848		1,332,643		1,109,492
Intersegment revenue
Integrated Solutions and Services	13,020		5,727		31,209		11,832
Applied Product Technologies	24,865		19,440		69,113		59,222
Total intersegment revenue	37,885		25,167		100,322		71,054
Revenue to external customers
Integrated Solutions and Services	297,411		239,687		837,297		678,538
Applied Product Technologies	141,914		129,994		395,024		359,900
Total revenue	$	439,325	$	369,681	$	1,232,321	$	1,038,438
Operating profit (loss)
Integrated Solutions and Services	$	39,864	$	37,793	$	113,269	$	94,934
Applied Product Technologies	28,592		22,735		69,412		54,218
Corporate	(37,426)		(32,218)		(117,791)		(88,430)
Total operating profit	31,030		28,310		64,890		60,722
Interest expense	(8,440)		(11,224)		(24,969)		(28,292)
Income before income taxes	22,590		17,086		39,921		32,430
Income tax expense	(5,027)		(3,887)		(8,896)		(7,672)
Net income	$	17,563	$	13,199	$	31,025	$	24,758

	June 30, 2022		September 30, 2021
Assets
Integrated Solutions and Services	$	1,127,646	$	887,265
Applied Product Technologies	664,946		656,362
Corporate	379,026		325,264
Total assets	$	2,171,618	$	1,868,891

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22. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings from continuing operations per common share (in thousands, except per share amounts):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp.	$	17,563	$	13,155	$	30,880	$	24,624
Denominator:
Denominator for basic net income per common share—weighted average shares	121,338		119,015		120,970		119,015
Effect of dilutive securities:
Share‑based compensation	3,512		3,245		3,927		3,312
Denominator for diluted net income per common share—adjusted weighted average shares	124,850		122,260		124,897		122,327
Basic earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.26	$	0.21
Diluted earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.25	$	0.20

23. Subsequent Events

On July 1, 2022, the Company completed the acquisition of Smith Engineering, Inc. (“Smith Engineering”) for $18,878 cash paid at closing. Smith Engineering is a leader in the design, manufacturing, and service of custom high purity water treatment equipment serving the biotech/pharmaceutical, data center, food and beverage, healthcare, medical device, and microelectronics markets. With over 1,200 customers in North America, Smith Engineering offers a variety of water treatment products and services, including filtration, UV, reverse osmosis, and deionization.

On July 15, 2022, the Company completed the acquisition of Epicor, Inc. (“Epicor”) for $4,269 cash paid at closing. Epicor has supplied specialty resins for power steam system treatment for fifty years. The resins provide a cost-effective and efficient method for creating and maintaining a continual supply of ultra-pure water for power plants.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the Unaudited Consolidated Financial Statements, including the notes, included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Report”), and with our audited consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021 (the “2021 Annual Report”). You should review the disclosures in Part I, Item 1A, “Risk Factors” in the 2021 Annual Report, as well as any cautionary language in this Report, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless otherwise indicated or the context otherwise requires, all references to “the Company,” “Evoqua,” “Evoqua Water Technologies Corp.,” “we,” “us,” “our” and similar terms refer to Evoqua Water Technologies Corp., together with its consolidated subsidiaries. Unless otherwise specified, all dollar amounts in this section are referred to in millions.

Overview

We are a leading provider of mission-critical water and wastewater treatment solutions, offering a broad portfolio of products, services, and expertise to support customers across various end markets. We are headquartered in Pittsburgh, Pennsylvania, with locations across nine countries. We have a comprehensive portfolio of differentiated, proprietary technologies offered under market‑leading and well‑established brands. Our core technologies are primarily focused on removing impurities from water, rather than neutralizing them through the addition of chemicals.

Our solutions are designed to provide our customers with the quantity and quality of water necessary to meet their unique specifications. We enable our customers to achieve lower costs through greater uptime, throughput and efficiency in their operations while supporting their regulatory compliance and environmental requirements. We deliver and maintain these mission critical solutions through our extensive North American service network, and we sell our products and technologies internationally through direct and indirect sales channels. We have worked to protect water, the environment, and our employees for more than 100 years. As a result, we have earned a reputation for quality, safety, and reliability around the world. Our employees are united by a common purpose: Transforming water. Enriching life.®

Our vision “to be the world’s first choice for water solutions” and our values of “integrity, customers, sustainable, and performance” foster a culture that is focused on establishing a workforce that is enabled, empowered and accountable, creating a highly dynamic work environment.

We serve our customers through the following two segments:

•Integrated Solutions and Services segment, which provides application-specific solutions and full lifecycle services for critical water and wastewater applications across numerous end markets, including outsourced water service contracts, capital systems, and related recurring aftermarket services, parts and consumables, and emergency services to enable recycle and reuse, improve operational reliability and performance, and promote environmental compliance; and

•Applied Product Technologies segment, which provides highly differentiated and scalable water and wastewater products and technologies as stand-alone offerings or components in integrated solutions to a diverse set of system integrators and end-users globally.

Our segments draw from the same reservoir of leading technologies, shared manufacturing infrastructure, common business processes, and corporate philosophies. The key factors used to identify these reportable operating segments are the organization and alignment of our internal operations, the nature of the products and services and customer type.

Recent Developments, Key Factors and Trends Affecting Our Business and Financial Statements

Our 2021 Annual Report includes a discussion of various key factors and trends that we believe have affected or may affect our operating results. The following discussion highlights recent developments, as well as significant changes in these key factors and trends.

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Inflation, material availability and labor shortages. Material, freight, and labor inflation resulted in increased costs in the first three quarters of fiscal 2022, and we expect this trend will continue throughout fiscal 2022 and into fiscal 2023. Although we have offset a portion of these increased costs through price increases and operational efficiencies to date, our margin percentage has been negatively impacted. There can be no assurance that we will be able to continue to offset all or any portion of these increased costs. If we are unable to manage commodity fluctuations through pricing actions, cost savings projects, and sourcing decisions as well as through consistent productivity improvements, it may adversely impact our gross profit and gross margin in future periods. Additionally, supply chain disruptions and labor shortages have restricted and could further restrict availability of certain commodities and materials, which may result in delays in our execution of projects in fiscal 2022 and negatively impact revenues. Tight labor markets have resulted in longer times to fill open positions and labor inflation. Continued delays in filling open positions, particularly among our service technician population, could impact our ability to provide timely service to our customers. Although these factors did not have a material adverse effect on our results of operations for the three and nine months ended June 30, 2022, if sustained, they could have a material adverse effect on our results of operations going forward.

Impact of the COVID-19 pandemic. We continue to monitor the ongoing effects of the COVID-19 pandemic, particularly as shutdowns and restrictions in parts of China have continued in response to the spread of COVID-19 variants. These shutdowns and restrictions did not have a material adverse effect on our operations or financial results for the three and nine months ended June 30, 2022. However, if the duration of these shutdowns and restrictions extends, or if similar shutdowns and restrictions are imposed in other regions, it could impact our sales into those regions and our ability to source materials from those regions.

Although the pandemic negatively impacted sales volume across our business in earlier periods, due primarily to customer site access restrictions, temporary customer site closures, and temporary delays in annual maintenance activities by customers in certain end markets, these factors did not have a material adverse effect on our results of operations for the three and nine months ended June 30, 2022. Vaccination requirements imposed by certain of our customers to allow our employees to enter their sites may increase our costs or delay our performance of services for our customers, however this has not materially impacted our results to date.

For more information regarding factors and events that may impact our business, results of operations and financial condition as a result of the COVID-19 pandemic, see “Risk Factors-The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our business, financial condition, results of operations, and prospects” included in Part I, Item 1A, “Risk Factors” in the 2021 Annual Report.

Russia-Ukraine war. We have no operations in Russia or Ukraine, and our sales into these regions are minimal. However, the conflict in Ukraine has exacerbated the material inflation and availability challenges described above, particularly with respect to the impact it has had on energy and fuel prices and the price of steel and other precious metals that we procure in our supply chain. Although these factors did not have a material adverse effect on our results of operations for the three and nine months ended June 30, 2022, we expect the inflationary impact on energy, fuel and steel prices to continue throughout fiscal 2022. If these factors are sustained, or if the duration of the conflict is extended or the conflict spreads into a larger geographic portion of Europe, our results of operations in future periods could be materially and adversely impacted.

Acquisitions and divestitures. On December 20, 2021, the Company and its indirect wholly-owned subsidiaries Evoqua Water Technologies LLC (“EWT LLC”) and Evoqua Water Technologies Ltd. (together with EWT LLC, the “Buyer”), entered into an Asset Purchase Agreement (the “Agreement”) with Cantel Medical LLC, Mar Cor Purification, Inc., and certain of their affiliates (collectively, the “Sellers”), each wholly-owned subsidiaries of Steris plc, pursuant to which the Buyer agreed to acquire certain assets of the Sellers and assume certain liabilities of the Sellers that are owned or used or arise in connection with the global operation of the Sellers’ renal business (the “Mar Cor Business”) for an aggregate purchase price of $196.3 million in cash at closing (the “Purchase Price”), subject to customary adjustments, including for working capital (the “Transaction”). On January 3, 2022, we completed the Transaction to acquire the Mar Cor Business for approximately $195.0 million paid in cash at closing, following adjustments. We utilized cash on hand and borrowed an additional $160.0 million under our 2021 Revolving Credit Facility (as defined below) to fund the Transaction. The Purchase Price includes a $12.3 million earn out, which is being held in escrow and will be paid, pro rata, to the Sellers if the Mar Cor Business meets certain sales performance goals (the “Earn Out”). Any portion of the Earn Out not paid to the Sellers during the first year following closing of the Transaction will be returned to us. The Mar

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Cor Business is a leading manufacturer and servicer of medical water, commercial and industrial solutions in North America. Headquartered in Plymouth, Minnesota, the Mar Cor Business has 27 service and regeneration facilities in the U.S. and Canada. The Mar Cor Business offers significant technical expertise in designing, building, and servicing high-purity water treatment systems. The addition of this business expands our service footprint in North America, furthering our reach into the healthcare vertical market. During the nine months ended June 30, 2022, we incurred approximately $3.2 million in acquisition costs, which are included in General and administrative expense on the Unaudited Consolidated Statements of Operations. Additionally, we expect to incur between $18.0 million to $20.0 million in one-time integration costs within the following 18 to 24 months. The Mar Cor Business is included within the Integrated Solutions and Services segment.

During the nine months ended June 30, 2022, we completed the divestiture of certain resin regeneration assets in Germany (the “Germany Regen Business”) for approximately $0.4 million in cash at closing, resulting in a gain of $0.2 million recognized on the sale. The Germany Regen Business was a part of the Applied Product Technologies segment.

On April 1, 2022, we acquired the remaining 32% equity interest in Frontier Water Systems, LLC (“Frontier”) for an aggregate purchase price of approximately $10.4 million, making Frontier a wholly-owned subsidiary of the Company. This followed our initial acquisition of a 60% equity interest in Frontier in October 2019 and our acquisition of an additional 8% equity interest in Frontier in April 2021. San Diego-based Frontier is a leading supplier of engineered equipment packages for high-rate treatment of selenium, nitrate, and metals in water and wastewater. The business adds to Evoqua’s portfolio of advanced wastewater treatment technologies and is part of our Integrated Solutions and Services segment.

Also on April 1, 2022, we acquired the remaining 50% partnership interest in Treated Water Outsourcing, a joint venture between the Company and Nalco Water, an Ecolab company (“Nalco”), from Nalco for an aggregate purchase price of approximately $1.1 million.

On July 1, 2022, we completed the acquisition of Smith Engineering, Inc. (“Smith Engineering”) for approximately $18.9 million cash paid at closing. Smith Engineering is a leader in the design, manufacturing, and service of custom high purity water treatment equipment serving the biotech/pharmaceutical, data center, food and beverage, healthcare, medical device, and microelectronics markets. With over 1,200 customers in North America, Smith Engineering offers a variety of water treatment products and services, including filtration, UV, reverse osmosis, and deionization.

On July 15, 2022, we completed the acquisition of Epicor, Inc. (“Epicor”) for $4.3 million cash paid at closing. Epicor has supplied specialty resins for power steam system treatment for fifty years. The resins provide a cost-effective and efficient method for creating and maintaining a continual supply of ultra-pure water for power plants.

We continue to actively evaluate acquisition opportunities that are consistent with our business strategy. We maintain a robust pipeline of potential acquisition targets, developed by our management team as well as various outside industry experts and consultants.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our consolidated business are revenue, gross profit, gross margin, and net income (loss). Management utilizes these financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) when reviewing the Company’s performance and making financial, operational, and strategic decisions, and believes they are useful metrics for investors that help with performance comparability period over period. In addition, we consider certain non-GAAP financial measures such as adjusted EBITDA and organic revenue, as described more fully below. We evaluate our business segments’ operating results based on revenue, income from operations (“operating profit”), and adjusted EBITDA on a segment basis. We believe these financial measures are helpful in understanding and evaluating the segments’ core operating results and facilitates comparison of our performance on a consistent basis period over period.

Revenue and Organic Revenue

Our revenue is a function of sales volumes and selling prices. We report revenue by segment and by source which includes revenue from product sales (capital and aftermarket) and revenue from service. Revenue is used by management

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to evaluate the performance of our business. Organic revenue, which is a non-GAAP financial measure, is defined as revenue excluding the impact of foreign currency translation and inorganic revenue. Inorganic revenue represents the impact from acquisitions and divestitures during the first 12 months following the closing of the acquisition or divestiture. Divestitures include sales of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. We exclude the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. We exclude the effect of acquisitions and divestitures during the first 12 months following the closing of the acquisition or divestiture because they can obscure underlying business trends and make comparisons of long-term performance difficult between the Company and its peers due to the varying nature, size, and number of transactions from period to period. Management believes that reporting organic revenue provides useful information to investors by helping identify underlying growth trends in our core business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. See “Non-GAAP Reconciliations” in this Item 2 for a reconciliation of organic revenue to revenue.

EBITDA and Adjusted EBITDA

EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) before interest expense, income tax benefit (expense), and depreciation and amortization. Adjusted EBITDA, which is a non-GAAP financial measure, is one of the primary metrics used by management to evaluate the strength and financial performance of our core business. Adjusted EBITDA is defined as net income (loss) before interest expense, income tax benefit (expense), and depreciation and amortization, adjusted for the impact of certain other items, including restructuring and related business transformation costs, share-based compensation, transaction costs, and other gains, losses, and expenses that we believe do not directly reflect our underlying business operations. We present adjusted EBITDA because we believe it is frequently used by analysts, investors, and other interested parties to evaluate and compare operating performance and value companies within our industry. Further, we believe it is helpful in highlighting trends in our operating results and provides greater clarity and comparability period over period to management and our investors regarding the operational impact of long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. In addition, adjusted EBITDA highlights true business performance by removing the impact of certain items that management believes do not directly reflect our underlying operations and provides investors with greater visibility into the ongoing drivers of our business performance.

Management uses adjusted EBITDA to supplement GAAP measures of performance as follows:

•to assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance;

•in our management incentive compensation, which is based in part on components of adjusted EBITDA;

•in certain calculations under our senior secured credit facilities, which use components of adjusted EBITDA;

•to evaluate the effectiveness of our business strategies;

•to make budgeting decisions; and

•to compare our performance against that of other peer companies using similar measures.

In addition to the above, our chief operating decision maker uses adjusted EBITDA of each reportable operating segment as a supplement to segment income from operations and segment revenue to evaluate the operating performance of such segments. Adjusted EBITDA on a segment basis is defined as earnings before depreciation and amortization, adjusted for the impact of certain other items that have been reflected at the segment level. Adjusted EBITDA of the reportable operating segments do not include certain charges that are presented within corporate activities. These charges include certain restructuring and other business transformation charges that have been incurred to align and reposition the Company to the current reporting structure, acquisition related costs (including transaction costs and integration costs) and share-based compensation charges.

EBITDA and adjusted EBITDA should not be considered substitutes for, or superior to, financial measures prepared in accordance with GAAP. The financial results prepared in accordance with GAAP and the reconciliations from these

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results should be carefully evaluated. See “Non-GAAP Reconciliations” in this Item 2 for a reconciliation of EBITDA and adjusted EBITDA to net income. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, other companies in our industry or across different industries may calculate adjusted EBITDA differently.

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Results of Operations

The following table summarizes key components of our results of operations for the periods indicated:

	Three Months Ended June 30,
	2022				2021
(In millions, except per share amounts)			% of Revenue				% of Revenue		% Variance
Revenue from product sales and services	$	439.3	100.0	%	$	369.7	100.0	%	18.8	%
Gross profit	$	136.1	31.0	%	$	117.0	31.6	%	16.3	%
Total operating expenses	$	(105.9)	(24.1)	%	$	(90.1)	(24.4)	%	17.5	%
Other operating income, net	$	0.8	0.2	%	$	1.4	0.4	%	(42.9)	%
Interest expense	$	(8.4)	(1.9)	%	$	(11.2)	(3.0)	%	(25.0)	%
Income before income taxes	$	22.6	5.1	%	$	17.1	4.6	%	32.2	%
Income tax expense	$	(5.0)	(1.1)	%	$	(3.9)	(1.1)	%	28.2	%
Net income	$	17.6	4.0	%	$	13.2	3.6	%	33.3	%
Net income attributable to non‑controlling interest	$	—	—	%	$	—	—	%	n/a
Net income attributable to Evoqua Water Technologies Corp.	$	17.6	4.0	%	$	13.2	3.6	%	33.3	%
Weighted average shares outstanding
Basic	121.3				119.0
Diluted	124.9				122.3
Earnings per share
Basic	$	0.14			$	0.11
Diluted	$	0.14			$	0.11
Other financial data:
Adjusted EBITDA(1)	$	77.0	17.5	%	$	66.2	17.9	%	16.3	%
	Nine Months Ended June 30,
	2022				2021
(In millions, except per share amounts)			% of Revenue				% of Revenue		% Variance
Revenue from product sales and services	$	1,232.3	100.0	%	$	1,038.4	100.0	%	18.7	%
Gross profit	$	375.5	30.5	%	$	318.3	30.7	%	18.0	%
Total operating expenses	$	(314.2)	(25.5)	%	$	(259.6)	(25.0)	%	21.0	%
Other operating income, net	$	3.6	0.3	%	$	2.0	0.2	%	80.0	%
Interest expense	$	(25.0)	(2.0)	%	$	(28.3)	(2.7)	%	(11.7)	%
Income before income taxes	$	39.9	3.2	%	$	32.4	3.1	%	23.1	%
Income tax expense	$	(8.9)	(0.7)	%	$	(7.7)	(0.7)	%	15.6	%
Net income	$	31.0	2.5	%	$	24.7	2.4	%	25.5	%
Net income attributable to non‑controlling interest	$	0.1	—	%	$	0.1	—	%	—	%
Net income attributable to Evoqua Water Technologies Corp.	$	30.9	2.5	%	$	24.6	2.4	%	25.6	%
Weighted average shares outstanding
Basic	121.0				119.0
Diluted	124.9				122.3
Earnings per share
Basic	$	0.26			$	0.21
Diluted	$	0.25			$	0.20
Other financial data:
Adjusted EBITDA(1)	$	204.5	16.6	%	$	169.0	16.3	%	21.0	%

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(1)Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation to net income (loss), its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

Consolidated Results for the Three Months Ended June 30, 2022 and 2021

Revenue-Revenue increased $69.6 million, or 18.8%, to $439.3 million in the three months ended June 30, 2022, from $369.7 million in the three months ended June 30, 2021. Revenue from product sales increased $49.6 million, or 22.7%, to $268.0 million in the three months ended June 30, 2022, from $218.4 million in the three months ended June 30, 2021. Revenue from services increased $20.0 million, or 13.2%, to $171.3 million in the three months ended June 30, 2022, from $151.3 million in the three months ended June 30, 2021.

The following tables provide the change in revenue by offering and the change in revenue by driver during the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	268.0	61.0	%	$	218.4	59.1	%	$	49.6	22.7	%
Capital	171.4		39.0	%	156.0		42.2	%	15.4		9.9	%
Aftermarket	96.6		22.0	%	62.4		16.9	%	34.2		54.8	%
Revenue from services	171.3		39.0	%	151.3		40.9	%	20.0		13.2	%
	$	439.3	100.0	%	$	369.7	100.0	%	$	69.6	18.8	%

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic(1)	$	403.8	91.9	%	$	369.7	100.0	%	$	34.1	9.2	%
Inorganic	40.8		9.3	%	—		—	%	40.8		11.0	%
Foreign currency translation	(5.3)		(1.2)	%	n/a		n/a		(5.3)		(1.4)	%
	$	439.3	100.0	%	$	369.7	100.0	%	$	69.6	18.8	%

(1)Organic revenue is a non-GAAP financial measure. For a reconciliation to total revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

The increase in organic revenue was driven by favorable price realization and higher volume for products and services across most product lines and all regions.

Revenue in future periods could be negatively impacted by commodity and material availability constraints caused by global supply chain disruptions, skilled labor shortages, and the timing of projects.

Cost of sales and gross margin-Total gross margin decreased slightly to 31.0% in the three months ended June 30, 2022, from 31.6% in the three months ended June 30, 2021.

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The following table provides the change in cost of product sales and cost of services, respectively, along with related gross margins:

	Three Months Ended June 30,
	2022				2021
(In millions)			Gross Margin				Gross Margin
Cost of product sales	$	(185.7)	30.7	%	$	(152.6)	30.1	%
Cost of services	(117.5)		31.4	%	(100.1)		33.8	%
	$	(303.2)	31.0	%	$	(252.7)	31.6	%

Gross margin from product sales increased by 60 basis points (“bps”) to 30.7% in the three months ended June 30, 2022, from 30.1% in the three months ended June 30, 2021. This increase was driven by favorable volume, mix, and positive price realization, which was partially offset by labor, material, and freight inflation.

Gross margin from services decreased by 240 bps to 31.4% in the three months ended June 30, 2022, from 33.8% in the three months ended June 30, 2021. This decrease was driven by increased labor costs and resource constraints.

We expect continued pressure on gross margin in future periods due to material, freight and labor inflation. Although we expect to continue to partially offset those increasing costs with positive price realization, there can be no assurance that we will be able to do so.

Operating expenses-Operating expenses increased $15.8 million, or 17.5%, to $105.9 million in the three months ended June 30, 2022, from $90.1 million in the three months ended June 30, 2021. Operating expenses are comprised of the following:

	Three Months Ended June 30,
	2022				2021
(In millions)			% of Revenue				% of Revenue		% Variance
General and administrative expense	$	(61.4)	(14.0)	%	$	(50.8)	(13.7)	%	20.9	%
Sales and marketing expense	(40.6)		(9.2)	%	(35.9)		(9.7)	%	13.1	%
Research and development expense	(3.9)		(0.9)	%	(3.4)		(0.9)	%	14.7	%
Total operating expenses	$	(105.9)	(24.1)	%	$	(90.1)	(24.4)	%	17.5	%

The increase period over period in operating expenses was primarily due to foreign currency translation losses in the current period, compared to foreign currency translation gains in the prior period, most of which is related to intercompany loans. The increase was also due to increased employee related expenses as well as increased operating and amortization expense due to the acquisition of the Mar Cor Business in the current year. In addition, there were increased consulting, information technology, and travel expenses compared to the prior period. The above increases were partially offset by a decrease in external legal fees compared to the prior period, as well as certain benefits in the current period related to the acquisition of the Mar Cor Business, which we expect to be non-recurring in nature.

Fluctuations in foreign currency translation and inflation could impact operating expenses in future periods.

Other operating income, net-Other operating income, net, decreased $0.6 million to $0.8 million in the three months ended June 30, 2022, from $1.4 million in the three months ended June 30, 2021. This decrease was driven by COVID-19 pandemic subsidies received from the Canadian government in the prior period, which did not reoccur in the current period. This was partially offset by an increase in income from the disposal of fixed assets compared to the prior period.

Interest expense-Interest expense decreased $2.8 million, or 25.0%, to $8.4 million in the three months ended June 30, 2022, from $11.2 million in the three months ended June 30, 2021. The decrease in interest expense was primarily driven by $3.1 million of fees incurred in the prior period as a result of the April 2021 refinancing of our senior credit facility, which also resulted in the write off of $1.3 million of deferred financing fees in the prior period, which did not reoccur in

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the current period. This decrease was partially offset by an increase in interest expense associated with higher outstanding debt.

Income tax expense-Income tax expense increased to $5.0 million in the three months ended June 30, 2022, as compared to income tax expense of $3.9 million in the three months ended June 30, 2021. The increase in tax expense was primarily due to higher earnings in non-U.S. tax jurisdictions, which generally increases tax expense.

Net income-Net income increased $4.4 million, or 33.3%, to $17.6 million in the three months ended June 30, 2022, from $13.2 million in the three months ended June 30, 2021, as a result of the variances noted above.

Adjusted EBITDA-Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA for the three months ended June 30, 2022 increased by $10.8 million, or 16.3%, to $77.0 million, as compared to $66.2 million for the three months ended June 30, 2021, primarily driven by sales volume, favorable price realization, and mix, which was partially offset by inflationary costs. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

Segment Results

	Three Months Ended June 30,
	2022				2021
(In millions)			% of Total				% of Total		% Variance
Revenue
Integrated Solutions and Services	$	297.4	67.7	%	$	239.7	64.8	%	24.1	%
Applied Product Technologies	141.9		32.3	%	130.0		35.2	%	9.2	%
Total Consolidated	$	439.3	100.0	%	$	369.7	100.0	%	18.8	%
Operating profit (loss)
Integrated Solutions and Services	$	39.9	128.7	%	$	37.8	133.6	%	5.6	%
Applied Product Technologies	28.6		92.3	%	22.7		80.2	%	26.0	%
Corporate	(37.5)		(121.0)	%	(32.2)		(113.8)	%	16.5	%
Total Consolidated	$	31.0	100.0	%	$	28.3	100.0	%	9.5	%
Adjusted EBITDA(1)
Integrated Solutions and Services	$	64.1	83.2	%	$	56.3	85.0	%	13.9	%
Applied Product Technologies	32.8		42.6	%	28.4		42.9	%	15.5	%
Corporate	(19.9)		(25.8)	%	(18.5)		(27.9)	%	7.6	%
Total Consolidated	$	77.0	100.0	%	$	66.2	100.0	%	16.3	%

(1)Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation to segment operating profit (loss), its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

Integrated Solutions and Services

Revenue in the Integrated Solutions and Services segment increased $57.7 million, or 24.1%, to $297.4 million in the three months ended June 30, 2022, from $239.7 million in the three months ended June 30, 2021.

45

The following tables provide the change in revenue by offering and the change in revenue by driver during the three months ended June 30, 2022 and 2021 for the Integrated Solutions and Services segment:

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	131.5	44.2	%	$	95.2	39.7	%	$	36.3	38.1	%
Capital	$	72.5	24.4	%	$	63.3	26.4	%	$	9.2	14.5	%
Aftermarket	59.0		19.8	%	31.9		13.3	%	27.1		85.0	%
Revenue from services	165.9		55.8	%	144.5		60.3	%	21.4		14.8	%
	$	297.4	100.0	%	$	239.7	100.0	%	$	57.7	24.1	%

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic(1)	$	257.2	86.5	%	$	239.7	100.0	%	$	17.5	7.3	%
Inorganic	40.8		13.7	%	—		—	%	40.8		17.0	%
Foreign currency translation	(0.6)		(0.2)	%	n/a		n/a		(0.6)		(0.2)	%
	$	297.4	100.0	%	$	239.7	100.0	%	$	57.7	24.1	%

(1)Segment organic revenue is a non-GAAP financial measure. For a reconciliation to total segment revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

The increase in organic revenue was driven by favorable price realization and higher sales volume, primarily related to service and aftermarket revenue across most end markets which offset a slight decline in capital revenue. The decline in capital revenue was related to the timing of projects in the chemical processing end market, which was partially offset by increases in microelectronics and life sciences end markets.

Operating profit in the Integrated Solutions and Services segment increased $2.1 million, or 5.6%, to $39.9 million in the three months ended June 30, 2022, from $37.8 million in the three months ended June 30, 2021.

Operating profit was favorably impacted by the acquisition of the Mar Cor Business, as well as higher organic sales volume and favorable price realization. These increases were partially offset by operational variances, including labor, material, and freight inflation and availability, as well as COVID-19 pandemic subsidies received from the Canadian government in the prior period, which did not reoccur in the current period.

46

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA in the Integrated Solutions and Services segment increased $7.8 million, or 13.9%, to $64.1 million in the three months ended June 30, 2022, compared to $56.3 million in the three months ended June 30, 2021. The increase was driven by the same factors that impacted operating profit, other than the change in depreciation and amortization, and also excludes restructuring and other non-recurring activity. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

Applied Product Technologies

Revenue in the Applied Product Technologies segment increased $11.9 million, or 9.2%, to $141.9 million in the three months ended June 30, 2022, from $130.0 million in the three months ended June 30, 2021.

The following tables provide the change in revenue by offering and the change in revenue by driver during the three months ended June 30, 2022 and 2021 for the Applied Product Technologies segment:

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	136.5	96.2	%	$	123.2	94.8	%	$	13.3	10.8	%
Capital	98.9		69.7	%	92.7		71.3	%	6.2		6.7	%
Aftermarket	37.6		26.5	%	30.5		23.5	%	7.1		23.3	%
Revenue from services	5.4		3.8	%	6.8		5.2	%	(1.4)		(20.6)	%
	$	141.9	100.0	%	$	130.0	100.0	%	$	11.9	9.2	%

	Three Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic(1)	$	146.6	103.3	%	$	130.0	100.0	%	$	16.6	12.8	%
Inorganic	—		—	%	—		—	%	—		—	%
Foreign currency translation	(4.7)		(3.3)	%	n/a		n/a		(4.7)		(3.6)	%
	$	141.9	100.0	%	$	130.0	100.0	%	$	11.9	9.2	%

(1)Segment organic revenue is a non-GAAP financial measure. For a reconciliation to total segment revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

The increase in organic revenue was driven by strong sales volume and price realization across all regions and most end markets.

47

Operating profit in the Applied Product Technologies segment increased $5.9 million, or 26.0%, to $28.6 million in the three months ended June 30, 2022, from $22.7 million in the three months ended June 30, 2021.

The increase in operating profit was primarily due to favorable sales volume, mix, and price realization across multiple product lines and regions, which were partially offset by unfavorable operational variances, including labor, material, and freight inflation and availability.

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA in the Applied Product Technologies segment increased $4.4 million, or 15.5%, to $32.8 million in the three months ended June 30, 2022, compared to $28.4 million in the three months ended June 30, 2021. The increase was driven by the same factors that impacted operating profit, other than the change in depreciation and amortization, and also excludes restructuring and other non-recurring activity. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

Corporate

Operating loss in Corporate increased $5.3 million, or 16.5%, to $37.5 million in the three months ended June 30, 2022, from $32.2 million in the three months ended June 30, 2021. The increase was primarily due to foreign currency translation losses in the current period, compared to foreign currency translation gains in the prior period, most of which is related to intercompany loans. Additionally, there were increased employment expenses, including share-based compensation. These were partially offset by lower costs associated with legal matters in the current period.

Consolidated Results for the Nine Months Ended June 30, 2022 and 2021

Revenue-Revenue increased $193.9 million, or 18.7%, to $1,232.3 million in the nine months ended June 30, 2022, from $1,038.4 million in the nine months ended June 30, 2021. Revenue from product sales increased $139.4 million, or 23.2%, to $740.3 million in the nine months ended June 30, 2022, from $600.9 million in the nine months ended June 30, 2021. Revenue from services increased $54.5 million, or 12.5%, to $492.0 million in the nine months ended June 30, 2022, from $437.5 million in the nine months ended June 30, 2021.

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The following tables provide the change in revenue by offering and the change in revenue by driver during the nine months ended June 30, 2022 and 2021:

	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	740.3	60.1	%	$	600.9	57.9	%	$	139.4	23.2	%
Capital	$	484.8	39.3	%	$	425.9	41.0	%	$	58.9	13.8	%
Aftermarket	255.5		20.7	%	175.0		16.9	%	80.5		46.0	%
Revenue from services	492.0		39.9	%	437.5		42.1	%	54.5		12.5	%
	$	1,232.3	100.0	%	$	1,038.4	100.0	%	$	193.9	18.7	%

	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic(1)	$	1,150.0	93.3	%	$	1,037.6	99.9	%	$	112.4	10.8	%
Inorganic	88.7		7.2	%	0.8		0.1	%	87.9		8.5	%
Foreign currency translation	(6.4)		(0.5)	%	n/a		n/a		(6.4)		(0.6)	%
	$	1,232.3	100.0	%	$	1,038.4	100.0	%	$	193.9	18.7	%

(1)Organic revenue is a non-GAAP financial measure. For a reconciliation to total revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

The increase in organic revenue was driven by higher sales volume across most product lines and regions, as well as favorable price realization.

Cost of sales and gross margin-Total gross margin decreased to 30.5% in the nine months ended June 30, 2022, from 30.7% in the nine months ended June 30, 2021.

The following table provides the change in cost of product sales and cost of services, respectively, along with related gross margins:

	Nine Months Ended June 30,
	2022				2021
(In millions)			Gross Margin				Gross Margin
Cost of product sales	$	(524.9)	29.1	%	$	(428.2)	28.7	%
Cost of services	(331.9)		32.5	%	(291.9)		33.3	%
	$	(856.8)	30.5	%	$	(720.1)	30.7	%

Gross margin from product sales increased by 40 bps to 29.1% in the nine months ended June 30, 2022, from 28.7% in the nine months ended June 30, 2021. The increase in gross margin was primarily driven by favorable price realization and product mix. These factors were partially offset by labor, material and freight inflation.

Gross margin from services decreased by 80 bps to 32.5% in the nine months ended June 30, 2022, from 33.3% in the nine months ended June 30, 2021. This decrease was driven by increased labor costs and resource constraints.

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Operating expenses-Operating expenses increased $54.6 million, or 21.0%, to $314.2 million in the nine months ended June 30, 2022, from $259.6 million in the nine months ended June 30, 2021. Operating expenses are comprised of the following:

	Nine Months Ended June 30,
	2022				2021
(In millions)			% of Revenue				% of Revenue		% Variance
General and administrative expense	$	(186.2)	(15.1)	%	$	(146.1)	(14.1)	%	27.4	%
Sales and marketing expense	(116.9)		(9.5)	%	(103.6)		(10.0)	%	12.8	%
Research and development expense	(11.1)		(0.9)	%	(9.9)		(1.0)	%	12.1	%
Total operating expenses	$	(314.2)	(25.5)	%	$	(259.6)	(25.0)	%	21.0	%

The increase period over period in operating expenses was primarily due to higher employee related expenses associated with labor inflation. Foreign currency translation losses in the current period, compared to foreign currency translation gains in the prior period, most of which is related to intercompany loans, also contributed to this increase. In addition, there were increased consulting and travel expenses, and increased amortization and operating expense due to acquisitions in the current period compared to the prior period. The above increases were partially offset by a decrease in external legal fees compared to the prior period, as well as a benefit in the current period related to changes in the estimate of the Mar Cor Business achieving the earn-out target.

Fluctuations in foreign currency translation and inflation could impact operating expenses in future periods.

Other operating income, net-Other operating income, net, increased $1.6 million to $3.6 million in the nine months ended June 30, 2022, from $2.0 million in the nine months ended June 30, 2021. This increase was driven by income from precious metal sales, mainly from scrapped anodes in China, as well as gains on the disposal of fixed assets compared to the prior period. Additionally, we received a refund of certain taxes paid from the Chinese government in the current period, which partially offset COVID-19 pandemic subsidies received from the Canadian government in the prior period, which did not reoccur in the current period.

Interest expense-Interest expense decreased $3.3 million, or 11.7%, to $25.0 million in the nine months ended June 30, 2022, from $28.3 million in the nine months ended June 30, 2021. The decrease in interest expense was primarily driven by a $100.0 million debt prepayment in conjunction with the April 2021 refinancing of our senior credit facility, as well as a reduction in the interest rate spread and LIBOR year over year. As a result of the April 2021 refinancing, an additional $3.1 million of fees and a write off of $1.3 million of deferred financing fees were incurred in the prior period. This decrease was partially offset by a fair value increase of $2.1 million in the purchase right liability to acquire the remaining equity interest of Frontier in the current period, as well as an increase in interest expense associated with higher outstanding debt.

Income tax expense-Income tax expense increased $1.2 million to $8.9 million in the nine months ended June 30, 2022, from $7.7 million in the nine months ended June 30, 2021. The increase in tax expense was primarily due to higher earnings in non-U.S. tax jurisdictions, which generally increases tax expense, partially offset by discrete tax expense in the prior year that did not reoccur in the current year.

Net income-Net income increased $6.3 million, or 25.5%, to $31.0 million in the nine months ended June 30, 2022, from $24.7 million in the nine months ended June 30, 2021, as a result of the variances noted above.

Adjusted EBITDA-Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA for the nine months ended June 30, 2022 increased by $35.5 million, or 21.0%, to $204.5 million, as compared to $169.0 million for the nine months ended June 30, 2021, primarily driven by sales volume and related gross profit. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

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Segment Results

	Nine Months Ended June 30,
	2022				2021
(In millions)			% of Total				% of Total		% Variance
Revenue
Integrated Solutions and Services	$	837.3	67.9	%	$	678.5	65.3	%	23.4	%
Applied Product Technologies	395.0		32.1	%	359.9		34.7	%	9.8	%
Total Consolidated	$	1,232.3	100.0	%	$	1,038.4	100.0	%	18.7	%
Operating profit (loss)
Integrated Solutions and Services	$	113.3	174.6	%	$	94.9	156.3	%	19.4	%
Applied Product Technologies	69.4		106.9	%	54.2		89.3	%	28.0	%
Corporate	(117.8)		(181.5)	%	(88.4)		(145.6)	%	33.3	%
Total Consolidated	$	64.9	100.0	%	$	60.7	100.0	%	6.9	%
Adjusted EBITDA(1)
Integrated Solutions and Services	$	181.4	88.7	%	$	148.8	88.0	%	21.9	%
Applied Product Technologies	82.0		40.1	%	72.6		43.0	%	12.9	%
Corporate	(58.9)		(28.8)	%	(52.4)		(31.0)	%	12.4	%
Total Consolidated	$	204.5	100.0	%	$	169.0	100.0	%	21.0	%

(1)Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation to segment operating profit (loss), its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

Integrated Solutions and Services

Revenue in the Integrated Solutions and Services segment increased $158.8 million, or 23.4%, to $837.3 million in the nine months ended June 30, 2022, from $678.5 million in the nine months ended June 30, 2021.

The following tables provide the change in revenue by offering and the change in revenue by driver during the nine months ended June 30, 2022 and 2021 for the Integrated Solutions and Services segment:

	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	360.9	43.1	%	$	257.5	38.0	%	$	103.4	40.2	%
Capital	210.3		25.1	%	166.0		24.5	%	44.3		26.7	%
Aftermarket	150.6		18.0	%	91.5		13.5	%	59.1		64.6	%
Revenue from services	476.4		56.9	%	421.0		62.0	%	55.4		13.2	%
	$	837.3	100.0	%	$	678.5	100.0	%	$	158.8	23.4	%

	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic	$	749.0	89.5	%	$	677.7	99.9	%	$	71.3	10.5	%
Inorganic	88.7		10.6	%	0.8		0.1	%	87.9		13.0	%
Foreign currency translation	(0.4)		—	%	n/a		n/a		(0.4)		(0.1)	%
	$	837.3	100.0	%	$	678.5	100.0	%	$	158.8	23.4	%

(1)Segment organic revenue is a non-GAAP financial measure. For a reconciliation to total segment revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

51

The increase in organic revenue was driven by higher sales volume across capital, aftermarket, and service, as well as favorable price realization.

Operating profit in the Integrated Solutions and Services segment increased $18.4 million, or 19.4%, to $113.3 million in the nine months ended June 30, 2022, from $94.9 million in the nine months ended June 30, 2021.

Operating profit growth was driven by higher organic sales volume and mix as well as favorable price realization. These increases were partially offset by operational variances, including labor and material inflation and availability, as well as COVID-19 pandemic subsidies received from the Canadian government in the prior period, which did not reoccur in the current period. Acquisitions also contributed to the increase in operating profit, primarily associated with the impact of the Mar Cor Business.

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA in the Integrated Solutions and Services segment increased $32.6 million, or 21.9%, to $181.4 million in the nine months ended June 30, 2022, compared to $148.8 million in the nine months ended June 30, 2021. The increase was driven by the same factors that impacted operating profit, other than the change in depreciation and amortization, and also excludes restructuring and other non-recurring activity. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

Applied Product Technologies

Revenue in the Applied Product Technologies segment increased $35.1 million, or 9.8%, to $395.0 million in the nine months ended June 30, 2022, from $359.9 million in the nine months ended June 30, 2021.

The following tables provide the change in revenue by offering and the change in revenue by driver during the nine months ended June 30, 2022 and 2021 for the Applied Product Technologies segment:

	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Revenue from product sales:	$	379.4	96.1	%	$	343.4	95.4	%	$	36.0	10.5	%
Capital	$	274.5	69.5	%	$	259.9	72.2	%	$	14.6	5.6	%
Aftermarket	104.9		26.6	%	83.5		23.2	%	21.4		25.6	%
Revenue from services	15.6		3.9	%	16.5		4.6	%	(0.9)		(5.5)	%
	$	395.0	100.0	%	$	359.9	100.0	%	$	35.1	9.8	%

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	Nine Months Ended June 30,
	2022				2021				$ Variance		% Variance
(In millions)			% of Revenue				% of Revenue
Organic	$	401.0	101.5	%	$	359.9	100.0	%	$	41.1	11.4	%
Inorganic	—		—	%	—		—	%	—		—	%
Foreign currency translation	(6.0)		(1.5)	%	n/a		n/a		(6.0)		(1.6)	%
	$	395.0	100.0	%	$	359.9	100.0	%	$	35.1	9.8	%

(1)Segment organic revenue is a non-GAAP financial measure. For a reconciliation to total segment revenue, its most directly comparable financial measure presented in accordance with GAAP, see “Non-GAAP Reconciliations” in Item 2 of this Report.

The increase in organic revenue was driven by sales mix, volume growth, and price across all regions and multiple product lines.

Operating profit in the Applied Product Technologies segment increased $15.2 million, or 28.0%, to $69.4 million in the nine months ended June 30, 2022, from $54.2 million in the nine months ended June 30, 2021.

The increase in operating profit was primarily due to favorable sales volumes and mix across multiple product lines and regions, partially offset by unfavorable operational variances, including project variances and labor and material inflation and availability.

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA in the Applied Product Technologies segment increased $9.4 million, or 12.9%, to $82.0 million in the nine months ended June 30, 2022, compared to $72.6 million in the nine months ended June 30, 2021. The increase was driven by the same factors that impacted operating profit, other than the change in depreciation and amortization, and also excludes restructuring and other non-recurring activity. See “Non-GAAP Reconciliations” in Item 2 of this Report for a reconciliation of adjusted EBITDA.

Corporate

Operating loss in Corporate increased $29.4 million, or 33.3%, to $117.8 million in the nine months ended June 30, 2022, from $88.4 million in the nine months ended June 30, 2021. The increase was primarily due to foreign currency translation losses in the current period, compared to foreign currency translation gains in the prior period, most of which is related to intercompany loans. Additionally, there were increased employment expenses, including share-based compensation. These were partially offset by lower costs associated with legal matters in the current year.

53

Non-GAAP Reconciliations

The following is a reconciliation of total revenue to organic revenue for the three months ended June 30, 2022:

	Total Revenue				Foreign Currency				Inorganic Revenue(1)				Organic Revenue
	Three Months Ended June 30,		% Variance		Three Months Ended June 30,		% Variance		Three Months Ended June 30,		% Variance		Three Months Ended June 30,		% Variance
(In millions)	2022	2021			2022	2021			2022	2021			2022	2021
Evoqua Water Technologies	$439.3	$369.7	18.8	%	$(5.3)	n/a	(1.4)	%	$40.8	$—	11.0	%	$403.8	$369.7	9.2	%
Integrated Solutions & Services	$297.4	$239.7	24.1	%	$(0.6)	n/a	(0.2)	%	$40.8	$—	17.0	%	$257.2	$239.7	7.3	%
Applied Product Technologies	$141.9	$130.0	9.2	%	$(4.7)	n/a	(3.6)	%	$—	$—	—	%	$146.6	$130.0	12.8	%

(1)Includes the acquisition of the Mar Cor Business on January 3, 2022.

The following is a reconciliation of total revenue to organic revenue for the nine months ended June 30, 2022:

	Total Revenue				Foreign Currency				Inorganic Revenue(1)				Organic Revenue
	Nine Months Ended June 30,		% Variance		Nine Months Ended June 30,		% Variance		Nine Months Ended June 30,		% Variance		Nine Months Ended June 30,		% Variance
(In millions)	2022	2021			2022	2021			2022	2021			2022	2021
Evoqua Water Technologies	$1,232.3	$1,038.4	18.7	%	$(6.4)	n/a	(0.6)	%	$88.7	$0.8	8.5	%	$1,150.0	$1,037.6	10.8	%
Integrated Solutions & Services	$837.3	$678.5	23.4	%	$(0.4)	n/a	(0.1)	%	$88.7	$0.8	13.0	%	$749.0	$677.7	10.5	%
Applied Product Technologies	$395.0	$359.9	9.8	%	$(6.0)	n/a	(1.6)	%	$—	$—	—	%	$401.0	$359.9	11.4	%

(1)Includes divestiture of the Lange product line on March 1, 2021, acquisition of Ultrapure & Industrial Services on December 17, 2020, acquisition of WCSI on April 1, 2021, and the acquisition of the Mar Cor Business on January 3, 2022.

The following is a reconciliation of our Net income to adjusted EBITDA. Amounts excluded relate to items that management believes do not reflect the underlying, ongoing operational performance of the business as a result of their nature or size and/or are non-recurring and would not be expected to occur as part of our normal business on a regular basis:

54

	Three Months Ended June 30,						Nine Months Ended June 30,
(In millions)	2022		2021		% Variance		2022		2021		% Variance
Net income	$	17.6	$	13.2	33.3	%	$	31.0	$	24.7	25.0	%
Income tax expense	5.0		3.9		28.2	%	8.9		7.7		15.6	%
Interest expense	8.4		11.2		(25.0)	%	25.0		28.3		(11.7)	%
Operating profit	$	31.0	$	28.3	9.5	%	$	64.9	$	60.7	6.9	%
Depreciation and amortization	32.7		29.1		12.4	%	93.9		83.7		12.2	%
EBITDA	$	63.7	$	57.4	11.0	%	$	158.8	$	144.4	10.0	%
Restructuring and related business transformation costs(a)	1.9		1.8		5.6	%	5.1		9.0		(43.3)	%
Purchase accounting adjustment costs(b)	1.6		—		n/a		4.2		—		n/a
Share-based compensation(c)	5.8		5.5		5.5	%	17.2		11.8		45.8	%
Transaction costs(d)	0.1		0.3		(66.7)	%	5.0		1.6		212.5	%
Other losses (gains) and expenses(e)	3.9		1.2		225.0	%	14.2		2.2		545.5	%
Adjusted EBITDA	$	77.0	$	66.2	16.3	%	$	204.5	$	169.0	21.0	%

(a)Restructuring and related business transformation costs

Adjusted EBITDA is calculated prior to considering certain restructuring or business transformation events. These events may occur over extended periods of time, and in some cases it is reasonably possible that they could reoccur in future periods based on reorganizations of the business, cost reduction or productivity improvement needs, or in response to economic conditions. For the periods presented such events include the following:

(i)Certain costs and expenses in connection with various restructuring initiatives, including severance and other employee-related costs, relocation and facility consolidation costs, and third-party consultant costs to assist with these initiatives. This includes:

(A)amounts related to the Company’s restructuring initiatives to reduce the cost structure and rationalize location footprint following the sale of the Memcor product line;

(B)amounts related to the Company’s transition from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide; and

(C)amounts related to various other initiatives implemented to restructure and reorganize our business with the appropriate management team and cost structure.

(ii)Legal settlement costs and intellectual property related fees including fees and settlement costs associated with legacy matters, related to product warranty litigation on MEMCOR® products and certain discontinued products. Memcor ® is a trademark of Rohm & Haas Electronic Materials Singapore Pte. Ltd.

(iii)Expenses associated with our information technology and functional infrastructure transformation, including activities to optimize information technology systems and functional infrastructure processes.

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(iv)Costs associated with the secondary public offering of common stock held by certain shareholders of the Company, as well as costs incurred by us in connection with establishment of our public company compliance structure and processes, including consultant costs.

(b)Purchase accounting adjustment costs

Adjusted EBITDA is calculated prior to considering adjustments for the effect of the purchase accounting step-up in the value of inventory to fair value recognized in cost of goods sold as a result of the acquisition of the Mar Cor Business. See Note 4, “Acquisitions,” in Part I, Item 1 of this Report for further detail.

(c)Share-based compensation

Adjusted EBITDA is calculated prior to considering share‑based compensation expenses related to equity awards. See Note 17, “Share-Based Compensation,” in Part I, Item 1 of this Report for further detail.

(d)Transaction costs    

Adjusted EBITDA is calculated prior to considering transaction, integration and restructuring costs associated with business combinations because these costs are unique to each transaction and represent costs that were incurred as a result of the transaction decision. Integration and restructuring costs associated with a business combination may occur over several years and include, but are not limited to, consulting fees, legal fees, certain employee-related costs, facility consolidation and product rationalization costs, and fair value changes associated with contingent consideration.

(e)Other losses (gains) and expenses

Adjusted EBITDA is calculated prior to considering certain other significant losses (gains) and expenses. For the periods presented such events include the following:

(i)impact of foreign exchange gains and losses;

(ii)charges incurred by the Company related to product rationalization in its electro-chlorination business;

(iii)amounts related to the sale of the Memcor product line;

(iv)expenses incurred by the Company as a result of the COVID-19 pandemic, including additional charges for personal protective equipment, increased costs for facility sanitization and one-time payments to certain employees;

(v)legal fees incurred in excess of amounts covered by the Company’s insurance related to securities litigation and an SEC investigation; and

(vi)loss on divestiture of the Lange product line.

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We do not present net income on a segment basis because we do not allocate interest expense or income tax benefit (expense) to our segments, making operating profit the most comparable GAAP metric. The following is a reconciliation of our segment EBITDA and segment adjusted EBITDA to operating profit, their most directly comparable financial measure presented in accordance with GAAP:

	Three Months Ended June 30,								$ Variance				% Variance
	2022				2021
(In millions)	Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies
Operating profit	$	39.9	$	28.6	$	37.8	$	22.7	$	2.1	$	5.9	6	%	26	%
Depreciation and amortization	21.9		3.4		18.2		3.5		3.7		(0.1)		20	%	(3)	%
EBITDA	$	61.8	$	32.0	$	56.0	$	26.2	$	5.8	$	5.8	10	%	22	%
Restructuring and related business transformation costs (a)	1.0		0.8		0.3		0.7		0.7		0.1		233	%	14	%
Purchase accounting adjustment costs (b)	1.5		—		—		—		1.5		—		n/a		n/a
Transaction costs (c)	(0.2)		—		—		—		(0.2)		—		n/a		n/a
Other losses (gains) and expenses (d)	—		—		—		1.5		—		(1.5)		n/a		(100)	%
Adjusted EBITDA	$	64.1	$	32.8	$	56.3	$	28.4	$	7.8	$	4.4	14	%	15	%
	Nine Months Ended June 30,								$ Variance				% Variance
	2022				2021
(In millions)	Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies		Integrated Solutions and Services		Applied Product Technologies
Operating profit	$	113.3	$	69.4	$	94.9	$	54.2	$	18.4	$	15.2	19	%	28	%
Depreciation and amortization	61.1		10.3		52.3		10.6		8.8		(0.3)		17	%	(3)	%
EBITDA	$	174.4	$	79.7	$	147.2	$	64.8	$	27.2	$	14.9	18	%	23	%
Restructuring and related business transformation costs (a)	1.7		2.3		1.4		5.2		0.3		(2.9)		21	%	(56)	%
Purchase accounting adjustment costs (b)	4.1		—		—		—		4.1		—		n/a		n/a
Transaction costs (c)	1.2		—		—		—		1.2		—		n/a		n/a
Other losses (gains) and expenses (d)	—		—		0.2		2.6		(0.2)		(2.6)		(100)	%	(100)	%
Adjusted EBITDA	$	181.4	$	82.0	$	148.8	$	72.6	$	32.6	$	9.4	22	%	13	%

(a)Represents costs and expenses in connection with restructuring initiatives in the three and nine months ended June 30, 2022 and 2021, respectively. Such expenses are primarily composed of severance, relocation, and facility consolidation costs.

(b)Represents adjustments for the effect of the purchase accounting step-up in the value of inventory to fair value recognized in cost of goods sold as a result of the acquisition of the Mar Cor Business.

(c)Represents primarily costs associated with a change in the current estimate of certain acquisitions achieving their earn-out targets, as well as certain costs associated with the integration of the Mar Cor Business.

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(d)Other losses (gains) and expenses as discussed above, distinct to our Integrated Solutions and Services (“ISS”) and Applied Product Technologies (“APT”) segments include the following:

(i)amounts related to the sale of the Memcor product line;

(ii)charges incurred by the Company related to product rationalization in its electro-chlorination business; and

(iii)loss on divestiture of the Lange product line.

Immaterial rounding differences may be present in the tables above.

Liquidity and Capital Resources

Liquidity describes the ability of a company to borrow or generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, other commitments and contractual obligations. Our principal sources of liquidity are cash generated by our operating activities, borrowings under the 2021 Revolving Credit Facility, and financing arrangements related to capital expenditures for equipment used to provide services to our customers. Historically, we have financed our operations primarily from these sources. Our primary cash needs are for day to day operations, to pay interest and principal on our indebtedness, to fund working capital requirements, and to make capital expenditures.

Our ability to fund our capital needs depends on our ongoing ability to generate cash from operations and access to bank financing and the capital markets. In support of international operations, portions of our cash balances are held in various currencies and may be subject to foreign currency translation and other costs associated with repatriation, if necessary. Although neither moderate increases in net working capital nor the COVID-19 pandemic have materially impacted our liquidity to date, we plan to continue to evaluate aspects of our spending, including capital expenditures, discretionary spending, and strategic investments. We believe we are currently well-positioned to manage our business and have the ability and sufficient capacity to meet our cash requirements by using available cash, internally generated funds, and borrowing under the 2021 Revolving Credit Facility.

As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including occasionally extending payment terms. We also facilitate a voluntary supply chain finance program (the “program”) to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third party administers the program; our responsibility is limited to making payments on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into agreements with any of the participating financial institutions in connection with the program. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program. The amounts settled through the program and paid to participating financial institutions were $29.5 million and $27.4 million in the nine months ended June 30, 2022 and 2021, respectively. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit to participation in the program.

We expect to continue to finance our liquidity requirements through internally generated funds, borrowings under the 2021 Revolving Credit Facility and equipment financing arrangements. We believe that our projected cash flows generated from operations, together with borrowings under the 2021 Revolving Credit Facility, and other financing arrangements are sufficient to fund our principal debt payments, interest expense, our working capital needs, and our expected capital expenditures for the next twelve months. Our capital expenditures for the nine months ended June 30, 2022 and 2021 were $58.7 million and $54.1 million, respectively. However, our budgeted capital expenditures can vary from period to period based on the nature of capital intensive project awards. Our focus on customer outsourced water projects will continue to be a driver of capital expenditures. From time to time, we may enter into financing arrangements related to capital expenditures for equipment used to provide services to our customers. During the nine months ended June 30, 2022 and 2021, we entered into equipment financing arrangements totaling $30.3 million and $25.4 million, respectively. In addition, we may draw on the 2021 Revolving Credit Facility from time to time to fund or partially fund an acquisition.

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As of June 30, 2022, we had total indebtedness of $936.2 million, including $470.3 million of term loan borrowings under the 2021 Credit Agreement, $211.1 million outstanding under the 2021 Revolving Credit Facility, $138.0 million outstanding under the Securitization Facility, which includes $0.1 million of accrued interest, and $116.8 million in borrowings related to equipment financing. We also had $9.5 million of letters of credit issued under our 2021 Revolving Credit Facility as of June 30, 2022.

As of June 30, 2022 and September 30, 2021, we were in compliance with the covenants contained in the 2021 Credit Agreement, including the 2021 Revolving Credit Facility.

2021 Credit Agreement

On April 1, 2021, EWT III entered into a Credit Agreement (the “2021 Credit Agreement”) among EWT III, as borrower, EWT II, as parent guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and ING Capital, LLC, as sustainability coordinator. The 2021 Credit Agreement provides for a multi-currency senior secured revolving credit facility in an aggregate principal amount not to exceed the U.S. dollar equivalent of $350.0 million (the “2021 Revolving Credit Facility”) and a discounted senior secured term (the “2021 Term Loan”) in the amount of $475.0 million (together with the 2021 Revolving Credit Facility, the “Senior Facilities”). The 2021 Credit Agreement also provides for a letter of credit sub-facility not to exceed $60.0 million.

The 2021 Credit Agreement contains customary representations, warranties, affirmative covenants, and negative covenants, including, among other things, a springing maximum first lien leverage ratio of 5.55 to 1.00. The Company did not exceed this ratio during the nine months ended June 30, 2022, does not anticipate exceeding this ratio during the year ending September 30, 2022, and therefore does not anticipate any additional repayments during the year ending September 30, 2022.

Receivables Securitization Program

On April 1, 2021, Evoqua Finance LLC (“Evoqua Finance”), an indirect wholly-owned subsidiary of the Company, entered into an accounts receivable securitization program (the “Receivables Securitization Program”) consisting of, among other agreements, (i) a Receivables Financing Agreement (the “Receivables Financing Agreement”) among Evoqua Finance, as the borrower, the lenders from time to time party thereto (the “Receivables Financing Lenders”), PNC Bank, National Association (“PNC Bank”), as administrative agent, EWT LLC, as initial servicer, and PNC Capital Markets LLC (“PNC Markets”), as structuring agent, pursuant to which the lenders have made available to Evoqua Finance a receivables finance facility (the “Securitization Facility”) in an amount up to $150.0 million and (ii) a Sale and Contribution Agreement (the “Sale Agreement”) among Evoqua Finance, as purchaser, EWT LLC, as initial servicer and as an originator, and Neptune Benson, Inc., an indirectly wholly-owned subsidiary of the Company, as an originator (together with EWT LLC, the “Originators”).

The Receivables Securitization Program contains certain customary representations, warranties, affirmative covenants, and negative covenants, subject to certain cure periods in some cases, including the eligibility of the Receivables being sold by the Originators and securing the loans made by the Receivables Financing Lenders, as well as customary reserve requirements, events of default, termination events, and servicer defaults. The Company was in compliance with all covenants during the nine months ended June 30, 2022, does not anticipate becoming noncompliant during the year ending September 30, 2022, and therefore, subject to collateral availability, does not anticipate any additional repayments during the year ending September 30, 2022.

Evoqua Water Technologies Corp. is a holding company and does not conduct any business operations of its own. As a result, our ability to pay cash dividends on our common stock, if any, is dependent upon cash dividends and distributions and other transfers from our operating subsidiaries. Under the terms of the 2021 Credit Agreement, our operating subsidiaries are currently limited in their ability to pay cash dividends to us, and we expect these limitations to continue in the future under the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries.

Our indebtedness could adversely affect our ability to raise additional capital, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk, and prevent us from meeting our obligations.

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Contractual Obligations

We presented our contractual obligations in Part II, Item 7, “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021. There were no significant changes in our contractual obligations during the nine months ended June 30, 2022.

On January 3, 2022, we borrowed an additional $160 million under the 2021 Revolving Credit Facility. We are required to pay a commitment fee based on the daily unused portion of the 2021 Revolving Credit Facility, as well as certain other fees to agents and the arrangers under the Senior Facilities. Subject to the terms of the 2021 Credit Agreement, to the extent not previously paid, any amount owed under the 2021 Revolving Credit Facility will become due and payable in full on April 1, 2026.

Cash Flows

The following table summarizes the changes to our cash flows for the periods presented:

	Nine Months Ended June 30,
(In millions)	2022		2021
Statement of Cash Flows Data
Net cash provided by operating activities	$	86.9	$	102.9
Net cash used in investing activities	(264.8)		(74.4)
Net cash provided by (used in) financing activities	172.8		(83.0)
Effect of exchange rate changes on cash	(3.3)		3.0
Change in cash and cash equivalents	$	(8.4)	$	(51.5)

Operating Activities

Cash flows from operating activities can fluctuate significantly from period‑to‑period as working capital needs and the timing of payments for restructuring activities and other items impact reported cash flows.

Net cash provided by operating activities totaled $86.9 million in the nine months ended June 30, 2022, and $102.9 million in the nine months ended June 30, 2021.

•Operating cash flows in the nine months ended June 30, 2022 reflect an increase in net earnings of $6.3 million as compared to the nine months ended June 30, 2021.

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•The add back of non‑cash items increased operating cash flows by $123.3 million in the nine months ended June 30, 2022, as compared to an increase to operating cash flows of $96.0 million in the nine months ended June 30, 2021, resulting in an increase of $27.3 million. This increase was primarily related to the add back of foreign currency losses in the current period, compared to the deduction of foreign currency gains in the prior period, as well as an increase in depreciation and amortization, and share-based compensation expenses in the current period. Non-cash changes also include deferred income taxes, amortization of deferred financing fees, gains and losses on sale of businesses, and gains and losses on sale of property, plant, and equipment.

•The aggregate of receivables, inventories, contract assets and liabilities, and accounts payable used $32.6 million in operating cash flows in the nine months ended June 30, 2022, compared to providing $11.5 million in the nine months ended June 30, 2021, resulting in a decrease to cash flows of $44.1 million as compared to the prior year period.

The amount of cash flow generated from or used by the above mentioned accounts depends upon how effectively we manage our cash conversion cycle, which is a representation of the number of days that elapse from the date of purchase of raw materials and components to the collection of cash from customers. Our cash conversion cycle can be significantly impacted by the timing of collections and payments in a period.

•The aggregate of the remaining assets and liabilities used $36.4 million of operating cash flows in the nine months ended June 30, 2022, compared to using $26.9 million in the nine months ended June 30, 2021, resulting in a decrease to cash flows of $9.5 million. This is mainly due to timing of cash receipts on long-term receivables.

•Income taxes provided $1.5 million of operating cash flow during the nine months ended June 30, 2022, as compared to using $2.5 million during the nine months ended June 30, 2021, resulting in an increase to cash flows of $4.0 million as compared to the prior year period.

Investing Activities

Net cash used in investing activities was $264.8 million in the nine months ended June 30, 2022, as compared to net cash used in investing activities of $74.4 million in the nine months ended June 30, 2021, resulting in a net decrease to cash flow of $190.4 million as compared to the prior year period. This decrease was largely driven by cash outflow associated with the acquisition of the Mar Cor Business, as well as the acquisitions of the remaining interest of Frontier and TWO in the current period.

Financing Activities

Net cash provided by financing activities was $172.8 million in the nine months ended June 30, 2022, as compared to using $83.0 million in the nine months ended June 30, 2021, resulting in a net increase to cash flow of $255.8 million as compared to the prior year period. The increase in cash provided by financing activities for the nine months ended June 30, 2022 was primarily due to the debt refinancing activities that occurred in the prior period, as well as an increased issuance of debt compared to the prior period. This increase was partially offset by an increase of taxes paid related to net share settlements of share-based compensation awards compared to the prior period. Lastly, cash received from the issuance of common stock in connection with the exercise of stock options declined compared to the prior period.

Seasonality

Our business may exhibit seasonality resulting from our customers’ increasing demand for our products and services during the spring and summer months as compared to the fall and winter months. For example, we generally experience increased demand for our odor control product lines and services in the warmer months which, together with other factors, typically results in improved performance in the second half of our fiscal year. Inclement weather and extreme weather events, such as hurricanes, winter storms, droughts, and floods, can also have varying impacts on our business. Certain events may cause customer shutdowns that prevent or defer our performance of services or sale of equipment,

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while other events may drive increased demand for our products and services, particularly emergency response services. As a result, our results from operations may vary from period to period, and past performance should not be considered indicative of future results. 

Off‑Balance Sheet Arrangements

We had the following outstanding under our credit arrangements at June 30, 2022 and September 30, 2021:

(In millions)	June 30, 2022		September 30, 2021
Letters of credit	$	9.5	$	10.1
Surety bonds	$	129.0	$	147.8

The longest maturity date of the letters of credit and surety bonds in effect as of June 30, 2022 was March 20, 2030.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Item 8, Note 2, “Summary of Significant Accounting Policies” and Item 7, “Critical Accounting Policies and Estimates” included in the 2021 Annual Report. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in the Notes to the Unaudited Consolidated Financial Statements in Part I, Item 1 of this Report. The application of the Company’s accounting policies may require the use of estimates and assumptions. Management uses historical experience and all available information to make these estimates and assumptions. Estimates are revised as additional information becomes available. Actual results could differ from these estimates.

See Note 2, “Recent Accounting Pronouncements” in the Unaudited Consolidated Financial Statements in Item 1 of this Report for a discussion of recently issued accounting guidance.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the information concerning exposure to market risks as stated in Part I, Item 7A of the 2021 Annual Report.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to confirm that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to confirm that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of such date.

While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarterly period ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

From time to time, we are subject to various claims, charges, and litigation matters that arise in the ordinary course of business. We believe these actions are a normal incident of the nature and kind of business in which we are engaged. While it is not feasible to predict the outcome of these matters with certainty, we do not believe that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations, or prospects.

In October 2020, the Company learned that the SEC and the United States Attorney’s Office for the District of Massachusetts are investigating whether financial misstatements were made in the Company’s public filings and earnings announcements prior to October 2018, similar to what was alleged in a class action lawsuit filed in November 2018 captioned In re Evoqua Water Technologies Corp. Securities Litigation (the “Securities Litigation”), which was dismissed in November 2021 following Court approval of a settlement in the amount of $16.65 million, all of which was paid by insurance. The Company is cooperating with those investigations. Although the Company is unable to predict the outcome or reasonably estimate any potential loss from the ongoing investigations, we currently believe that this matter will not have a material adverse effect on our business, financial condition, results of operations, or prospects.

Item 1A. Risk Factors

There have been no material changes to the information concerning risk factors as stated in our 2021 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

None.

Item 5.    Other Information

None.

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Item 6.    Exhibits

The following exhibits are filed or furnished as a part of this report:

Exhibit No.	Exhibit Description
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

64

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EVOQUA WATER TECHNOLOGIES CORP.
August 2, 2022	/s/ RONALD C. KEATING
	By:	Ronald C. Keating
		Chief Executive Officer (Principal Executive Officer)
August 2, 2022	/s/ BENEDICT J. STAS
	By:	Benedict J. Stas
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

65

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald C. Keating, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 of Evoqua Water Technologies Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ RONALD C. KEATING
Date:	August 2, 2022	Ronald C. Keating President, Chief Executive Officer and Director (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benedict J. Stas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 of Evoqua Water Technologies Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

		/s/ BENEDICT J. STAS
Date:	August 2, 2022	Benedict J. Stas Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

           In connection with the Quarterly Report on Form 10-Q of Evoqua Water Technologies Corp., a Delaware corporation (the “Company”), for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ronald C. Keating, President, Chief Executive Officer and Director of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

        (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		/s/ RONALD C. KEATING
Date:	August 2, 2022	Ronald C. Keating President, Chief Executive Officer and Director (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

            In connection with the Quarterly Report on Form 10-Q of Evoqua Water Technologies Corp., a Delaware corporation (the “Company”), for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Benedict J. Stas, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

        (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		/s/ BENEDICT J. STAS
Date:	August 2, 2022	Benedict J. Stas Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

XML

Cover - shares	9 Months Ended
	Jun. 30, 2022	Jul. 27, 2022
Cover [Abstract]
Amendment Flag	false
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Type	10-Q
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-38272
Entity Registrant Name	EVOQUA WATER TECHNOLOGIES CORP.
Entity Tax Identification Number	46-4132761
Entity Address, Address Line One	210 Sixth Avenue
Entity Address, Postal Zip Code	15222
Entity Address, City or Town	Pittsburgh,
Entity Address, State or Province	PA
City Area Code	724
Local Phone Number	772-0044
Trading Symbol	AQUA
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		121,486,702
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Central Index Key	0001604643
Current Fiscal Year End Date	--09-30

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
ASSETS
Current assets	$ 832,220	$ 678,458
Cash and cash equivalents	137,839	146,244
Receivables, net	293,471	277,995
Inventories, net	232,459	158,503
Contract assets	101,899	72,746
Prepaid and other current assets	64,877	21,871
Income tax receivable	1,675	1,099
Property, plant, and equipment, net	400,367	374,988
Goodwill	471,688	407,376
Intangible assets, net	315,983	290,075
Deferred income taxes, net of valuation allowance	4,788	8,285
Operating lease right-of-use assets, net	52,954	45,521
Other non‑current assets	93,618	64,188
Total assets	2,171,618	1,868,891
LIABILITIES AND EQUITY
Current liabilities	457,162	405,989
Accounts payable	198,180	164,535
Current portion of debt, net of deferred financing fees and discounts	16,064	12,775
Contract liabilities	66,943	55,883
Product warranties	7,198	8,138
Accrued expenses and other liabilities	162,474	160,367
Income tax payable	6,303	4,291
Non‑current liabilities	1,052,166	880,683
Long-term debt, net of deferred financing fees and discounts	909,763	730,430
Product warranties	3,994	2,966
Obligation under operating leases	43,832	37,935
Other non‑current liabilities	79,766	92,909
Deferred income taxes	14,811	16,443
Total liabilities	1,509,328	1,286,672
Commitments and Contingent Liabilities (Note 19)
Shareholders’ equity
Common stock, par value $0.01: authorized 1,000,000 shares; issued 123,150 shares, outstanding 121,486 at June 30, 2022; issued 122,173 shares, outstanding 120,509 at September 30, 2021	1,232	1,223
Treasury stock: 1,664 shares at June 30, 2022 and 1,664 shares at September 30, 2021	(2,837)	(2,837)
Additional paid-in capital	600,403	582,052
Retained earnings (deficit)	19,698	(11,182)
Accumulated other comprehensive income, net of tax	43,794	11,415
Total Evoqua Water Technologies Corp. equity	662,290	580,671
Non-controlling interest	0	1,548
Total shareholders’ equity	662,290	582,219
Total liabilities and shareholders’ equity	$ 2,171,618	$ 1,868,891

XML

Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Sep. 30, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, issued (in shares)	123,150,000	122,173,000
Common stock, outstanding (in shares)	121,486,000	120,509,000
Treasury stock (in shares)	1,664,000	1,664,000

XML

Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues [Abstract]
Revenues	$ 439,325	$ 369,681	$ 1,232,321	$ 1,038,438
Cost of Revenue [Abstract]
Cost of product sales and services	(303,193)	(252,652)	(856,795)	(720,145)
Gross profit	136,132	117,029	375,526	318,293
Operating Expenses [Abstract]
General and administrative expense	(61,426)	(50,837)	(186,231)	(146,048)
Sales and marketing expense	(40,634)	(35,871)	(116,942)	(103,629)
Research and development expense	(3,857)	(3,413)	(11,060)	(9,929)
Total operating expenses	(105,917)	(90,121)	(314,233)	(259,606)
Other operating income	951	1,662	4,023	2,653
Other operating expense	(136)	(260)	(426)	(618)
Operating profit (loss)	31,030	28,310	64,890	60,722
Interest expense	(8,440)	(11,224)	(24,969)	(28,292)
Income before income taxes	22,590	17,086	39,921	32,430
Income tax expense	(5,027)	(3,887)	(8,896)	(7,672)
Net income	17,563	13,199	31,025	24,758
Net income attributable to non‑controlling interest	0	44
Net income attributable to Evoqua Water Technologies Corp.	$ 17,563	$ 13,155	$ 30,880	$ 24,624
Basic income per common share	$ 0.14	$ 0.11	$ 0.26	$ 0.21
Diluted income per common share	$ 0.14	$ 0.11	$ 0.25	$ 0.20
Non-controlling Interest
Operating Expenses [Abstract]
Net income	$ 0	$ 44
Net income attributable to non‑controlling interest			$ 145	$ 134
Revenue from product sales
Revenues [Abstract]
Revenues	267,957	218,427	740,300	600,908
Cost of Revenue [Abstract]
Cost of product sales and services	(185,742)	(152,591)	(524,867)	(428,173)
Revenue from service
Revenues [Abstract]
Revenues	171,368	151,254	492,021	437,530
Cost of Revenue [Abstract]
Cost of product sales and services	$ (117,451)	$ (100,061)	$ (331,928)	$ (291,972)

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Unaudited Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Other comprehensive (loss) income
Net income	$ 17,563	$ 13,199	$ 31,025	$ 24,758
Foreign currency translation adjustments	(5,643)	591	(1,858)	22,605
Unrealized derivative gain (loss) on cash flow hedges, net of tax	5,435	(3,524)	33,746	6,569
Change in pension liability, net of tax	156	266	491	640
Total other comprehensive (loss) income	(52)	(2,667)	32,379	29,814
Less: Comprehensive income attributable to non‑controlling interest	0	(44)	(145)	(134)
Comprehensive income attributable to Evoqua Water Technologies Corp.	$ 17,511	$ 10,488	$ 63,259	$ 54,438

XML

Unaudited Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Deficit	Accumulated Other Comprehensive (Loss) Income	Non-controlling Interest
Common stock issued at the beginning of the period (shares) at Sep. 30, 2020		119,486,000
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2020	$ 482,063	$ 1,189	$ (2,837)	$ 564,928	$ (62,664)	$ (20,472)	$ 1,919
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2020			2,195,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	3,019			3,019
Issuance of common stock (in shares)		1,264,000	1,000
Stock Issued During Period, Value, New Issues	14,263	$ 13		14,250
Issuance of common stock, net	(250)						(250)
Net income	6,477				6,433		44
Dividends paid to non-controlling interest	(3,611)					(3,611)
Common stock issued at the end of the period (shares) at Dec. 31, 2020		120,750,000
Stockholders' equity, balance at the end of the period at Dec. 31, 2020	501,961	$ 1,202	$ (2,837)	582,197	(56,231)	(24,083)	1,713
Treasury stock, balance at the end of the period (in shares) at Dec. 31, 2020			2,196,000
Common stock issued at the beginning of the period (shares) at Sep. 30, 2020		119,486,000
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2020	482,063	$ 1,189	$ (2,837)	564,928	(62,664)	(20,472)	1,919
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2020			2,195,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	24,758
Dividends paid to non-controlling interest	29,814
Common stock issued at the end of the period (shares) at Jun. 30, 2021		121,837,000
Stockholders' equity, balance at the end of the period at Jun. 30, 2021	545,179	$ 1,219	$ (2,837)	573,892	(38,040)	9,342	1,603
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2021			1,664,000
Common stock issued at the beginning of the period (shares) at Dec. 31, 2020		120,750,000
Stockholders' equity, balance at the beginning of the period at Dec. 31, 2020	501,961	$ 1,202	$ (2,837)	582,197	(56,231)	(24,083)	1,713
Treasury stock, balance at the beginning of the period (in shares) at Dec. 31, 2020			2,196,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	3,214			3,214
Issuance of common stock (in shares)		692,000	(532,000)
Stock Issued During Period, Value, New Issues	(21,364)	$ 13		(21,377)
Issuance of common stock, net	(100)						(100)
Net income	5,082				5,036		46
Dividends paid to non-controlling interest	36,092					36,092
Common stock issued at the end of the period (shares) at Mar. 31, 2021		121,442,000
Stockholders' equity, balance at the end of the period at Mar. 31, 2021	524,885	$ 1,215	$ (2,837)	564,034	(51,195)	12,009	1,659
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2021			1,664,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	4,228			4,228
Issuance of common stock (in shares)		395,000	0
Stock Issued During Period, Value, New Issues	5,634	$ 4		5,630
Issuance of common stock, net	(100)						(100)
Net income	13,199				13,155		44
Dividends paid to non-controlling interest	(2,667)					(2,667)
Common stock issued at the end of the period (shares) at Jun. 30, 2021		121,837,000
Stockholders' equity, balance at the end of the period at Jun. 30, 2021	$ 545,179	$ 1,219	$ (2,837)	573,892	(38,040)	9,342	1,603
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2021			1,664,000
Common stock issued at the beginning of the period (shares) at Sep. 30, 2021	122,173,000	122,173,000
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2021	$ 582,219	$ 1,223	$ (2,837)	582,052	(11,182)	11,415	1,548
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2021	1,664,000		1,664,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	$ 5,203			5,203
Issuance of common stock (in shares)		199,000	0
Stock Issued During Period, Value, New Issues	824	$ 2		822
Issuance of common stock, net	(100)						(100)
Net income	6,088				5,987		101
Dividends paid to non-controlling interest	8,359					8,359
Common stock issued at the end of the period (shares) at Dec. 31, 2021		122,372,000
Stockholders' equity, balance at the end of the period at Dec. 31, 2021	$ 602,593	$ 1,225	$ (2,837)	588,077	(5,195)	19,774	1,549
Treasury stock, balance at the end of the period (in shares) at Dec. 31, 2021			1,664,000
Common stock issued at the beginning of the period (shares) at Sep. 30, 2021	122,173,000	122,173,000
Stockholders' equity, balance at the beginning of the period at Sep. 30, 2021	$ 582,219	$ 1,223	$ (2,837)	582,052	(11,182)	11,415	1,548
Treasury stock, balance at the beginning of the period (in shares) at Sep. 30, 2021	1,664,000		1,664,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 31,025
Dividends paid to non-controlling interest	$ 32,379
Common stock issued at the end of the period (shares) at Jun. 30, 2022	123,150,000	123,150,000
Stockholders' equity, balance at the end of the period at Jun. 30, 2022	$ 662,290	$ 1,232	$ (2,837)	600,403	19,698	43,794	0
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2022	1,664,000		1,664,000
Common stock issued at the beginning of the period (shares) at Dec. 31, 2021		122,372,000
Stockholders' equity, balance at the beginning of the period at Dec. 31, 2021	$ 602,593	$ 1,225	$ (2,837)	588,077	(5,195)	19,774	1,549
Treasury stock, balance at the beginning of the period (in shares) at Dec. 31, 2021			1,664,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	5,386			5,386
Issuance of common stock (in shares)		394,000
Stock Issued During Period, Value, New Issues	(1,354)	$ 4		(1,358)
Issuance of common stock, net							0
Net income	7,374				7,330		44
Dividends paid to non-controlling interest	24,072					24,072
Common stock issued at the end of the period (shares) at Mar. 31, 2022		122,766,000
Stockholders' equity, balance at the end of the period at Mar. 31, 2022	638,071	$ 1,229	$ (2,837)	592,105	2,135	43,846	1,593
Treasury stock, balance at the end of the period (in shares) at Mar. 31, 2022			1,664,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity based compensation expense	5,750			5,750
Issuance of common stock (in shares)		384,000
Stock Issued During Period, Value, New Issues	2,551	$ 3		2,548
Issuance of common stock, net							0
Net income	17,563	$ 0	$ 0	0	17,563	0	0
Dividends paid to non-controlling interest	(52)					(52)
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	$ (1,593)						(1,593)
Common stock issued at the end of the period (shares) at Jun. 30, 2022	123,150,000	123,150,000
Stockholders' equity, balance at the end of the period at Jun. 30, 2022	$ 662,290	$ 1,232	$ (2,837)	$ 600,403	$ 19,698	$ 43,794	$ 0
Treasury stock, balance at the end of the period (in shares) at Jun. 30, 2022	1,664,000		1,664,000

XML

Unaudited Consolidated Statements of Changes in Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating activities
Net income	$ 31,025	$ 24,758
Reconciliation of net income to cash flows provided by operating activities:
Depreciation and amortization	93,881	83,707
Amortization of deferred financing fees (includes $0 and $1,333 write off of deferred financing fees)	1,393	2,814
Deferred income taxes	1,332	994
Share-based compensation	16,339	10,461
(Gain) loss on sale of property, plant, and equipment	(684)	2,456
(Gain) loss on sale of business	(193)	193
Foreign currency exchange losses (gains) on intercompany loans and other non-cash items	11,235	(4,628)
Changes in assets and liabilities
Accounts receivable	3,222	18,931
Inventories	(44,566)	(18,261)
Contract assets	(30,092)	12,059
Prepaids and other current assets	(23,951)	(21,869)
Accounts payable	27,367	(10,587)
Accrued expenses and other liabilities	2,494	23,065
Contract liabilities	11,356	9,337
Income taxes	1,596	(2,489)
Other non‑current assets and liabilities	(14,820)	(28,083)
Net cash provided by operating activities	86,934	102,858
Investing activities
Purchase of property, plant, and equipment	(58,700)	(54,147)
Purchase of intangibles	(2,361)	(1,206)
Proceeds from sale of property, plant, and equipment	2,383	1,108
Proceeds from sale of business, net of cash of $0 and $0	356	897
Acquisitions, net of cash received $0 and $0	(206,471)	(21,059)
Net cash used in investing activities	(264,793)	(74,407)
Financing activities
Issuance of debt, net of deferred issuance costs	245,236	747,877
Repayment of debt	(64,007)	(837,082)
Repayment of finance lease obligation	(9,965)	(10,173)
Proceeds from issuance of common stock	7,921	18,096
Taxes paid related to net share settlements of share-based compensation awards	(6,274)	(1,315)
Distribution to non‑controlling interest	(100)	(450)
Net cash provided by (used in) financing activities	172,811	(83,047)
Effect of exchange rate changes on cash	(3,357)	3,119
Change in cash and cash equivalents	(8,405)	(51,477)
Beginning of period	146,244	193,001
End of period	137,839	141,524
Supplemental disclosure of cash flow information
Cash paid for taxes	5,544	7,536
Cash paid for interest	19,076	20,643
Non‑cash investing and financing activities
Finance lease transactions	10,404	12,300
Operating lease transactions	$ 18,482	$ 11,699

XML

Unaudited Consolidated Statements of Changes in Cash Flows (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Statement of Cash Flows [Abstract]
Write off of deferred debt issuance cost	$ 0	$ 1,333
Cash acquired from acquisition	0	0
Cash divested with sale of business	$ 0	$ 0

XML

Description of the Company and Basis of Presentation

9 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of the Company and Basis of Presentation

Description of the Company and Basis of Presentation

Background

Evoqua Water Technologies Corp. (referred to herein as the “Company” or “EWT”) is a holding company and does not conduct any business operations of its own. The Company was incorporated on October 7, 2013. On November 6, 2017, the Company completed its initial public offering (“IPO”).

The Business

EWT provides a wide range of product brands and advanced water and wastewater treatment systems and technologies, as well as mobile and emergency water supply solutions and service contract options through its branch network. Headquartered in Pittsburgh, Pennsylvania, EWT is a multinational corporation with operations in the United States (“U.S.”), Canada, the United Kingdom (“UK”), the Netherlands, Germany, Australia, the People’s Republic of China, Singapore and India.

The Company is organizationally structured into two reportable operating segments for the purpose of making operational decisions and assessing financial performance: (i) Integrated Solutions and Services and (ii) Applied Product Technologies.

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. Unless otherwise specified, all dollar and share amounts in these notes are referred to in thousands.

The interim Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021 (“2021 Annual Report”), in preparing these Unaudited Consolidated Financial Statements, with the exception of accounting standard updates described in Note 2, “Recent Accounting Pronouncements.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2021 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation.

XML

Recent Accounting Pronouncements

9 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification (“ASC”) 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) (“Topic 606”), as if the entity had originated the contracts, rather than adjust them to fair value at the acquisition date. The guidance is effective for fiscal years beginning after December 15, 2022 and is to be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and also issued subsequent amendments to the initial guidance (collectively, “Topic 848”). Topic 848 became effective immediately and expires on December 31, 2022. Topic 848 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve their hedge accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. Topic 848 provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform if certain criteria are met. The Company adopted Topic 848 during the nine months ended June 30, 2022 and the adoption did not have a material impact on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

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Variable Interest Entities

9 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Variable Interest Entities

Variable Interest Entities

Treated Water Outsourcing (“TWO”) was a joint venture between the Company and Nalco Water, an Ecolab company (“Nalco”), in which the Company held a 50% partnership interest. The Company acquired the remaining partnership interest in TWO from Nalco on April 1, 2022. See Note 4, “Acquisitions and Divestitures” for further discussion. Prior to acquisition, the Company was obligated to absorb all risk of loss up to 100% of the joint venture partner’s equity. As such, the Company fully consolidated TWO as a variable interest entity (“VIE”) under ASC Topic No. 810, Consolidation.

The following provides a summary of TWO’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining partnership interest in TWO on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $1,380)	$	3,202
Property, plant, and equipment	903
Goodwill	2,206
Total liabilities	(1,009)

	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	843	$	1,641	$	2,511
Total operating expenses	(748)		(1,440)		(2,217)
Income from operations	$	95	$	201	$	294

On October 1, 2019, the Company acquired a 60% investment position in San Diego-based Frontier Water Systems, LLC (“Frontier”). The Frontier acquisition was a VIE because it had insufficient equity to finance its activities due to key assets being assigned to the Company upon acquisition.  The Company was the primary beneficiary of Frontier because the Company had the power to direct the activities that most significantly affect Frontier’s economic performance.

In addition, the Company entered into an agreement to purchase the remaining 40% interest in Frontier on or prior to March 30, 2024. This agreement (a) gave holders of the remaining 40% interest in Frontier (the “Minority Owners”) the right to sell to Evoqua up to approximately 10% of the outstanding equity in Frontier at a predetermined price, which right was exercisable by the Minority Owners between January 1, 2021 and February 28, 2021 (the “Option”), and (b) obligated the Company to purchase and the Minority Owners to sell all of the Minority Owners’ remaining interest in Frontier at the fair market value at the time of sale on or prior to March 30, 2024 (the “Purchase Right”). The Company acquired an additional 8% equity interest in Frontier in April 2021. On April 1, 2022, the Company purchased the remaining 32% outstanding equity in Frontier. See Note 4, “Acquisitions and Divestitures” for further discussion.

The following provides a summary of Frontier’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining equity interest in Frontier on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $2,095)	$	12,495
Property, plant, and equipment	2,113
Goodwill	1,798
Intangible assets, net	8,265
Total liabilities	(9,425)

	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	4,945	$	13,363	$	7,793
Total operating expenses	(4,448)		(12,135)		(8,587)
Income (loss) from operations	$	497	$	1,228	$	(794)

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Acquisitions and Divestitures

9 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions and Divestitures

Acquisitions and DivestituresAcquisitions support the Company’s strategy of delivering a broad solutions portfolio with robust technology across multiple geographies and end markets. The Company continues to evaluate potential strategic acquisitions of businesses, assets and product lines and believes that capex-like, tuck-in acquisitions present key opportunities within its overall growth strategy.

On April 1, 2022, the Company acquired the remaining 32% interest in Frontier from the Minority Owners for a purchase price of $10,396, which the Company had accrued for as the Purchase Right as of March 31, 2022, making Frontier a wholly-owned subsidiary of the Company. This followed the Company’s initial acquisition of a 60% equity interest in Frontier in October 2019 and the Company’s acquisition of an additional 8% equity interest in Frontier in April 2021. The total amount paid for the acquisition of Frontier, including those amounts paid in prior periods, was $22,771.

Also on April 1, 2022, the Company acquired the remaining 50% partnership interest in TWO from Nalco for a purchase price of $1,099.

On December 20, 2021, the Company and its indirect wholly-owned subsidiaries Evoqua Water Technologies LLC (“EWT LLC”) and Evoqua Water Technologies Ltd. (together with EWT LLC, the “Buyer”) entered into an Asset Purchase Agreement (the “Agreement”) with Cantel Medical LLC, Mar Cor Purification, Inc., and certain of their affiliates (collectively, the “Sellers”), each wholly-owned subsidiaries of Steris plc, pursuant to which the Buyer agreed to acquire certain assets of the Sellers and assume certain liabilities of the Sellers that are owned or used or arise in connection with the global operation of the Sellers’ renal business (the “Mar Cor Business”) for an aggregate purchase price of $196,300 in cash at closing (the “Purchase Price”), subject to customary adjustments, including for working capital (the “Transaction”). On January 3, 2022, the Company completed the Transaction to acquire the Mar Cor Business for $194,976 paid in cash at closing, following adjustments. The Company utilized cash on hand and borrowed an additional $160,000 under the 2021 Revolving Credit Facility (as defined below) to fund the Transaction. The Mar Cor Business is included within the Integrated Solutions and Services segment.

The Purchase Price includes a $12,300 earn out, which is being held in escrow and will be paid, pro rata, to the Sellers if the Mar Cor Business meets certain sales performance goals through December 31, 2022 (the “Earn Out”). Any portion of the Earn Out not paid to the Sellers during the first year following closing of the Transaction will be returned to the Buyer. A Monte Carlo simulation was performed to determine the fair value of an Earn Out asset for the amount expected to be received back from escrow based on the forecasted achievement of the sales performance goals associated with the Earn Out as of the acquisition date. See Note 6, Fair Value Measurements, for further discussion. In addition, approximately $12,965 of the Purchase Price was placed into an escrow account, of which $9,815 is to secure general indemnification claims against the Sellers and $3,150 is for net working capital adjustments. During the nine months ended June 30, 2022, the Company incurred approximately $3,178 in acquisition costs, which are included in General and administrative expense on the Unaudited Consolidated Statements of Operations.

The acquisition of the Mar Cor Business has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. These preliminary estimates are subject to revision during the measurement period as additional analyses are performed and third-party valuations are finalized, and these differences could have a material impact on the accounting for the business combination.

Receivables, net	$	21,275
Inventories, net	32,479
Earn Out asset	7,824
Other current assets	1,732
Property, plant, and equipment, net	19,343
Goodwill	68,714
Intangible assets, net	57,094
Other non-current assets	7,434
Total assets acquired	215,895
Current liabilities	(15,377)
Non-current liabilities	(5,542)
Total liabilities assumed	(20,919)
Net assets acquired	$	194,976

During the nine months ended June 30, 2022, the Company completed the divestiture of the resin regeneration assets in Germany (the “Germany Regen Business”) for $356 in cash at closing, resulting in a gain of $193 recognized on the sale. The Germany Regen Business was a part of the Applied Product Technologies segment.

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Revenue

9 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Performance Obligations

The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations if the product has an alternative use and the Company does not have an enforceable right to payment for the performance completed to date, including a normal profit margin, in the event of termination for convenience. The Company maintains a backlog of confirmed orders, which totaled approximately $344,633 at June 30, 2022. This backlog represents the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that the majority of these performance obligations will be satisfied within the next twelve to twenty-four months.

Disaggregation of Revenue

In accordance with Topic 606, the Company disaggregates revenue from contracts with customers into source of revenue, reportable operating segment, and geographical regions. The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Information regarding the source of revenue:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue from contracts with customers recognized under Topic 606	$	396,354	$	320,218	$	1,096,883	$	903,325
Other(1)	42,971		49,463		135,438		135,113
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

(1)     Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842), primarily attributable to long term rentals.

Information regarding revenue disaggregated by source of revenue and segment is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Integrated Solutions and Services
Capital	$	72,535	$	63,336	$	210,339	$	166,055
Aftermarket	59,033		31,852		150,602		91,499
Service	165,843		144,499		476,356		420,984
Total	$	297,411	$	239,687	$	837,297	$	678,538
Applied Product Technologies
Capital	$	98,782	$	92,692	$	274,444	$	259,877
Aftermarket	37,607		30,547		104,915		83,477
Service	5,525		6,755		15,665		16,546
Total	$	141,914	$	129,994	$	395,024	$	359,900
Total Revenue
Capital	$	171,317	$	156,028	$	484,783	$	425,932
Aftermarket	96,640		62,399		255,517		174,976
Service	171,368		151,254		492,021		437,530
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Information regarding revenue disaggregated by geographic area is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
United States	$	362,268	$	291,113	$	1,009,615	$	829,925
Asia	32,996		31,987		91,943		81,568
Europe	28,122		28,749		82,392		81,561
Canada	13,422		14,210		39,831		36,025
Australia	2,517		3,622		8,540		9,359
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Contract Balances

The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company receives payments from customers based on a billing schedule as established in its contracts.

Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Change in contract assets and liabilities are due to the Company’s performance under the contract.

The tables below provide a roll-forward of contract assets and contract liabilities balances for the periods presented:

	Nine Months Ended June 30,
Contract assets(a)	2022		2021
Balance at beginning of period	$	72,746	$	80,759
Recognized in current period	294,794		232,750
Reclassified to accounts receivable	(265,324)		(244,766)
Foreign currency	(317)		600
Balance at end of period	$	101,899	$	69,343

(a)     Excludes receivable balances which are disclosed on the Consolidated Balance Sheets.

	Nine Months Ended June 30,
Contract Liabilities	2022		2021
Balance at beginning of period	$	55,883	$	26,259
Recognized in current period	271,227		245,049
Amounts in beginning balance reclassified to revenue	(44,718)		(18,496)
Current period amounts reclassified to revenue	(215,366)		(216,972)
Foreign currency	(83)		1,075
Balance at end of period	$	66,943	$	36,915

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Fair Value Measurements

9 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurements

As of June 30, 2022 and September 30, 2021, the fair values of cash and cash equivalents, accounts receivable, and accounts payable approximated carrying values due to the short maturity of these items.

The Company measures the fair value of pension plan assets and liabilities, deferred compensation plan assets and liabilities on a recurring basis pursuant to ASC Topic No. 820, Fair Value Measurement. ASC Topic No. 820 establishes a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‑derived valuations whose inputs are observable or whose significant value driver is observable.

Level 3: Unobservable inputs in which little or no market data is available, therefore requiring an entity to develop its own assumptions.

The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (“NAV”) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to measure the fair value of these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy.

	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of June 30, 2022
Assets:
Pension plan
Cash	$	—	$	316	$	—	$	—
Global Multi-Asset Fund	12,639		—		—		—
Government Securities	1,459		—		—		—
Liability Driven Investment	4,275		—		—		—
Guernsey Unit Trust	2,255		—		—		—
Global Absolute Return	1,418		—		—		—
Deferred compensation plan assets
Cash	—		1,034		—		—
Mutual Funds	—		13,106		—		—
Earn-out assets related to acquisitions	—		—		—		10,543
Interest rate swaps	—		—		36,500		—
Foreign currency forward contracts	—		—		107		—
Liabilities:
Pension plan	—		—		(41,483)		—
Deferred compensation plan liabilities	—		—		(20,361)		—
Total return swaps—deferred compensation	—		—		(137)		—
Long‑term debt	—		—		(928,629)		—
Foreign currency forward contracts	—		—		(75)		—
Commodity swaps	—		—		(7)		—

	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2021
Assets:
Pension plan
Cash	$	—	$	831	$	—	$	—
Global Multi-Asset Fund	15,244		—		—		—
Government Securities	5,158		—		—		—
Liability Driven Investment	2,793		—		—		—
Guernsey Unit Trust	2,387		—		—		—
Global Absolute Return	2,225		—		—		—
Deferred compensation plan assets
Cash	—		1,251		—		—
Mutual Funds	—		17,806		—		—
Interest rate swaps	—		—		3,127		—
Foreign currency forward contracts	—		—		24		—
Liabilities:
Pension plan	—		—		(46,013)		—
Deferred compensation plan liabilities	—		—		(24,382)		—
Total return swaps—deferred compensation	—		—		(130)		—
Long‑term debt	—		—		(752,988)		—
Interest rate swaps	—		—		(303)		—
Foreign currency forward contracts	—		—		(102)		—
Commodity swaps	—		—		(19)		—
Earn-out liabilities related to acquisitions	—		—		—		(150)
Purchase Right	—		—		—		(8,305)

The pension plan assets and liabilities and deferred compensation plan assets and liabilities are included in Other non‑current assets and Other non‑current liabilities at June 30, 2022 and September 30, 2021. The unrealized loss on mutual funds was $2,111 at June 30, 2022.

The Company records contingent consideration arrangements at fair value on a recurring basis, and the associated balances presented as of June 30, 2022 and September 30, 2021 are earn-outs related to acquisitions. The fair value of earn-outs related to acquisitions is based on significant unobservable inputs including the achievement of certain performance metrics. Significant changes in these inputs would result in corresponding increases or decreases in the fair value of the earn-out each period until the related contingency has been resolved. Changes in the fair value of the contingent consideration obligations and assets can result from adjustments in the probability of achieving future development steps, sales targets and profitability and are recorded in General and administrative expenses in the Unaudited Consolidated Statements of Operations. During the three and nine months ended June 30, 2022, the Company recorded a decrease in the fair value of the earn-out liability related to the prior year acquisition of Water Consulting Specialists, Inc. (“WCSI”) of $25 and $150, respectively. As a result of the Mar Cor Business acquisition on January 3, 2022, the Company recorded an Earn Out asset for $7,824 which represented the fair value of amounts expected to be received back from escrow based on the forecasted achievement of certain sales performance goals at the acquisition date. During the three and nine months ended June 30, 2022, the Company recorded an increase in the fair value of the Earn Out asset of $2,719 based on updated forecast information. As of June 30, 2022 and September 30, 2021, earn-out liabilities related to acquisitions totaled $0 and $150, respectively, and are included in Accrued expenses and other liabilities on the Consolidated Balance Sheets. As of June 30, 2022 and September 30, 2021, earn-out assets related to

acquisitions total $10,543 and $0, respectively, and are included in Prepaid and other current assets on the Consolidated Balance Sheets.In addition, the Company had a liability recorded for the Purchase Right to purchase the remaining 32% interest of Frontier. During the nine months ended June 30, 2022, the Company recorded an increase in the fair value of the Purchase Right liability of $2,091, which was recorded to Interest expense on the Unaudited Consolidated Statements of Operations. The Purchase Right was exercised by the Minority Owners on April 1, 2022 resulting in the purchase of the remaining interest of Frontier for $10,396 and the settlement of the Purchase Right liability recorded. As of June 30, 2022 and September 30, 2021, $0 and $8,305, respectively is included in Other non‑current liabilities related to the Purchase Right on the Consolidated Balance Sheets.

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Accounts Receivable

9 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Accounts receivable

Accounts Receivable

Accounts receivable are summarized as follows:

	June 30, 2022		September 30, 2021
Accounts receivable	$	300,121	$	282,819
Allowance for credit losses	(6,650)		(4,824)
Receivables, net	$	293,471	$	277,995

The movement in the allowance for credit losses was as follows for the nine months ended June 30, 2022:

Balance at September 30, 2021	$	(4,824)
Charged to costs and expenses	(1,423)
Write-offs	190
Foreign currency and other	(593)
Balance at June 30, 2022	$	(6,650)

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Inventories

9 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories

The major classes of Inventories, net are as follows:

	June 30, 2022		September 30, 2021
Raw materials and supplies	$	119,853	$	86,469
Work in progress	36,296		19,842
Finished goods and products held for resale	85,709		59,624
Costs of unbilled projects	2,909		2,277
Reserves for excess and obsolete	(12,308)		(9,709)
Inventories, net	$	232,459	$	158,503

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Property, Plant, and Equipment

9 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant, and Equipment

Property, plant, and equipment consists of the following:

	June 30, 2022		September 30, 2021
Machinery and equipment	$	401,670	$	388,352
Rental equipment	261,644		246,257
Land and buildings	77,473		70,048
Construction in process	71,303		59,737
	812,090		764,394
Less: accumulated depreciation	(411,723)		(389,406)
Property, plant, and equipment, net	$	400,367	$	374,988

The Company entered into secured financing agreements that require providing a security interest in specified equipment and, in some cases, the underlying contract. As of June 30, 2022 and September 30, 2021, the gross and net amounts of those assets are as follows:

	June 30, 2022				September 30, 2021
	Gross		Net		Gross		Net
Machinery and equipment	$	86,133	$	63,931	$	73,632	$	57,036
Construction in process	44,121		44,121		30,504		30,504
	$	130,254	$	108,052	$	104,136	$	87,540

Depreciation expense and maintenance and repairs expense for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Depreciation expense	$	21,089	$	19,170	$	61,131	$	56,450
Maintenance and repair expense	7,808		4,603		21,402		14,565

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Goodwill

9 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

Changes in the carrying amount of goodwill are as follows:

	Integrated Solutions and Services		Applied Product Technologies		Total
Balance at September 30, 2021	$	233,830	$	173,546	$	407,376
Business combinations and divestitures	68,708		(34)		68,674
Foreign currency translation	(701)		(3,661)		(4,362)
Balance at June 30, 2022	$	301,837	$	169,851	$	471,688

As of June 30, 2022 and September 30, 2021, $223,834 and $159,730, respectively, of goodwill was deductible for tax purposes.

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Debt

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt

Debt

Long‑term debt, including accrued interest, consists of the following:

	June 30, 2022		September 30, 2021
2021 Term Loan, due April 1, 2028 (1)	$	470,250	$	473,837
2021 Revolving Credit Facility, due April 1, 2026 (2)	211,113		37,268
Securitization Facility, due April 1, 2024 (3)	138,013		150,061
Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07%	116,796		93,375
Notes Payable, due July 31, 2023 (4)	—		402
Total debt	936,172		754,943
Less unamortized deferred financing fees	(10,345)		(11,738)
Total net debt	925,827		743,205
Less current portion	(16,064)		(12,775)
Total long‑term debt	$	909,763	$	730,430

(1)The interest rate on the 2021 Term Loan was 3.56% as of June 30, 2022, comprised of 1.06% LIBOR plus a 2.50% spread. Includes accrued interest of $0 and $25 at June 30, 2022 and September 30, 2021, respectively.

(2)The 2021 Revolving Credit Facility includes $206,000 outstanding with an interest rate of 3.64% as of June 30, 2022, comprised of 1.69% LIBOR plus a 1.95% spread, and $5,000 outstanding with an interest rate of 5.70%. as of June 30, 2022, comprised of 4.75% Prime Rate plus a 0.95% spread. During the nine months ended June 30, 2022, the spread on the 2021 Revolving Credit Facility was reduced from 2.25% at September 30, 2021 as a result of a Sustainability Pricing Adjustment per the 2021 Credit Agreement. Includes accrued interest of $113 and $268, at June 30, 2022 and September 30, 2021, respectively.

(3)The interest rate on the Securitization Facility was 3.04% as of June 30, 2022, comprised of 1.79% LIBOR plus a 1.25% spread. Includes accrued interest of $113 and $61 at June 30, 2022 and September 30, 2021, respectively.

(4)In March 2022, the outstanding balance of the Notes Payable due July 31, 2023, was repaid in conjunction with the Company’s acquisition of TWO. See Note 4, “Acquisitions and Divestitures” for further discussion.

2021 Credit Agreement

On April 1, 2021, EWT III entered into a Credit Agreement (the “2021 Credit Agreement”) among EWT III, as borrower, EWT II, as parent guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and ING Capital, LLC, as sustainability coordinator. The 2021 Credit Agreement provides for a multi-currency senior secured revolving credit facility in an aggregate principal amount not to exceed the U.S. dollar equivalent of $350,000 (the “2021 Revolving Credit Facility”) and a discounted senior secured term (the “2021 Term Loan”) in the amount of $475,000 (together with the 2021 Revolving Credit Facility, the “Senior Facilities”). The 2021 Credit Agreement also provides for a letter of credit sub-facility not to exceed $60,000.

The 2021 Credit Agreement contains customary representations, warranties, affirmative covenants, and negative covenants, including, among other things, a springing maximum first lien leverage ratio of 5.55 to 1.00. The Company did not exceed this ratio during the nine months ended June 30, 2022, does not anticipate exceeding this ratio during the year ending September 30, 2022, and therefore does not anticipate any additional repayments during the year ending September 30, 2022.

The following table summarizes the amount of the Company’s outstanding borrowings and outstanding letters of credit under the 2021 Revolving Credit Facility as of June 30, 2022 and September 30, 2021.

	June 30, 2022		September 30, 2021
Borrowing availability	$	350,000	$	350,000
Outstanding borrowings	211,000		37,000
Outstanding letters of credit	9,529		10,112
Unused amounts	$	129,471	$	302,888

Receivables Securitization Program

On April 1, 2021, Evoqua Finance LLC (“Evoqua Finance”), an indirect wholly-owned subsidiary of the Company, entered into an accounts receivable securitization program (the “Receivables Securitization Program”) consisting of, among other agreements, (i) a Receivables Financing Agreement (the “Receivables Financing Agreement”) among Evoqua Finance, as the borrower, the lenders from time to time party thereto (the “Receivables Financing Lenders”), PNC Bank, National Association (“PNC Bank”), as administrative agent, EWT LLC, as initial servicer, and PNC Capital Markets LLC (“PNC Markets”), as structuring agent, pursuant to which the lenders have made available to Evoqua Finance a receivables finance facility (the “Securitization Facility”) in an amount up to $150,000 and (ii) a Sale and Contribution Agreement (the “Sale Agreement”) among Evoqua Finance, as purchaser, EWT LLC, as initial servicer and as an originator, and Neptune Benson, Inc., an indirectly wholly-owned subsidiary of the Company, as an originator (together with EWT LLC, the “Originators”).

The Receivables Securitization Program contains certain customary representations, warranties, affirmative covenants, and negative covenants, subject to certain cure periods in some cases, including the eligibility of the receivables being sold by the Originators and securing the loans made by the Receivables Financing Lenders, as well as customary reserve requirements, events of default, termination events, and servicer defaults. The Company was in compliance with all covenants during the nine months ended June 30, 2022, does not anticipate becoming noncompliant during the year ending September 30, 2022, and therefore, subject to limitations arising from collateral availability, does not anticipate any additional repayments during the year ending September 30, 2022.

Equipment Financings

During the nine months ended June 30, 2022, the Company completed the following equipment financings:

Date Entered	Due	Interest Rate as of June 30, 2022		Principal Amount
June 30, 2022	July 31, 2029(1)	4.81	%	$	12,356
June 30, 2022	May 31, 2029(2)	4.25	%	4,086
March 18, 2022	March 17, 2029	4.67	%	1,839
March 16, 2022	July 31, 2029(1)	4.81	%	1,317
March 15, 2022	April 1, 2029	4.74	%	4,788
December 30, 2021	December 30, 2028	3.94	%	2,207
December 23, 2021	July 31, 2029(1)	4.81	%	3,742
				$	30,335

(1)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through August 1, 2022 based on an interest rate of 4.81% including a 1.06% LIBOR plus a 3.75% spread as of June 30, 2022. The Company entered into an interest rate swap with an effective date of August 1, 2022 to mitigate risk associated with this variable rate equipment financing, see Note 12, “Derivative Financial Instruments” for further discussion.

(2)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through December 30, 2022 based on a 1.50% Secured Overnight Financing Rate plus a 2.75% spread.

Deferred Financing Fees and Discounts

Deferred financing fees and discounts related to the Company’s long-term debt were included as a contra liability to debt on the Consolidated Balance Sheets as follows:

	June 30, 2022		September 30, 2021
Current portion of deferred financing fees and discounts(1)	$	(1,891)	$	(1,866)
Long-term portion of deferred financing fees and discounts(2)	(8,454)		(9,872)
Total deferred financing fees and discounts	$	(10,345)	$	(11,738)

(1)Included in Current portion of debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets.

(2)Included in Long-term debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets.

Amortization of deferred financing fees and discounts included in interest expense was $467 and $437 for the three months ended June 30, 2022 and 2021 and $1,393 and $1,481 for the nine months ended June 30, 2022 and 2021, respectively.

Repayment Schedule

Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of June 30, 2022, are presented below:

Fiscal Year
Remainder of 2022	$	4,293
2023	18,215
2024	155,025
2025	18,714
2026	22,030
Thereafter	717,895
Total	$	936,172

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Derivative Financial Instruments

9 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments

Interest Rate Risk Management

The Company is subject to market risk exposure arising from changes in interest rates on the senior secured credit facilities as well as variable rate equipment financings, which bear interest at rates that are indexed against LIBOR. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to mitigate its exposure to rising interest rates. As of June 30, 2022, the notional amount of the Company’s interest rate swaps was $531,000.

Foreign Currency Risk Management

The Company’s functional currency is the U.S. dollar. By operating internationally, the Company is subject to foreign currency translation risk associated with converting the foreign operations’ financial statements into U.S. dollars transactions denominated in currencies other than the U.S. dollar (“foreign currencies”). The Company is also subject to currency risk from transactions denominated in foreign currencies. To mitigate cross-currency transaction risk, the Company analyzes significant exposures where it has receipts or payments in a currency other than the functional currency of its operations, and from time to time may strategically enter into short-term foreign currency forward contracts to lock in some or all of the cash flows associated with these transactions. The Company uses foreign currency derivative contracts in order to manage the effect of exchange fluctuations on forecasted sales and purchases that are denominated in foreign currencies. To mitigate the impact of foreign exchange rate risk, the Company entered into a series of forward contracts designated as cash flow hedges. As of June 30, 2022, the notional amount of the forward contracts was $14,025.

Equity Price Risk Management

The Company is exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Equity price movements affect the compensation expense as certain investments made by the Company’s employees in the deferred compensation plan are revalued. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge a portion of this exposure and offset the related compensation expense. As of June 30, 2022, the notional amount of the total return swaps was $4,966.

Credit Risk Management

The counterparties to the Company’s derivative contracts are highly-rated financial institutions. The Company regularly reviews the creditworthiness of its financial counterparties and fully expects the counterparties to perform under their respective agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. The Company records all derivative instruments on a gross basis in the Consolidated Balance Sheets. Accordingly, there are no offsetting amounts that net assets against liabilities.

Derivatives Designated as Cash Flow Hedges

The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Prepaid and other current assets	$	13,656	$	3,127
Foreign currency forward contracts	Prepaid and other current assets	43		6
Interest rate swaps	Other non‑current assets	22,844		—

		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Accrued expenses and other current liabilities	$	—	$	303
Foreign currency forward contracts	Accrued expenses and other current liabilities	75		102
Commodity swaps	Accrued expenses and other current liabilities	7		19

The following represents the amount of gain (loss) recognized in Accumulated other comprehensive income (loss) (“AOCI”) (net of tax) during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Interest rate swaps	$	5,798	$	(4,157)	$	32,746	$	5,111
Foreign currency forward contracts	(135)		67		(53)		(265)
Commodity swaps	(16)		(16)		12		(16)
	$	5,647	$	(4,106)	$	32,705	$	4,830

The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of (Loss) Gain	2022		2021		2022		2021
Cost of product sales and services	$	(25)	$	9	$	(104)	$	(4)
General and administrative expense	—		—		(7)		(72)
Selling and marketing expense	—		—		—		(39)
Interest expense	237		(591)		(930)		(1,624)
	$	212	$	(582)	$	(1,041)	$	(1,739)

Based on the fair value amounts of the Company’s cash flow hedges at June 30, 2022, the Company expects that approximately $26 of pre-tax net gains will be reclassified from AOCI into earnings during the next twelve months. The amount ultimately realized, however, will differ as exchange rates vary and the underlying contracts settle.

Derivatives Not Designated as Hedging Instruments

The following represents the fair value recorded for derivatives not designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Foreign currency forward contracts	Prepaid and other current assets	$	64	$	18
		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Total return swaps—deferred compensation	Accrued expenses and other current liabilities	$	137	$	130

The following represents the amount of loss recognized in earnings for derivatives not designated as hedges during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of Loss	2022		2021		2022		2021
General and administrative expense	$	(793)	$	—	$	(834)	$	—
	$	(793)	$	—	$	(834)	$	—

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Product Warranties

9 Months Ended

Jun. 30, 2022

Guarantees and Product Warranties [Abstract]

Product warranties

Product Warranties

A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows:

	Current Product Warranties				Non-Current Product Warranties
	Nine Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Balance at beginning of the period	$	8,138	$	6,115	$	2,966	$	1,724
Warranty provision for sales	4,705		5,680		1,772		1,577
Settlement of warranty claims	(4,987)		(3,826)		(593)		(701)
Foreign currency translation and other	(658)		94		(151)		29
Balance at end of the period	$	7,198	$	8,063	$	3,994	$	2,629

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Restructuring and Related Charges

9 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring and related charges

Restructuring and Related Charges

To better align its resources with its growth strategies and reduce its cost structure, the Company commits to various restructuring plans as necessary. The Company has undertaken various restructuring initiatives, including activities to reduce the cost structure and rationalize location footprint following the sale of the Memcor product line, transitioning from a three-segment structure to a two-segment operating model designed to better serve the needs of customers worldwide, and various initiatives within the Integrated Solutions and Services segment to drive efficiency and effectiveness in certain divisions.

The Company currently expects to incur in future periods approximately $2,700 to $3,700 of costs related to restructuring programs initiated in prior periods.

The table below sets forth the amounts accrued for the restructuring components and related activity:

	Nine Months Ended June 30,
	2022		2021
Balance at beginning of the period	$	304	$	970
Restructuring charges following the sale of the Memcor product line	942		4,649
Restructuring charges related to two-segment realignment	413		830
Restructuring charges related to other initiatives	3,232		1,856
Release of prior reserves	(290)		(296)
Write off charges	—		(966)
Cash payments	(3,551)		(6,349)
Other adjustments	(6)		8
Balance at end of the period	$	1,044	$	702

The balances for accrued restructuring liabilities at June 30, 2022 and September 30, 2021, are recorded in Accrued expenses and other liabilities on the Consolidated Balance Sheets. Restructuring charges primarily represent severance charges and other employee costs, fixed asset write-offs, and certain relocation expenses. The Company expects to pay the remaining amounts accrued as of June 30, 2022 during the remainder of fiscal 2022.

The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations:

	Nine Months Ended June 30,
	2022		2021
Cost of product sales and services	$	1,352	$	4,341
General and administrative expense	2,403		1,675
Sales and marketing expense	83		348
Research and development expense	1		(15)
Other operating expense, net	458		690
	$	4,297	$	7,039

The Company continues to evaluate restructuring activities that may result in additional charges in the future.

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Employee Benefit Plans

9 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Employee benefit plans

Employee Benefit Plans

The Company maintains multiple employee benefit plans.

Certain of the Company’s employees in the UK were participants in a Siemens defined benefit plan established for employees of a UK-based operation acquired by Siemens in 2004. The plan was frozen with respect to future service credits for active employees, however the benefit formula recognized future compensation increases. The Company agreed to establish a replacement defined benefit plan, with the assets of the Siemens scheme transferring to the new scheme on April 1, 2015.

The Company’s employees in Germany also participate in a defined benefit plan. Assets equaling the plan’s accumulated benefit obligation were transferred to a German defined benefit plan sponsored by the Company upon the acquisition of EWT from Siemens. The German entity also sponsors a defined benefit plan for a small group of employees located in France.

The components of net periodic benefit cost for the plans were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Service cost	$	215	$	287	$	674	$	858
Interest cost	100		81		315		240
Expected return on plan assets	(122)		(88)		(383)		(262)
Amortization of actuarial losses	156		266		491		640
Pension expense for defined benefit plans	$	349	$	546	$	1,097	$	1,476

The components of pension expense, other than the service cost component which is included in General and administrative expense, are included in the line item Other operating expense in the Unaudited Consolidated Statements of Operations.

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Income Taxes

9 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Year-to-date income tax expense or benefit is the product of the most current projected annual effective tax rate (“PAETR”) and the actual year-to-date pretax income (loss) adjusted for any discrete tax items. The income tax expense or benefit for a particular quarter, except for the first quarter, is the difference between the year-to-date calculation of income tax expense or benefit and the year-to-date calculation for the prior quarter. Items unrelated to current period ordinary income or (loss) are recognized entirely in the period identified as a discrete item of tax.

Annual Effective Tax Rate

The PAETR, which excludes the impact of discrete items, was 23.1% and 19.7% as of the nine months ended June 30, 2022 and 2021, respectively. For the nine months ended June 30, 2022, the PAETR was higher than the U.S. federal statutory rate of 21.0% primarily due to the mix of earnings between countries, most of which have higher statutory rates than the U.S., which was mostly offset by the impact of maintaining a valuation allowance that is provided on U.S. deferred tax assets. The current year PAETR was higher than the prior year’s rate due to an increase in projected pretax book income in countries with higher statutory tax rates.

The Company continues to maintain a full valuation allowance on U.S. federal and state net deferred tax assets (excluding the tax effects of deferred tax liabilities associated with indefinite lived intangibles) for the period ending June 30, 2022 as a result of pretax losses incurred since the Company’s inception in early 2014. The Company believes it is prudent to retain a valuation allowance until a more consistent pattern of earnings is established and net operating loss carryforwards begin to be utilized.

Current and Prior Period Tax Expense

For the three months ended June 30, 2022, the Company recognized income tax expense of $5,027 on pretax income of $22,590. The rate of 22.3% differed from the U.S. statutory rate of 21.0% as the mix of earnings between countries, most of which have higher statutory tax rates than the U.S., was mostly offset by the impact of maintaining a U.S. valuation allowance that is provided on U.S. deferred tax assets.

For the three months ended June 30, 2021, the Company recognized income tax expense of $3,887 on pretax income of $17,086. The rate of 22.7% differed from the U.S. statutory rate of 21.0% principally due to the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets.

For the nine months ended June 30, 2022, the Company recognized income tax expense of $8,896 on pretax income of $39,921. The rate of 22.3% differed from the U.S. statutory rate of 21.0% as the mix of earnings between countries, most of which have higher statutory tax rates than the U.S., was mostly offset by the impact of maintaining a U.S. valuation allowance that is provided on U.S. deferred tax assets.

For the nine months ended June 30, 2021, the Company recognized income tax expense of $7,672 on pretax income of $32,430. The rate of 23.7% differed from the U.S. statutory rate of 21.0% principally due to the unfavorable impact of discrete items related to an adjustment for prior periods and recording an uncertain tax position related to a tax audit in a foreign jurisdiction which were partially offset by the impact of maintaining a U.S. valuation allowance against U.S. deferred tax assets.At June 30, 2022 and 2021, the Company had gross unrecognized tax benefits of $1,663 and $1,805 respectively.

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Share-Based Compensation

9 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Share Based Compensation

Share-Based Compensation

The Company designs equity compensation plans to attract and retain employees while also aligning employees’ interests with the interests of the Company’s shareholders. In addition, members of the Company’s Board of Directors (the “Board”) participate in equity compensation plans in connection with their service on the Board.

The Company established the Evoqua Water Technologies Corp. Stock Option Plan (the “Stock Option Plan”) on March 6, 2014. The plan allows certain management employees and the Board to purchase shares in the Company. Under the Stock Option Plan, the number of shares available for award was 11,083. As of June 30, 2022, there were approximately 2,177 shares available for future grants, however, the Company does not currently intend to make additional grants under the Stock Option Plan.    

In connection with the IPO, the Board adopted, and the Company’s shareholders approved, the Evoqua Water Technologies Corp. 2017 Equity Incentive Plan (the “Equity Incentive Plan”), under which equity awards may be granted in the form of options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, dividend equivalent rights, share awards, and performance-based awards (including performance share units and performance-based restricted stock).

During the nine months ended June 30, 2022, the Company granted RSUs and performance share units under the Equity Incentive Plan to certain employees of the Company. The final number of performance share units that may be earned is dependent on the Company’s achievement of performance goals related to organic revenue growth dollars and average adjusted EBITDA margin over a three-year measurement period ending September 30, 2024. The final number of performance share units that may be earned is also subject to a total stockholder return (“TSR”) modifier, which operates by increasing or decreasing the total number of shares earned by up to 25% based on the Company’s TSR relative to the TSR of the U.S. constituents of the S&P Global Water Index. In order to receive shares earned at the end of the performance period, the recipient must remain employed by the Company or its subsidiaries through the end of the three-year period (except in the event of retirement, death, disability or, in certain circumstances, related to change in control).

As of June 30, 2022, there were approximately 3,958 shares available for grants under the Equity Incentive Plan.

Outstanding option awards vest ratably at 25% per year, and are exercisable at the time of vesting. The options granted have a ten-year contractual term.

A summary of the stock option activity as of June 30, 2022 is presented below:

(In thousands, except per share amounts)	Options	Weighted Average Exercise Price/Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 30, 2021	5,090	$	13.87	5.9 years	$	120,611
Granted	2	46.75
Exercised	(529)	10.57
Forfeited	(32)	20.94
Outstanding at June 30, 2022	4,531	$	14.21	5.3 years	$	82,939
Options exercisable at June 30, 2022	3,477	$	11.97	4.5 years	$	71,433
Options vested and expected to vest at June 30, 2022	4,516	$	14.18	5.3 years	$	82,792

The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended June 30, 2022 was $16,282.

A summary of the status of the Company's unvested stock options as of and for the nine months ended June 30, 2022 is presented below.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	1,901	$	6.69
Granted	2	24.22
Vested	(817)	6.54
Forfeited	(32)	6.66
Unvested at end of period	1,054	$	6.82

The total fair value of options vested during the nine months ended June 30, 2022, was $5,346.

The following is a summary of the RSU activity for the nine months ended June 30, 2022.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Outstanding at September 30, 2021	1,209	$	22.77
Granted	327	44.94
Vested	(504)	22.21
Forfeited	(37)	26.35
Outstanding at June 30, 2022	995	$	30.19
Expected to vest at June 30, 2022	966	$	29.95

The following is a summary of the performance share unit activity for the nine months ended June 30, 2022, assuming target award level.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	469	$	16.92
Granted	124	52.50
Unvested at end of period	593	$	23.39
Expected to vest	551	$	23.28

Expense Measurement and Recognition

The Company recognizes share-based compensation for all currently outstanding awards and, in future periods, will recognize compensation costs for the unvested portion of awards based on grant date fair values. Total share-based compensation expense was $5,818 and $5,526 during the three months ended June 30, 2022 and 2021, respectively, of which $5,750 and $4,228 was non-cash, respectively. Total share-based compensation expense was $17,220 and $11,816 during the nine months ended June 30, 2022 and 2021, respectively, of which $16,339 and $10,461 was non-cash, respectively. The unrecognized compensation expense related to stock options, RSUs, and performance share units (measured at a target award level) was $5,591, $24,133 and $9,905, respectively at June 30, 2022, and is expected to be recognized over a weighted average period of 1.7 years, 1.9 years and 2.0 years, respectively. The Company received $7,921 from the exercise of stock options during the nine months ended June 30, 2022.

Employee Stock Purchase Plan    

Effective October 1, 2018, the Company implemented an employee stock purchase plan (the “ESPP”) which allows employees to purchase shares of the Company’s stock at 85% of the lower of the fair market value on the first or last business day of the applicable six-month offering period. These purchases are offered twice throughout each fiscal year, and are paid by employees through payroll deductions over the respective six month purchase period, at the end of which the stock is transferred to the employees. On December 21, 2018, the Company registered 11,297 shares of common stock, par value $0.01 per share, of which 5,000 are available for future issuance under the ESPP. During the three months ended June 30, 2022 and 2021, the Company incurred compensation expense of $298 and $249, respectively, in salaries and wages with respect to the ESPP, representing the fair value of the discounted price of the shares. During the nine months ended June 30, 2022 and 2021, the Company incurred compensation expense of $717 and $652, respectively. These amounts are included in the total share-based compensation expense above. On October 1, 2021 and April 1, 2022, 60 and 48 shares, respectively, were issued under the ESPP.

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Concentration of Credit Risk	9 Months Ended
	Jun. 30, 2022
Risks and Uncertainties [Abstract]
Concentration of credit risk	Concentration of Credit RiskThe Company’s cash and cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Accounts receivable are derived from revenue earned from customers located in the U.S. and internationally and generally do not require collateral. The Company’s trade receivables do not represent a significant concentration of credit risk at June 30, 2022 and September 30, 2021 due to the wide variety of customers and markets into which products are sold and their dispersion across geographic areas. The Company does perform ongoing credit evaluations of its customers and maintains an allowance for potential credit losses on trade receivables. As of and for the three and nine months ended June 30, 2022 and 2021, no customer accounted for more than 10% of net sales or net accounts receivable.The Company operates predominantly in nine countries worldwide and provides a wide range of proven product brands and advanced water and wastewater treatment technologies, mobile and emergency water supply solutions, and service contract options through its Integrated Solutions and Services and Applied Product Technologies segments. The Company is a multi-national business but its sales and operations are primarily in the U.S. Sales to unaffiliated customers are transacted with the Company location that maintains the customer relationship.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Guarantees

From time to time, the Company is required to provide letters of credit, bank guarantees, or surety bonds in support of its commitments and as part of the terms and conditions on water treatment projects.  In addition, the Company is required to provide letters of credit or surety bonds to the Department of Environmental Protection or equivalent in some states in order to maintain its licenses to handle toxic substances at certain of its water treatment facilities.

These financial instruments typically expire after all Company commitments have been met, a period typically ranging from twelve months to ten years, or more in some circumstances.  The letters of credit, bank guarantees, or surety bonds are arranged through major banks or insurance companies. In the case of surety bonds, the Company generally indemnifies the issuer for all costs incurred if a claim is made against the bond. 

The following summarizes the Company’s outstanding letters of credit and surety bonds as of June 30, 2022 and September 30, 2021, respectively.

	June 30, 2022		September 30, 2021
Revolving credit capacity	$	60,000	$	60,000
Letters of credit outstanding	9,529		10,112
Remaining revolving credit capacity	$	50,471	$	49,888
Surety capacity	$	262,090	$	250,000
Surety issuances	129,021		147,845
Remaining surety available	$	133,069	$	102,155

The longest maturity date of letters of credit and surety bonds in effect as of June 30, 2022 was March 20, 2030.

Litigation

From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation is commenced against it arising from or related to: product liability; personal injury; trademarks, trade secrets, or other intellectual property; shareholder disputes; labor and employee disputes; commercial or contractual disputes; breach of warranty; or environmental matters. Claimed amounts may be substantial but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral awards. While it is not feasible to predict the outcome of these matters with certainty, and some lawsuits, claims, or proceedings may be disposed or decided unfavorably, the Company does not expect that any asserted or un-asserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its results of operations, or financial condition.

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Accrued Expenses and Other Liabilities

9 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:

	June 30, 2022		September 30, 2021
Salaries, wages, and other benefits	$	67,837	$	79,110
Obligation under operating leases	14,321		13,316
Obligation under finance leases	12,560		12,093
Deferred revenue	11,499		5,241
Third party commissions	10,464		10,031
Taxes, other than income	6,711		4,575
Insurance liabilities	3,466		3,720
Provisions for litigation	1,446		2,938
Severance payments	1,044		304
Fair value of liability derivatives	219		554
Earn-outs related to acquisitions	—		150
Other	32,907		28,335
	$	162,474	$	160,367

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Business Segments

9 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business Segments

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.

The Company has two reportable operating segments, Integrated Solutions and Services and Applied Product Technologies. 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, original equipment manufacturers (“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.

Corporate activities include general corporate expenses, elimination of inter-segment transactions, interest income and expense, and certain other charges. Certain other charges may 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 and certain integration costs), and share-based compensation charges. 

Since certain administrative and other operating expenses and other items 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.

Reportable operating segment revenue and operating profit for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Total revenue
Integrated Solutions and Services	$	310,431	$	245,414	$	868,506	$	690,370
Applied Product Technologies	166,779		149,434		464,137		419,122
Total revenue	477,210		394,848		1,332,643		1,109,492
Intersegment revenue
Integrated Solutions and Services	13,020		5,727		31,209		11,832
Applied Product Technologies	24,865		19,440		69,113		59,222
Total intersegment revenue	37,885		25,167		100,322		71,054
Revenue to external customers
Integrated Solutions and Services	297,411		239,687		837,297		678,538
Applied Product Technologies	141,914		129,994		395,024		359,900
Total revenue	$	439,325	$	369,681	$	1,232,321	$	1,038,438
Operating profit (loss)
Integrated Solutions and Services	$	39,864	$	37,793	$	113,269	$	94,934
Applied Product Technologies	28,592		22,735		69,412		54,218
Corporate	(37,426)		(32,218)		(117,791)		(88,430)
Total operating profit	31,030		28,310		64,890		60,722
Interest expense	(8,440)		(11,224)		(24,969)		(28,292)
Income before income taxes	22,590		17,086		39,921		32,430
Income tax expense	(5,027)		(3,887)		(8,896)		(7,672)
Net income	$	17,563	$	13,199	$	31,025	$	24,758

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Earnings per Share

9 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings per share

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings from continuing operations per common share (in thousands, except per share amounts):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp.	$	17,563	$	13,155	$	30,880	$	24,624
Denominator:
Denominator for basic net income per common share—weighted average shares	121,338		119,015		120,970		119,015
Effect of dilutive securities:
Share‑based compensation	3,512		3,245		3,927		3,312
Denominator for diluted net income per common share—adjusted weighted average shares	124,850		122,260		124,897		122,327
Basic earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.26	$	0.21
Diluted earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.25	$	0.20

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Subsequent Events

9 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 1, 2022, the Company completed the acquisition of Smith Engineering, Inc. (“Smith Engineering”) for $18,878 cash paid at closing. Smith Engineering is a leader in the design, manufacturing, and service of custom high purity water treatment equipment serving the biotech/pharmaceutical, data center, food and beverage, healthcare, medical device, and microelectronics markets. With over 1,200 customers in North America, Smith Engineering offers a variety of water treatment products and services, including filtration, UV, reverse osmosis, and deionization.

On July 15, 2022, the Company completed the acquisition of Epicor, Inc. (“Epicor”) for $4,269 cash paid at closing. Epicor has supplied specialty resins for power steam system treatment for fifty years. The resins provide a cost-effective and efficient method for creating and maintaining a continual supply of ultra-pure water for power plants.

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Organization, Consolidation and Presentation of Financial Statements (Policies)

9 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. Unless otherwise specified, all dollar and share amounts in these notes are referred to in thousands.

The interim Unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on November 17, 2021 (“2021 Annual Report”), in preparing these Unaudited Consolidated Financial Statements, with the exception of accounting standard updates described in Note 2, “Recent Accounting Pronouncements.” These Unaudited Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes included in our 2021 Annual Report. Certain prior period amounts have been reclassified to conform to the current period presentation.

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Recent Accounting Pronouncements (Policies)

9 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification (“ASC”) 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) (“Topic 606”), as if the entity had originated the contracts, rather than adjust them to fair value at the acquisition date. The guidance is effective for fiscal years beginning after December 15, 2022 and is to be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company is currently assessing the impact of adoption on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and also issued subsequent amendments to the initial guidance (collectively, “Topic 848”). Topic 848 became effective immediately and expires on December 31, 2022. Topic 848 allows eligible contracts that are modified to be accounted for as a continuation of those contracts, permits companies to preserve their hedge accounting during the transition period and enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. Topic 848 provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform if certain criteria are met. The Company adopted Topic 848 during the nine months ended June 30, 2022 and the adoption did not have a material impact on the Company’s Unaudited Consolidated Financial Statements and related disclosures.

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Investments, Equity Method and Joint Ventures (Tables)

9 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Balance Sheet and Summarized Financial Information

The following provides a summary of TWO’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining partnership interest in TWO on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $1,380)	$	3,202
Property, plant, and equipment	903
Goodwill	2,206
Total liabilities	(1,009)

	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	843	$	1,641	$	2,511
Total operating expenses	(748)		(1,440)		(2,217)
Income from operations	$	95	$	201	$	294

The following provides a summary of Frontier’s balance sheet as of September 30, 2021, and summarized financial information for the three and nine months ended June 30, 2021, and the nine months ended June 30, 2022. As a result of the acquisition of the remaining equity interest in Frontier on April 1, 2022, there is no summarized financial information for the three months ended June 30, 2022.

	September 30, 2021
Current assets (includes cash of $2,095)	$	12,495
Property, plant, and equipment	2,113
Goodwill	1,798
Intangible assets, net	8,265
Total liabilities	(9,425)

	Three Months Ended June 30,		Nine Months Ended June 30,
	2021		2022		2021
Total revenue	$	4,945	$	13,363	$	7,793
Total operating expenses	(4,448)		(12,135)		(8,587)
Income (loss) from operations	$	497	$	1,228	$	(794)

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Acquisitions and Divestitures (Tables)

9 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Preliminary Opening Balance Sheet

These preliminary estimates are subject to revision during the measurement period as additional analyses are performed and third-party valuations are finalized, and these differences could have a material impact on the accounting for the business combination.

Receivables, net	$	21,275
Inventories, net	32,479
Earn Out asset	7,824
Other current assets	1,732
Property, plant, and equipment, net	19,343
Goodwill	68,714
Intangible assets, net	57,094
Other non-current assets	7,434
Total assets acquired	215,895
Current liabilities	(15,377)
Non-current liabilities	(5,542)
Total liabilities assumed	(20,919)
Net assets acquired	$	194,976

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Revenue (Tables)

9 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Information regarding the source of revenue:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue from contracts with customers recognized under Topic 606	$	396,354	$	320,218	$	1,096,883	$	903,325
Other(1)	42,971		49,463		135,438		135,113
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

(1)     Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842), primarily attributable to long term rentals.

Information regarding revenue disaggregated by source of revenue and segment is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Integrated Solutions and Services
Capital	$	72,535	$	63,336	$	210,339	$	166,055
Aftermarket	59,033		31,852		150,602		91,499
Service	165,843		144,499		476,356		420,984
Total	$	297,411	$	239,687	$	837,297	$	678,538
Applied Product Technologies
Capital	$	98,782	$	92,692	$	274,444	$	259,877
Aftermarket	37,607		30,547		104,915		83,477
Service	5,525		6,755		15,665		16,546
Total	$	141,914	$	129,994	$	395,024	$	359,900
Total Revenue
Capital	$	171,317	$	156,028	$	484,783	$	425,932
Aftermarket	96,640		62,399		255,517		174,976
Service	171,368		151,254		492,021		437,530
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Information regarding revenue disaggregated by geographic area is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
United States	$	362,268	$	291,113	$	1,009,615	$	829,925
Asia	32,996		31,987		91,943		81,568
Europe	28,122		28,749		82,392		81,561
Canada	13,422		14,210		39,831		36,025
Australia	2,517		3,622		8,540		9,359
Total	$	439,325	$	369,681	$	1,232,321	$	1,038,438

Contract with Customer, Asset and Liability

The tables below provide a roll-forward of contract assets and contract liabilities balances for the periods presented:

	Nine Months Ended June 30,
Contract assets(a)	2022		2021
Balance at beginning of period	$	72,746	$	80,759
Recognized in current period	294,794		232,750
Reclassified to accounts receivable	(265,324)		(244,766)
Foreign currency	(317)		600
Balance at end of period	$	101,899	$	69,343

(a)     Excludes receivable balances which are disclosed on the Consolidated Balance Sheets.

	Nine Months Ended June 30,
Contract Liabilities	2022		2021
Balance at beginning of period	$	55,883	$	26,259
Recognized in current period	271,227		245,049
Amounts in beginning balance reclassified to revenue	(44,718)		(18,496)
Current period amounts reclassified to revenue	(215,366)		(216,972)
Foreign currency	(83)		1,075
Balance at end of period	$	66,943	$	36,915

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the Company’s financial assets and liabilities at fair value. The fair values related to the pension plan assets are determined using net asset value (“NAV”) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value. The reported carrying amounts of deferred compensation plan assets and liabilities and debt approximate their fair values. The Company uses interest rates and other relevant information generated by market transactions involving similar instruments to measure the fair value of these assets and liabilities, therefore all are classified as Level 2 within the valuation hierarchy.

	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of June 30, 2022
Assets:
Pension plan
Cash	$	—	$	316	$	—	$	—
Global Multi-Asset Fund	12,639		—		—		—
Government Securities	1,459		—		—		—
Liability Driven Investment	4,275		—		—		—
Guernsey Unit Trust	2,255		—		—		—
Global Absolute Return	1,418		—		—		—
Deferred compensation plan assets
Cash	—		1,034		—		—
Mutual Funds	—		13,106		—		—
Earn-out assets related to acquisitions	—		—		—		10,543
Interest rate swaps	—		—		36,500		—
Foreign currency forward contracts	—		—		107		—
Liabilities:
Pension plan	—		—		(41,483)		—
Deferred compensation plan liabilities	—		—		(20,361)		—
Total return swaps—deferred compensation	—		—		(137)		—
Long‑term debt	—		—		(928,629)		—
Foreign currency forward contracts	—		—		(75)		—
Commodity swaps	—		—		(7)		—

	Net Asset Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2021
Assets:
Pension plan
Cash	$	—	$	831	$	—	$	—
Global Multi-Asset Fund	15,244		—		—		—
Government Securities	5,158		—		—		—
Liability Driven Investment	2,793		—		—		—
Guernsey Unit Trust	2,387		—		—		—
Global Absolute Return	2,225		—		—		—
Deferred compensation plan assets
Cash	—		1,251		—		—
Mutual Funds	—		17,806		—		—
Interest rate swaps	—		—		3,127		—
Foreign currency forward contracts	—		—		24		—
Liabilities:
Pension plan	—		—		(46,013)		—
Deferred compensation plan liabilities	—		—		(24,382)		—
Total return swaps—deferred compensation	—		—		(130)		—
Long‑term debt	—		—		(752,988)		—
Interest rate swaps	—		—		(303)		—
Foreign currency forward contracts	—		—		(102)		—
Commodity swaps	—		—		(19)		—
Earn-out liabilities related to acquisitions	—		—		—		(150)
Purchase Right	—		—		—		(8,305)

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Accounts Receivable (Tables)

9 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Schedule of accounts receivable

Accounts receivable are summarized as follows:

	June 30, 2022		September 30, 2021
Accounts receivable	$	300,121	$	282,819
Allowance for credit losses	(6,650)		(4,824)
Receivables, net	$	293,471	$	277,995

Accounts Receivable, Allowance for Credit Loss

The movement in the allowance for credit losses was as follows for the nine months ended June 30, 2022:

Balance at September 30, 2021	$	(4,824)
Charged to costs and expenses	(1,423)
Write-offs	190
Foreign currency and other	(593)
Balance at June 30, 2022	$	(6,650)

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Inventories (Tables)

9 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory

The major classes of Inventories, net are as follows:

	June 30, 2022		September 30, 2021
Raw materials and supplies	$	119,853	$	86,469
Work in progress	36,296		19,842
Finished goods and products held for resale	85,709		59,624
Costs of unbilled projects	2,909		2,277
Reserves for excess and obsolete	(12,308)		(9,709)
Inventories, net	$	232,459	$	158,503

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Property, Plant, and Equipment (Tables)

9 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant, and equipment consists of the following:

	June 30, 2022		September 30, 2021
Machinery and equipment	$	401,670	$	388,352
Rental equipment	261,644		246,257
Land and buildings	77,473		70,048
Construction in process	71,303		59,737
	812,090		764,394
Less: accumulated depreciation	(411,723)		(389,406)
Property, plant, and equipment, net	$	400,367	$	374,988

Depreciation expense and maintenance and repairs expense for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Depreciation expense	$	21,089	$	19,170	$	61,131	$	56,450
Maintenance and repair expense	7,808		4,603		21,402		14,565

Schedule of Financial Instruments Owned and Pledged as Collateral

	June 30, 2022				September 30, 2021
	Gross		Net		Gross		Net
Machinery and equipment	$	86,133	$	63,931	$	73,632	$	57,036
Construction in process	44,121		44,121		30,504		30,504
	$	130,254	$	108,052	$	104,136	$	87,540

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Goodwill (Tables)

9 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill are as follows:

	Integrated Solutions and Services		Applied Product Technologies		Total
Balance at September 30, 2021	$	233,830	$	173,546	$	407,376
Business combinations and divestitures	68,708		(34)		68,674
Foreign currency translation	(701)		(3,661)		(4,362)
Balance at June 30, 2022	$	301,837	$	169,851	$	471,688

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Debt (Tables)

6 Months Ended

9 Months Ended

Mar. 31, 2022

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long‑term debt, including accrued interest, consists of the following:

	June 30, 2022		September 30, 2021
2021 Term Loan, due April 1, 2028 (1)	$	470,250	$	473,837
2021 Revolving Credit Facility, due April 1, 2026 (2)	211,113		37,268
Securitization Facility, due April 1, 2024 (3)	138,013		150,061
Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07%	116,796		93,375
Notes Payable, due July 31, 2023 (4)	—		402
Total debt	936,172		754,943
Less unamortized deferred financing fees	(10,345)		(11,738)
Total net debt	925,827		743,205
Less current portion	(16,064)		(12,775)
Total long‑term debt	$	909,763	$	730,430

(1)The interest rate on the 2021 Term Loan was 3.56% as of June 30, 2022, comprised of 1.06% LIBOR plus a 2.50% spread. Includes accrued interest of $0 and $25 at June 30, 2022 and September 30, 2021, respectively.

(2)The 2021 Revolving Credit Facility includes $206,000 outstanding with an interest rate of 3.64% as of June 30, 2022, comprised of 1.69% LIBOR plus a 1.95% spread, and $5,000 outstanding with an interest rate of 5.70%. as of June 30, 2022, comprised of 4.75% Prime Rate plus a 0.95% spread. During the nine months ended June 30, 2022, the spread on the 2021 Revolving Credit Facility was reduced from 2.25% at September 30, 2021 as a result of a Sustainability Pricing Adjustment per the 2021 Credit Agreement. Includes accrued interest of $113 and $268, at June 30, 2022 and September 30, 2021, respectively.

(3)The interest rate on the Securitization Facility was 3.04% as of June 30, 2022, comprised of 1.79% LIBOR plus a 1.25% spread. Includes accrued interest of $113 and $61 at June 30, 2022 and September 30, 2021, respectively.

(4)In March 2022, the outstanding balance of the Notes Payable due July 31, 2023, was repaid in conjunction with the Company’s acquisition of TWO. See Note 4, “Acquisitions and Divestitures” for further discussion.

Schedule of Line of Credit Facilities

The following table summarizes the amount of the Company’s outstanding borrowings and outstanding letters of credit under the 2021 Revolving Credit Facility as of June 30, 2022 and September 30, 2021.

	June 30, 2022		September 30, 2021
Borrowing availability	$	350,000	$	350,000
Outstanding borrowings	211,000		37,000
Outstanding letters of credit	9,529		10,112
Unused amounts	$	129,471	$	302,888

The following summarizes the Company’s outstanding letters of credit and surety bonds as of June 30, 2022 and September 30, 2021, respectively.

	June 30, 2022		September 30, 2021
Revolving credit capacity	$	60,000	$	60,000
Letters of credit outstanding	9,529		10,112
Remaining revolving credit capacity	$	50,471	$	49,888
Surety capacity	$	262,090	$	250,000
Surety issuances	129,021		147,845
Remaining surety available	$	133,069	$	102,155

Schedule of Equipment Financing

During the nine months ended June 30, 2022, the Company completed the following equipment financings:

Date Entered	Due	Interest Rate as of June 30, 2022		Principal Amount
June 30, 2022	July 31, 2029(1)	4.81	%	$	12,356
June 30, 2022	May 31, 2029(2)	4.25	%	4,086
March 18, 2022	March 17, 2029	4.67	%	1,839
March 16, 2022	July 31, 2029(1)	4.81	%	1,317
March 15, 2022	April 1, 2029	4.74	%	4,788
December 30, 2021	December 30, 2028	3.94	%	2,207
December 23, 2021	July 31, 2029(1)	4.81	%	3,742
				$	30,335

(1)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through August 1, 2022 based on an interest rate of 4.81% including a 1.06% LIBOR plus a 3.75% spread as of June 30, 2022. The Company entered into an interest rate swap with an effective date of August 1, 2022 to mitigate risk associated with this variable rate equipment financing, see Note 12, “Derivative Financial Instruments” for further discussion.

(2)Represents an advance received from the lender on a multiple draw term loan in which the Company is making interest only payments through December 30, 2022 based on a 1.50% Secured Overnight Financing Rate plus a 2.75% spread.

Schedule of Deferred Financing Costs and Discounts

Deferred financing fees and discounts related to the Company’s long-term debt were included as a contra liability to debt on the Consolidated Balance Sheets as follows:

	June 30, 2022		September 30, 2021
Current portion of deferred financing fees and discounts(1)	$	(1,891)	$	(1,866)
Long-term portion of deferred financing fees and discounts(2)	(8,454)		(9,872)
Total deferred financing fees and discounts	$	(10,345)	$	(11,738)

(1)Included in Current portion of debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets.

(2)Included in Long-term debt, net of deferred financing fees and discounts on the Consolidated Balance Sheets

Schedule of Aggregate Maturities of Long-term Debt

Aggregate maturities of all long‑term debt, including current portion of long‑term debt and excluding finance lease obligations as of June 30, 2022, are presented below:

Fiscal Year
Remainder of 2022	$	4,293
2023	18,215
2024	155,025
2025	18,714
2026	22,030
Thereafter	717,895
Total	$	936,172

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Derivative Financial Instruments (Tables)

9 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following represents the fair value recorded for derivatives designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Prepaid and other current assets	$	13,656	$	3,127
Foreign currency forward contracts	Prepaid and other current assets	43		6
Interest rate swaps	Other non‑current assets	22,844		—

		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Interest rate swaps	Accrued expenses and other current liabilities	$	—	$	303
Foreign currency forward contracts	Accrued expenses and other current liabilities	75		102
Commodity swaps	Accrued expenses and other current liabilities	7		19

The following represents the fair value recorded for derivatives not designated as cash flow hedges for the periods presented:

		Asset Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Foreign currency forward contracts	Prepaid and other current assets	$	64	$	18
		Liability Derivatives
	Balance Sheet Location	June 30, 2022		September 30, 2021
Total return swaps—deferred compensation	Accrued expenses and other current liabilities	$	137	$	130

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following represents the amount of gain (loss) recognized in Accumulated other comprehensive income (loss) (“AOCI”) (net of tax) during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Interest rate swaps	$	5,798	$	(4,157)	$	32,746	$	5,111
Foreign currency forward contracts	(135)		67		(53)		(265)
Commodity swaps	(16)		(16)		12		(16)
	$	5,647	$	(4,106)	$	32,705	$	4,830

Derivative Instruments, Gain (Loss)

The following represents the amount of (loss) gain reclassified from AOCI into earnings during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of (Loss) Gain	2022		2021		2022		2021
Cost of product sales and services	$	(25)	$	9	$	(104)	$	(4)
General and administrative expense	—		—		(7)		(72)
Selling and marketing expense	—		—		—		(39)
Interest expense	237		(591)		(930)		(1,624)
	$	212	$	(582)	$	(1,041)	$	(1,739)

Derivatives Not Designated as Hedging Instruments

The following represents the amount of loss recognized in earnings for derivatives not designated as hedges during the periods presented:

	Three Months Ended June 30,				Nine Months Ended June 30,
Location of Loss	2022		2021		2022		2021
General and administrative expense	$	(793)	$	—	$	(834)	$	—
	$	(793)	$	—	$	(834)	$	—

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Product Warranties (Tables)

9 Months Ended

Jun. 30, 2022

Guarantees and Product Warranties [Abstract]

Schedule of product warranty liability

A reconciliation of the activity related to the accrued warranty, including both the current and long‑term portions, is as follows:

	Current Product Warranties				Non-Current Product Warranties
	Nine Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Balance at beginning of the period	$	8,138	$	6,115	$	2,966	$	1,724
Warranty provision for sales	4,705		5,680		1,772		1,577
Settlement of warranty claims	(4,987)		(3,826)		(593)		(701)
Foreign currency translation and other	(658)		94		(151)		29
Balance at end of the period	$	7,198	$	8,063	$	3,994	$	2,629

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Restructuring and Related Charges (Tables)

9 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of restructuring components

	Nine Months Ended June 30,
	2022		2021
Balance at beginning of the period	$	304	$	970
Restructuring charges following the sale of the Memcor product line	942		4,649
Restructuring charges related to two-segment realignment	413		830
Restructuring charges related to other initiatives	3,232		1,856
Release of prior reserves	(290)		(296)
Write off charges	—		(966)
Cash payments	(3,551)		(6,349)
Other adjustments	(6)		8
Balance at end of the period	$	1,044	$	702

The table below sets forth the location of amounts recorded above on the Unaudited Consolidated Statements of Operations:

	Nine Months Ended June 30,
	2022		2021
Cost of product sales and services	$	1,352	$	4,341
General and administrative expense	2,403		1,675
Sales and marketing expense	83		348
Research and development expense	1		(15)
Other operating expense, net	458		690
	$	4,297	$	7,039

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Employee Benefit Plans (Tables)

9 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Schedule of net benefit costs

The components of net periodic benefit cost for the plans were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Service cost	$	215	$	287	$	674	$	858
Interest cost	100		81		315		240
Expected return on plan assets	(122)		(88)		(383)		(262)
Amortization of actuarial losses	156		266		491		640
Pension expense for defined benefit plans	$	349	$	546	$	1,097	$	1,476

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Share-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock options, activity

A summary of the stock option activity as of June 30, 2022 is presented below:

(In thousands, except per share amounts)	Options	Weighted Average Exercise Price/Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 30, 2021	5,090	$	13.87	5.9 years	$	120,611
Granted	2	46.75
Exercised	(529)	10.57
Forfeited	(32)	20.94
Outstanding at June 30, 2022	4,531	$	14.21	5.3 years	$	82,939
Options exercisable at June 30, 2022	3,477	$	11.97	4.5 years	$	71,433
Options vested and expected to vest at June 30, 2022	4,516	$	14.18	5.3 years	$	82,792

Schedule of Nonvested Share Activity

A summary of the status of the Company's unvested stock options as of and for the nine months ended June 30, 2022 is presented below.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	1,901	$	6.69
Granted	2	24.22
Vested	(817)	6.54
Forfeited	(32)	6.66
Unvested at end of period	1,054	$	6.82

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

The following is a summary of the RSU activity for the nine months ended June 30, 2022.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Outstanding at September 30, 2021	1,209	$	22.77
Granted	327	44.94
Vested	(504)	22.21
Forfeited	(37)	26.35
Outstanding at June 30, 2022	995	$	30.19
Expected to vest at June 30, 2022	966	$	29.95

The following is a summary of the performance share unit activity for the nine months ended June 30, 2022, assuming target award level.

(In thousands, except per share amounts)	Shares	Weighted Average Grant Date Fair Value/Share
Unvested at beginning of period	469	$	16.92
Granted	124	52.50
Unvested at end of period	593	$	23.39
Expected to vest	551	$	23.28

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Commitments and Contingencies (Tables)

9 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of Line of Credit Facilities

The following table summarizes the amount of the Company’s outstanding borrowings and outstanding letters of credit under the 2021 Revolving Credit Facility as of June 30, 2022 and September 30, 2021.

	June 30, 2022		September 30, 2021
Borrowing availability	$	350,000	$	350,000
Outstanding borrowings	211,000		37,000
Outstanding letters of credit	9,529		10,112
Unused amounts	$	129,471	$	302,888

The following summarizes the Company’s outstanding letters of credit and surety bonds as of June 30, 2022 and September 30, 2021, respectively.

	June 30, 2022		September 30, 2021
Revolving credit capacity	$	60,000	$	60,000
Letters of credit outstanding	9,529		10,112
Remaining revolving credit capacity	$	50,471	$	49,888
Surety capacity	$	262,090	$	250,000
Surety issuances	129,021		147,845
Remaining surety available	$	133,069	$	102,155

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Accrued Expenses and Other Liabilities (Tables)

9 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued expenses and other liabilities consisted of the following:

	June 30, 2022		September 30, 2021
Salaries, wages, and other benefits	$	67,837	$	79,110
Obligation under operating leases	14,321		13,316
Obligation under finance leases	12,560		12,093
Deferred revenue	11,499		5,241
Third party commissions	10,464		10,031
Taxes, other than income	6,711		4,575
Insurance liabilities	3,466		3,720
Provisions for litigation	1,446		2,938
Severance payments	1,044		304
Fair value of liability derivatives	219		554
Earn-outs related to acquisitions	—		150
Other	32,907		28,335
	$	162,474	$	160,367

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Business Segments (Tables)

9 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Schedule of segment reporting information, by segment

Reportable operating segment revenue and operating profit for the three and nine months ended June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Total revenue
Integrated Solutions and Services	$	310,431	$	245,414	$	868,506	$	690,370
Applied Product Technologies	166,779		149,434		464,137		419,122
Total revenue	477,210		394,848		1,332,643		1,109,492
Intersegment revenue
Integrated Solutions and Services	13,020		5,727		31,209		11,832
Applied Product Technologies	24,865		19,440		69,113		59,222
Total intersegment revenue	37,885		25,167		100,322		71,054
Revenue to external customers
Integrated Solutions and Services	297,411		239,687		837,297		678,538
Applied Product Technologies	141,914		129,994		395,024		359,900
Total revenue	$	439,325	$	369,681	$	1,232,321	$	1,038,438
Operating profit (loss)
Integrated Solutions and Services	$	39,864	$	37,793	$	113,269	$	94,934
Applied Product Technologies	28,592		22,735		69,412		54,218
Corporate	(37,426)		(32,218)		(117,791)		(88,430)
Total operating profit	31,030		28,310		64,890		60,722
Interest expense	(8,440)		(11,224)		(24,969)		(28,292)
Income before income taxes	22,590		17,086		39,921		32,430
Income tax expense	(5,027)		(3,887)		(8,896)		(7,672)
Net income	$	17,563	$	13,199	$	31,025	$	24,758

	June 30, 2022		September 30, 2021
Assets
Integrated Solutions and Services	$	1,127,646	$	887,265
Applied Product Technologies	664,946		656,362
Corporate	379,026		325,264
Total assets	$	2,171,618	$	1,868,891

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Earnings per Share (Tables)

9 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

The following table sets forth the computation of basic and diluted earnings from continuing operations per common share (in thousands, except per share amounts):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp.	$	17,563	$	13,155	$	30,880	$	24,624
Denominator:
Denominator for basic net income per common share—weighted average shares	121,338		119,015		120,970		119,015
Effect of dilutive securities:
Share‑based compensation	3,512		3,245		3,927		3,312
Denominator for diluted net income per common share—adjusted weighted average shares	124,850		122,260		124,897		122,327
Basic earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.26	$	0.21
Diluted earnings attributable to Evoqua Water Technologies Corp. per common share	$	0.14	$	0.11	$	0.25	$	0.20

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Description of the Company and Basis of Presentation (Details) - segment		3 Months Ended	9 Months Ended
	Oct. 29, 2018	Jun. 30, 2022	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	3	2	2

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Variable Interest Entities- Investments, Equity Method and Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jul. 01, 2022	Apr. 01, 2022	Sep. 30, 2021	Apr. 08, 2021	Feb. 28, 2021	Oct. 01, 2019
Schedule of Equity Method Investments [Line Items]
Obligation to absorb risk of loss, percentage of partner's equity	100.00%		100.00%
Current assets	$ 832,220		$ 832,220				$ 678,458
Property, plant, and equipment, net	400,367		400,367				374,988
Goodwill	471,688		471,688				407,376
Intangible assets, net	315,983		315,983				290,075
Liabilities	(1,509,328)		(1,509,328)				(1,286,672)
Revenues	439,325	$ 369,681	1,232,321	$ 1,038,438
Operating Expenses	(105,917)	(90,121)	(314,233)	(259,606)
Operating profit (loss)	$ 31,030	28,310	$ 64,890	60,722
Frontier
Schedule of Equity Method Investments [Line Items]
Percentage of voting interests acquired					32.00%	32.00%		8.00%		60.00%
Remaining percentage to be acquired	40.00%		40.00%							32.00%
Frontier | Maximum
Schedule of Equity Method Investments [Line Items]
Remaining percentage to be acquired									10.00%
Treated Water Outsourcing
Schedule of Equity Method Investments [Line Items]
Partnership interest			50.00%
Cash							1,380
Current assets							3,202
Property, plant, and equipment, net							903
Goodwill							2,206
Liabilities							(1,009)
Revenues		843	$ 1,641	2,511
Operating Expenses		(748)	(1,440)	(2,217)
Operating profit (loss)		95	201	294
Frontier
Schedule of Equity Method Investments [Line Items]
Cash							2,095
Current assets							12,495
Property, plant, and equipment, net							2,113
Goodwill							1,798
Intangible assets, net							8,265
Liabilities							$ (9,425)
Revenues		4,945	13,363	7,793
Operating Expenses		(4,448)	(12,135)	(8,587)
Operating profit (loss)		$ 497	$ 1,228	$ (794)

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Acquisitions and Divestitures - Narrative (Details) - USD ($) $ in Thousands				3 Months Ended	9 Months Ended
	Apr. 01, 2022	Jan. 03, 2022	Dec. 20, 2021	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Jul. 01, 2022	Apr. 30, 2021	Apr. 08, 2021	Oct. 01, 2019
Business Acquisition [Line Items]
Consideration transferred, including amounts from prior periods	$ 22,771
Proceeds from sale of business					$ 356	$ 897
Gain on sale of business				$ 193	193	$ (193)
Treated Water Outsourcing
Business Acquisition [Line Items]
Percentage of voting interests acquired	50.00%
Payments to acquire businesses	$ 1,099
Mar Cor
Business Acquisition [Line Items]
Payments to acquire businesses		$ 194,976
Price of acquisition, expected			$ 196,300
Borrowings under credit facility		160,000
Contingent consideration, liability				12,300	$ 12,300
Escrow deposit		12,965
Acquisition costs				$ 3,178
Mar Cor | General Indemnity
Business Acquisition [Line Items]
Escrow deposit		9,815
Mar Cor | Working Capital Adjustments
Business Acquisition [Line Items]
Escrow deposit		$ 3,150
Frontier
Business Acquisition [Line Items]
Percentage of voting interests acquired	32.00%						32.00%		8.00%	60.00%
Payments to acquire businesses	$ 10,396
Frontier
Business Acquisition [Line Items]
Ownership interest percentage acquired								8.00%		60.00%

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Acquisitions and Divestitures - Preliminary Opening Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Apr. 01, 2022	Sep. 30, 2021
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	$ 471,688		$ 407,376
Mar Cor
Business Combination, Separately Recognized Transactions [Line Items]
Receivables, net		$ 21,275
Inventories, net		32,479
Earn Out asset	$ 10,543	7,824	$ 0
Other current assets		1,732
Property, plant, and equipment, net		19,343
Goodwill		68,714
Intangible assets, net		57,094
Other non-current assets		7,434
Total assets acquired		215,895
Current liabilities		(15,377)
Non-current liabilities		(5,542)
Total liabilities assumed		(20,919)
Net assets acquired		$ 194,976

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Revenue (Performance Obligation) (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount	$ 344,633
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period: 2022-01-01 | Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	24 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period: 2022-04-01 | Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months

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Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Revenue from contracts with customers recognized under Topic 606		$ 396,354	$ 320,218	$ 1,096,883	$ 903,325
Other	[1]	42,971	49,463	135,438	135,113
Revenues		439,325	369,681	1,232,321	1,038,438
United States
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		362,268	291,113	1,009,615	829,925
Europe
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		28,122	28,749	82,392	81,561
Asia
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		32,996	31,987	91,943	81,568
Canada
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		13,422	14,210	39,831	36,025
Australia
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		2,517	3,622	8,540	9,359
Integrated Solutions and Services
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		297,411	239,687	837,297
Applied Product Technologies
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		141,914	129,994	395,024
Revenue from aftermarket
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		96,640	62,399	255,517	174,976
Revenue from aftermarket | Integrated Solutions and Services
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		59,033	31,852	150,602	91,499
Revenue from aftermarket | Applied Product Technologies
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		37,607	30,547	104,915	83,477
Revenue from service
Disaggregation of Revenue [Line Items]
Revenues		171,368	151,254	492,021	437,530
Revenue from product sales and services		171,368	151,254	492,021	437,530
Revenue from service | Integrated Solutions and Services
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		165,843	144,499	476,356	420,984
Revenue from service | Applied Product Technologies
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		5,525	6,755	15,665	16,546
Revenue from capital projects
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		171,317	156,028	484,783	425,932
Revenue from capital projects | Integrated Solutions and Services
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		72,535	63,336	210,339	166,055
Revenue from capital projects | Applied Product Technologies
Disaggregation of Revenue [Line Items]
Revenue from product sales and services		$ 98,782	$ 92,692	$ 274,444	$ 259,877

[1] Other revenue relates to revenue recognized pursuant to ASU 2016-02, Leases (Topic 842), primarily attributable to long term rentals.

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Revenue (Contract Assets and Liabilities) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Contract liabilities	$ 66,943	$ 36,915	$ 55,883	$ 26,259
Change in Contract with Customer, Asset [Roll Forward]
beginning of period	72,746	80,759
Recognized in current period	294,794	232,750
Reclassified to accounts receivable	265,324	244,766
Foreign currency	(317)	600
end of period	101,899	69,343
Change in Contract with Customer, Liability [Roll Forward]
Recognized in current period	271,227	245,049
Amounts in beginning balance reclassified to revenue	(44,718)	(18,496)
Current period amounts reclassified to revenue	(215,366)	(216,972)
Foreign currency	$ (83)	$ 1,075

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Fair Value Measurements (Assets and Liabilities at Fair Value) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Apr. 01, 2022	Sep. 30, 2021
Deferred compensation plan assets
Mutual Funds	$ 13,106
Mar Cor
Deferred compensation plan assets
Earn Out asset	10,543	$ 7,824	$ 0
Fair Value, Measurements, Recurring | Quoted Market Prices in Active Markets (Level 1)
Deferred compensation plan assets
Cash	1,034		1,251
Mutual Funds			17,806
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Deferred compensation plan assets
Interest rate swaps			3,127
Foreign currency forward contracts	107		24
Liabilities:
Pension plan	(41,483)		(46,013)
Deferred compensation plan liabilities	(20,361)		(24,382)
Total return swaps—deferred compensation	(137)		(130)
Long‑term debt	(928,629)		(752,988)
Interest Rate Derivative Liabilities, at Fair Value			(303)
Foreign currency forward contracts	(75)		(102)
Commodity swaps	(7)		(19)
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3
Liabilities:
Earn-out liabilities related to acquisitions			(150)
Option and purchase right			(8,305)
Fair Value, Measurements, Recurring | Cash | Quoted Market Prices in Active Markets (Level 1)
Assets:
Defined benefit plan, fair value of plan assets	316		831
Fair Value, Measurements, Recurring | Global Multi-Asset Fund
Assets:
Plan assets at net asset value	12,639		15,244
Fair Value, Measurements, Recurring | Government Securities
Assets:
Plan assets at net asset value	1,459		5,158
Fair Value, Measurements, Recurring | Liability Driven Investment
Assets:
Plan assets at net asset value	4,275		2,793
Fair Value, Measurements, Recurring | Guernsey Unit Trust
Assets:
Plan assets at net asset value	2,255		2,387
Fair Value, Measurements, Recurring | Global Absolute Return
Assets:
Plan assets at net asset value	$ 1,418		$ 2,225

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands			3 Months Ended	9 Months Ended
	Apr. 01, 2022	Jan. 03, 2022	Jun. 30, 2022	Jun. 30, 2022	Sep. 30, 2021	Oct. 01, 2019
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Unrealized loss on investments				$ 2,111
Mar Cor
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Earn Out asset	$ 7,824		$ 10,543	$ 10,543	$ 0
Increase in fair value of earn out			$ 2,719
Payments to acquire businesses		$ 194,976
Frontier
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Remaining percentage to be acquired			40.00%	40.00%		32.00%
Purchase right liability				$ 2,091
Payments to acquire businesses	$ 10,396
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Earn-out payments, change in fair value			$ 25	150
Earn-out related to acquisitions					150
Option and purchase right					8,305
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Current Liabilities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Earn-out related to acquisitions			0	0	$ 0
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Other Noncurrent Liabilities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Option and purchase right			$ 0	$ 0

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Accounts Receivable (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Sep. 30, 2021
Receivables [Abstract]
Accounts receivable	$ 300,121	$ 282,819
Allowance for credit losses	(6,650)	(4,824)
Accounts receivable, net	293,471	$ 277,995
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance at September 30, 2020	(4,824)
Charged to costs and expenses	(1,423)
Write-offs	190
Foreign currency and other	(593)
Balance at December 31, 2020	$ (6,650)

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Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Inventory Disclosure [Abstract]
Raw materials and supplies	$ 119,853	$ 86,469
Work in progress	36,296	19,842
Finished goods and products held for resale	85,709	59,624
Costs of unbilled projects	2,909	2,277
Reserves for excess and obsolete	(12,308)	(9,709)
Inventory, Net	$ 232,459	$ 158,503

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Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 812,090		$ 812,090		$ 764,394
Less: accumulated depreciation	(411,723)		(411,723)		(389,406)
Property, plant, and equipment, net	400,367		400,367		374,988
Depreciation and amortization	21,089	$ 19,170	61,131	$ 56,450
Maintenance and repair expense	7,808	$ 4,603	21,402	$ 14,565
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	401,670		401,670		388,352
Land and buildings
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	77,473		77,473		70,048
Construction in process
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	71,303		71,303		59,737
Rental equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 261,644		$ 261,644		$ 246,257

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Property, Plant, and Equipment Property, Plant and Equipment (Secured Financing Agreements) (Details) - Equipment Financings - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Property, plant and equipment gross [Member]
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	$ 130,254	$ 104,136
Property, plant and equipment gross [Member] | Machinery and equipment
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	86,133	73,632
Property, plant and equipment gross [Member] | Construction in process
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	44,121	30,504
Property, plant and equipment net [Member]
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	108,052	87,540
Property, plant and equipment net [Member] | Machinery and equipment
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	63,931	57,036
Property, plant and equipment net [Member] | Construction in process
Debt Instrument [Line Items]
Pledged Assets, Not Separately Reported, Other	$ 44,121	$ 30,504

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Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Business acquisition, goodwill, expected tax deductible, amount	$ 223,834	$ 159,730

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Goodwill (Schedule of Goodwill) (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning of the period	$ 407,376
Foreign currency translation	(4,362)
Goodwill, end of the period	471,688
Business combinations and divestitures	68,674
Operating Segments | Integrated Solutions and Services
Goodwill [Roll Forward]
Goodwill, beginning of the period	233,830
Foreign currency translation	(701)
Goodwill, end of the period	301,837
Business combinations and divestitures	68,708
Operating Segments | Applied Product Technologies
Goodwill [Roll Forward]
Goodwill, beginning of the period	173,546
Foreign currency translation	(3,661)
Goodwill, end of the period	169,851
Goodwill, Written off Related to Sale of Business Unit	$ (34)

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Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Total debt	$ 936,172		$ 936,172	$ 754,943
Less unamortized deferred financing fees	(10,345)		(10,345)	(11,738)
Total net debt	925,827		925,827	743,205
Current portion of debt	(16,064)		(16,064)	(12,775)
Total long‑term debt	$ 909,763		$ 909,763	730,430
Prime Rate | Rate three
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	4.75%
Prime Rate | Rate four
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	0.95%
Securitization Facility, due April 1, 2024
Debt Instrument [Line Items]
Debt , interest rate, effective percentage	3.04%		3.04%
Debt instrument, basis spread on variable rate			1.25%
Securitization Facility, due April 1, 2024 | LIBOR
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate			1.79%
2021 Revolving Credit Facility, due April 2026
Debt Instrument [Line Items]
Total debt	$ 211,113		$ 211,113	37,268
Debt instrument, basis spread on variable rate		2.25%	1.95%
Interest payable	113		$ 113	268
2021 Revolving Credit Facility, due April 2026 | Rate one
Debt Instrument [Line Items]
Total debt	$ 206,000		$ 206,000
Debt , interest rate, effective percentage	3.64%		3.64%
2021 Revolving Credit Facility, due April 2026 | Rate two
Debt Instrument [Line Items]
Total debt	$ 5,000		$ 5,000
Debt , interest rate, effective percentage	5.70%		5.70%
2021 Revolving Credit Facility, due April 2026 | LIBOR
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate			1.69%
Securitization Facility, due April 1, 2024
Debt Instrument [Line Items]
Total debt	$ 138,013		$ 138,013	150,061
Interest payable	113		113	61
Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07% | Equipment Financings
Debt Instrument [Line Items]
Total debt	116,796		116,796	93,375
Notes Payable, due July 31, 2023 (4)
Debt Instrument [Line Items]
Total debt	0		0	402
2021 Term Loan
Debt Instrument [Line Items]
Total debt	$ 470,250		$ 470,250	473,837
Debt , interest rate, effective percentage	3.56%		3.56%
Debt instrument, basis spread on variable rate			2.50%
Interest payable	$ 0		$ 0	$ 25
2021 Term Loan | LIBOR
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate			1.06%
Minimum | Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07% | Equipment Financings
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	3.59%		3.59%
Maximum | Equipment Financing, due September 30, 2023 to July 31, 2029, interest rates ranging from 3.59% to 8.07% | Equipment Financings
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	8.07%		8.07%

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Debt (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Apr. 01, 2021
Line of Credit Facility [Line Items]
Amortization of debt issuance costs and discounts	$ 467,000	$ 437,000	$ 1,393,000	$ 1,481,000
Maximum
Line of Credit Facility [Line Items]
Accounts receivable from securitization					$ 150,000,000
2021 Credit Agreement | Term Loan
Line of Credit Facility [Line Items]
Amount of loan					475,000,000
Revolving Credit Facility | 2021 Credit Agreement
Line of Credit Facility [Line Items]
Credit facility borrowing capacity					350,000,000
Letter of Credit | 2021 Credit Agreement
Line of Credit Facility [Line Items]
Credit facility borrowing capacity					$ 60,000,000

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Debt (Schedule of Line of Credit Facilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Line of Credit Facility [Line Items]
Line of credit facility, remaining borrowing capacity	$ 60,000	$ 60,000
Debt instrument, unused borrowing capacity, amount	50,471	49,888
Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit facility, remaining borrowing capacity	350,000	350,000
Letter of Credit
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount	9,529	10,112
Debt instrument, unused borrowing capacity, amount	129,471	302,888
2021 Revolving Credit Facility, due April 2026
Line of Credit Facility [Line Items]
line of Credit Facility, Amount Drawn	$ 211,000	$ 37,000

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Debt (Schedule of Equipment Financings) (Details) - Loans Payable - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Equipment Financing Due July 31 2029
Debt Instrument [Line Items]
Debt , interest rate, effective percentage	4.81%
Total debt	$ 12,356	$ 1,317	$ 3,742
Debt instrument, basis spread on variable rate	3.75%
Equipment Financing Due July 31 2029 | LIBOR
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.06%
Equipment Financing Due May 31 2029
Debt Instrument [Line Items]
Debt , interest rate, effective percentage	4.25%
Total debt	$ 4,086
Debt instrument, basis spread on variable rate	2.75%
Equipment Financing Due May 31 2029 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.50%
Equipment Financing Due March 17 2029
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage		4.67%
Total debt		$ 1,839
Equipment Financing Due Dec 30 2028
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage		4.74%	3.94%
Total debt		$ 4,788	$ 2,207
Equipment Financings
Debt Instrument [Line Items]
Total debt	$ 30,335

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Debt (schedule of Deferred Financing Fees and Discounts (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Debt Instrument [Line Items]
Unamortized discount (premium) and debt issuance costs, net	$ 10,345	$ 11,738
First Lien Term Facility, due December 20, 2024
Debt Instrument [Line Items]
Unamortized discount (premium) and debt issuance costs, net	(10,345)	(11,738)
First Lien Term Facility, due December 20, 2024 | Other Current Liabilities
Debt Instrument [Line Items]
Unamortized discount (premium) and debt issuance costs, net	(1,891)	(1,866)
First Lien Term Facility, due December 20, 2024 | Other Noncurrent Liabilities
Debt Instrument [Line Items]
Unamortized discount (premium) and debt issuance costs, net	$ (8,454)	$ (9,872)

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Debt (Long-term Debt Maturities) (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Debt Disclosure [Abstract]
2022	$ 4,293
2023	18,215
2024	155,025
2025	18,714
2026	22,030
Thereafter	717,895
Long-term Debt	$ 936,172

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Derivative Financial Instruments - Narrative (Details) $ in Thousands	9 Months Ended
	Jun. 30, 2022 USD ($)
Derivative [Line Items]
Gain expected to reclassified from AOCI to earnings	$ 26
Interest rate swaps
Derivative [Line Items]
Derivative, Notional Amount	531,000
Foreign currency forward contracts
Derivative [Line Items]
Derivative, Notional Amount	14,025
Commodity swaps
Derivative [Line Items]
Derivative, Notional Amount	$ 4,966

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Derivative Financial Instruments (Fair Values) (Details) - Fair Value, Inputs, Level 2 - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Derivatives, Fair Value [Line Items]
Interest rate cap		$ 3,127
Interest Rate Derivative Liabilities, at Fair Value		303
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | Interest rate swaps
Derivatives, Fair Value [Line Items]
Interest rate cap	$ 13,656	3,127
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | Foreign currency forward contracts
Derivatives, Fair Value [Line Items]
Foreign Currency Cash Flow Hedge Asset at Fair Value	43	6
Designated as Hedging Instrument | Other Current Liabilities
Derivatives, Fair Value [Line Items]
Interest rate cap	36,500
Interest Rate Derivative Liabilities, at Fair Value	0	303
Foreign Currency Cash Flow Hedge Liability at Fair Value	75	102
Price Risk Fair Value Hedge Liability, at Fair Value	7	19
Designated as Hedging Instrument | Other Assets | Interest rate swaps
Derivatives, Fair Value [Line Items]
Interest rate cap	$ 22,844	$ 0

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Derivative Financial Instruments (Amounts Recognized in AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized derivative gain (loss) on cash flow hedges, net of tax	$ 5,435	$ (3,524)	$ 33,746	$ 6,569
Other Comprehensive Income (Loss) | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized derivative gain (loss) on cash flow hedges, net of tax	5,647	(4,106)	32,705	4,830
Interest rate swaps | Other Comprehensive Income (Loss) | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized derivative gain (loss) on cash flow hedges, net of tax	5,798	(4,157)	32,746	5,111
Foreign currency forward contracts | Other Comprehensive Income (Loss) | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized derivative gain (loss) on cash flow hedges, net of tax	(135)	67	(53)	(265)
Commodity swaps | Other Comprehensive Income (Loss) | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized derivative gain (loss) on cash flow hedges, net of tax	$ (16)	$ (16)	$ 12	$ (16)

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Derivative Financial Instruments (Amounts Reclassified out of AOCI) (Details) - Reclassification out of Accumulated Other Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	$ 212	$ (582)	$ (1,041)	$ (1,739)
Cost of Product Sales and Services
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	(25)	9	(104)	(4)
General and Administrative Expense
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	0	0	(7)	(72)
Sales and Marketing Expense
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	0	0	0	(39)
Interest Expense
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net	$ 237	$ (591)	$ (930)	$ (1,624)

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Derivative Financial Instruments (Derivatives Not Designated as Cash Flow Hedges) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain	$ (793)	$ 0	$ (834)	$ 0
General and Administrative Expense
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain	(793)	$ 0	(834)	$ 0
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Total Return Swap | Not Designated as Hedging Instrument | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	137		137		$ 130
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Foreign currency forward contracts | Not Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 64		$ 64		$ 18

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Product Warranties (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward]
Balance at beginning of the period	$ 8,138
Balance at beginning of the period	2,966
Balance at end of the period	7,198
Balance at end of the period	3,994
Other Current Liabilities
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward]
Balance at beginning of the period	8,138	$ 6,115
Warranty provision for sales	4,705	5,680
Settlement of warranty claims	(4,987)	(3,826)
Foreign currency translation and other	(658)	94
Balance at end of the period	7,198	8,063
Other Noncurrent Liabilities
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward]
Balance at beginning of the period	2,966	1,724
Warranty provision for sales	1,772	1,577
Settlement of warranty claims	(593)	(701)
Foreign currency translation and other	(151)	29
Balance at end of the period	$ 3,994	$ 2,629

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Restructuring and Related Charges (Details) $ in Thousands		3 Months Ended	9 Months Ended
	Oct. 29, 2018 segment	Jun. 30, 2022 USD ($) segment	Jun. 30, 2022 USD ($) segment	Jun. 30, 2021 USD ($)
Restructuring Cost and Reserve [Line Items]
Number of reportable segments | segment	3	2	2
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning of the period			$ 304	$ 970
Restructuring charges			4,297	7,039
Release of prior reserves			290	296
Write off charges			0	(966)
Cash payments			(3,551)	(6,349)
Other adjustments			(6)	8
Restructuring reserve, end of the period		$ 1,044	1,044	702
Cost of Product Sales and Services
Restructuring Reserve [Roll Forward]
Restructuring charges			1,352	4,341
General and Administrative Expense
Restructuring Reserve [Roll Forward]
Restructuring charges			2,403	1,675
Sales and Marketing Expense
Restructuring Reserve [Roll Forward]
Restructuring charges			83	348
Research and Development Expense
Restructuring Reserve [Roll Forward]
Restructuring charges			1	(15)
Other Operating Income (Expense)
Restructuring Reserve [Roll Forward]
Restructuring charges			458	690
Post Memcor product line sale restructuring
Restructuring Reserve [Roll Forward]
Restructuring charges			942	4,649
Two-segment realignment
Restructuring Reserve [Roll Forward]
Restructuring charges			413	830
Other Restructuring
Restructuring Reserve [Roll Forward]
Restructuring charges			3,232	$ 1,856
Other Restructuring | Minimum
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost		2,700,000	2,700,000
Other Restructuring | Maximum
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost		$ 3,700,000	$ 3,700,000

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Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Retirement Benefits [Abstract]
Service cost	$ 215	$ 287	$ 674	$ 858
Interest cost	100	81	315	240
Expected return on plan assets	(122)	(88)	(383)	(262)
Amortization of actuarial losses	156	266	491	640
Pension expense for defined benefit plans	$ 349	$ 546	$ 1,097	$ 1,476

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Estimated Annual Effective Tax Rate Used to Calculate Income Tax Expense (Benefit)			23.10%	19.70%
Federal statutory income tax rate, percent			21.00%	21.00%
Income tax expense	$ (5,027)	$ (3,887)	$ (8,896)	$ (7,672)
Income before income taxes	$ 22,590	$ 17,086	$ 39,921	$ 32,430
Effective income tax rate reconciliation, percent	22.30%	22.70%	22.30%	23.70%
Unrecognized Tax Benefits	$ 1,663	$ 1,805	$ 1,663	$ 1,805

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Share-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands					3 Months Ended		9 Months Ended
	Apr. 01, 2022	Oct. 01, 2021	Dec. 21, 2018	Oct. 01, 2018	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service period							3 years
Granted (shares)							2
Intrinsic value, exercises in period							$ 16,282
Fair value of options vested							5,346
Share-based Compensation expense					$ 5,818	$ 5,526	17,220	$ 11,816
Non-cash share-based compensation					5,750	4,228	16,339	10,461
Compensation cost not yet recognized, period for recognition					$ 24,133		24,133
Proceeds from issuance of common stock							$ 7,921	18,096
Employee Stock Ownership Plan (ESOP), Shares in ESOP			11,297
Common stock, par value (in dollars per share)					$ 0.01		$ 0.01		$ 0.01
Evoqua Water Technologies Corp. Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards vesting percentage					25.00%
Contractual term of options							10 years
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity incentive plan, number of shares authorized (shares)					11,083		11,083
Number of shares available for grant (in shares)					2,177		2,177
Compensation cost not yet recognized, period for recognition					$ 5,591		$ 5,591
Period for recognition for unrecognized compensation expense							1 year 8 months 12 days
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)					3,958		3,958
Purchase price of stock, percentage				85.00%
Employee Stock Ownership Plan (ESOP), Shares in ESOP			5,000
Employee Stock Ownership Plan (ESOP), Compensation Expense					$ 298	$ 249	$ 717	$ 652
Shares issued under ESPP	48	60
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (in dollars per share)			$ 0.01
Special RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost not yet recognized, period for recognition					$ 9,905		$ 9,905
Period for recognition for unrecognized compensation expense							2 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition for unrecognized compensation expense							1 year 10 months 24 days

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Share-Based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2021
Options
Outstanding at beginning of the period (shares)	5,090,000
Granted (shares)	2,000
Exercised (shares)	(529,000)
Forfeited (shares)	(32,000)
Outstanding at end of the period (shares)	4,531,000
Options exercisable (shares)	3,477,000
Options vested and expected to vest (shares)	4,516,000
Weighted Average Exercise Price/Share
Weighted average exercise price, outstanding, beginning balance (in dollars per share)	$ 13.87
Weighted average exercise price, granted (in dollars per share)	46.75
Weighted average exercise price, exercised (in dollars per share)	10.57
Weighted average exercise price, forfeited (in dollars per share)	20.94
Weighted average exercise price, outstanding, ending balance (in dollars per share)	14.21
Weighted average exercise price, exercisable (in dollars per share)	11.97
Weighted average exercise price, options vested and expected to vest (in dollars per share)	$ 14.18
Weighted Average Remaining Contractual Term
Weighted average remaining contractual term, outstanding	5 years 3 months 18 days	5 years 10 months 24 days
Weighted average contractual term, exercisable	4 years 6 months
Weighted average remaining contractual term, options vested and expected to vest	5 years 3 months 18 days
Intrinsic value, outstanding	$ 82,939		$ 120,611
Intrinsic value, exercisable	71,433
Intrinsic value, options vested and expected to vest	$ 82,792

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Share-Based Compensation (Nonvested Share Activity) (Details)	9 Months Ended
	Jun. 30, 2022 $ / shares shares
Shares
Unvested at beginning of period | shares	1,901,000
Granted (shares) | shares	2,000
Vested (shares) | shares	(817,000)
Forfeited (shares) | shares	(32,000)
Unvested at end of period | shares	1,054,000
Weighted Average Grant Date Fair Value/Share
Weighted average grant date fair value, nonvested, beginning balance (in dollars per share) | $ / shares	$ 6.69
Weighted average grant date fair value, granted (in dollars per share) | $ / shares	24.22
Weighted average grant date fair value, vested (in dollars per share) | $ / shares	6.54
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares	6.66
Weighted average grant date fair value, nonvested, ending balance (in dollars per share) | $ / shares	$ 6.82

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Share-Based Compensation (RSU Activity) (Details) shares in Thousands	9 Months Ended
	Jun. 30, 2022 $ / shares shares
Shares
Forfeited | shares	32
Options exercisable (shares) | shares	3,477
Weighted Average Grant Date Fair Value/Share
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares	$ 6.66
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ / shares	$ 14.18
Restricted Stock Units (RSUs)
Shares
Outstanding at beginning of the period (shares) | shares	1,209
Granted | shares	327
Vested in period (shares) | shares	(504)
Forfeited | shares	37
Outstanding at beginning of the period | shares	995
Options exercisable (shares) | shares	966
Weighted Average Grant Date Fair Value/Share
Weighted average grant date fair value, nonvested, equity instruments other than options, beginning of the period (in dollar per share) | $ / shares	$ 22.77
Weighted average grant date fair value, granted (in dollars per share) | $ / shares	44.94
Weighted average grant date fair value, vested (in dollars per share) | $ / shares	22.21
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares	26.35
Weighted average grant date fair value, nonvested, equity instruments other than options, end of the period (in dollar per share) | $ / shares	30.19
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ / shares	$ 29.95
Special RSU
Shares
Outstanding at beginning of the period (shares) | shares	469
Granted | shares	124
Outstanding at beginning of the period | shares	593
Options exercisable (shares) | shares	551
Weighted Average Grant Date Fair Value/Share
Weighted average grant date fair value, nonvested, equity instruments other than options, beginning of the period (in dollar per share) | $ / shares	$ 16.92
Weighted average grant date fair value, granted (in dollars per share) | $ / shares	52.50
Weighted average grant date fair value, nonvested, equity instruments other than options, end of the period (in dollar per share) | $ / shares	23.39
Weighted average exercise price, options vested and expected to vest (in dollars per share) | $ / shares	$ 23.28

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Concentration of Credit Risk (Details)	Jun. 30, 2022 country
Risks and Uncertainties [Abstract]
Number of countries in which entity operates	9

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Commitments and Contingencies (Schedule of Letters of Credit and Surety Bonds) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Sep. 30, 2021
Other Commitments [Line Items]
Revolving credit capacity	$ 60,000	$ 60,000	$ 60,000
Remaining revolving credit capacity	50,471	50,471	49,888
Surety Bond
Other Commitments [Line Items]
Surety capacity	262,090	262,090	250,000
Surety issuances	129,021	129,021	147,845
Remaining surety available	$ 133,069	133,069	102,155
Minimum | Surety Bond
Other Commitments [Line Items]
Letter of Credit, Guarantee, Bond Commitments, Expiration Period	12 months
Maximum | Surety Bond
Other Commitments [Line Items]
Letter of Credit, Guarantee, Bond Commitments, Expiration Period	10 years
Letter of Credit
Other Commitments [Line Items]
Letters of credit outstanding, amount	$ 9,529	9,529	10,112
Remaining revolving credit capacity	$ 129,471	$ 129,471	$ 302,888
Debt Instrument, Maturity Date		Mar. 20, 2030

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Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Sep. 30, 2021
Payables and Accruals [Abstract]
Salaries, wages, and other benefits	$ 67,837	$ 79,110
Obligation under operating leases	14,321	13,316
Obligation under finance leases	12,560	12,093
Third party commissions	10,464	10,031
Taxes, other than income	6,711	4,575
Provision for litigation	1,446	2,938
Insurance liabilities	3,466	3,720
Severance payments	1,044	304
Fair value of liability derivatives	219	554
Earn-outs related to acquisitions	0	150
Other	32,907	28,335
Accrued expenses and other liabilities	$ 162,474	$ 160,367
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued expenses and other liabilities	Accrued expenses and other liabilities
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued expenses and other liabilities
Deferred Revenue, Current	$ 11,499	$ 5,241

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Business Segments (Details) $ in Thousands		3 Months Ended						9 Months Ended
	Oct. 29, 2018 segment	Jun. 30, 2022 USD ($) segment	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jun. 30, 2022 USD ($) segment	Jun. 30, 2021 USD ($)	Sep. 30, 2021 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment	3	2						2
Segment Reporting Information [Line Items]
Total revenue		$ 439,325			$ 369,681			$ 1,232,321	$ 1,038,438
Operating profit (loss)		31,030			28,310			64,890	60,722
Interest expense		(8,440)			(11,224)			(24,969)	(28,292)
Income before income taxes		22,590			17,086			39,921	32,430
Income tax (expense) benefit		(5,027)			(3,887)			(8,896)	(7,672)
Net income		17,563	$ 7,374	$ 6,088	13,199	$ 5,082	$ 6,477	31,025	24,758
Assets		2,171,618						2,171,618		$ 1,868,891
Integrated Solutions and Services
Segment Reporting Information [Line Items]
Revenue from product sales and services		297,411			239,687			837,297
Applied Product Technologies
Segment Reporting Information [Line Items]
Revenue from product sales and services		141,914			129,994			395,024
Intersegment Eliminations
Segment Reporting Information [Line Items]
Revenue from product sales and services		37,885			25,167			100,322	71,054
Intersegment Eliminations | Integrated Solutions and Services
Segment Reporting Information [Line Items]
Revenue from product sales and services		13,020			5,727			31,209	11,832
Intersegment Eliminations | Applied Product Technologies
Segment Reporting Information [Line Items]
Revenue from product sales and services		24,865			19,440			69,113	59,222
Operating Segments
Segment Reporting Information [Line Items]
Total revenue		477,210			394,848			1,332,643	1,109,492
Operating Segments | Integrated Solutions and Services
Segment Reporting Information [Line Items]
Total revenue		310,431			245,414			868,506	690,370
Revenue from product sales and services		297,411			239,687			837,297	678,538
Operating profit (loss)		39,864			37,793			113,269	94,934
Assets		1,127,646						1,127,646		887,265
Operating Segments | Applied Product Technologies
Segment Reporting Information [Line Items]
Total revenue		166,779			149,434			464,137	419,122
Revenue from product sales and services		141,914			129,994			395,024	359,900
Operating profit (loss)		28,592			22,735			69,412	54,218
Assets		664,946						664,946		656,362
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Operating profit (loss)		(37,426)			$ (32,218)			(117,791)	$ (88,430)
Assets		$ 379,026						$ 379,026		$ 325,264

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Numerator for basic and diluted earnings per common share—Net income attributable to Evoqua Water Technologies Corp.	$ 17,563	$ 13,155	$ 30,880	$ 24,624
Denominator:
Denominator for basic net income per common share—weighted average shares	121,338	119,015	120,970	119,015
Effect of dilutive securities:
Share‑based compensation	3,512	3,245	3,927	3,312
Denominator for diluted net income per common share—adjusted weighted average shares	124,850	122,260	124,897	122,327
Basic income per common share	$ 0.14	$ 0.11	$ 0.26	$ 0.21
Diluted income per common share	$ 0.14	$ 0.11	$ 0.25	$ 0.20

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Subsequent Events (Details) $ in Thousands	Jul. 01, 2022 USD ($) customers
Subsequent Event [Line Items]
Number of customers (over) | customers	1,200
Subsequent Event | Smith Engineering
Subsequent Event [Line Items]
Effective date of acquisition	Jul. 01, 2022
Payments to acquire businesses	$ 18,878
Subsequent Event | Epicor
Subsequent Event [Line Items]
Effective date of acquisition	Jul. 15, 2022
Payments to acquire businesses	$ 4,269