AquaVenture Holdings Limited (NYSE: WAAS) (“AquaVenture” or the
“Company”), a leader in Water-as-a-Service® (“WAAS®”) solutions,
today reported financial results for the quarter ended March 31,
2019.
Highlights
For the three months ended March 31, 2019:
- Total revenues of $46.6 million
reflected a 43.2% increase over the prior year period, comprised of
an increase of 48.8% and 36.4% in the Quench and Seven Seas Water
segments, respectively.
- Net loss of $5.7 million, or ($0.21)
per share, compared to net loss of $6.3 million, or ($0.24) per
share, in the prior year period.
- Adjusted EBITDA was $16.5 million, a
60.0% increase over the prior year period. Adjusted EBITDA Margin
was 35.5%, an improvement of 380 basis points.
- Adjusted EBITDA plus principal
collected on the Peru construction contract increased 54.7% to
$17.8 million from $11.5 million in the prior year period.
Tony Ibarguen, AquaVenture’s President and Chief Executive
Officer announced: “AquaVenture started off 2019 with another
quarter of exciting results, growing year-over-year revenues by
43.2% and year-over-year Adjusted EBITDA by 60.0%. This growth
reflects the successful execution of our strategic 2018
acquisitions in combination with robust organic performance. The
Quench team had an impressive quarter with just over 12% organic
year-over-year growth, while integrating the Q4 2018 acquisition of
PHSI. Seven Seas Water also made great progress in the integration
of AUC, and we announced an important amendment of our agreement
with Limetree Bay Terminals in the U.S. Virgin Islands. This
extends our customer relationship until 2024 and will expand the
water production capacity later this year from 0.7 million gallons
per day currently to 1.7 million gallons per day. We are very
pleased with our start to the year and are committed to driving
growth in both businesses as we continue to expand our
water-as-a-service solutions to more customers, in more locations,
and with a broader array of product offerings. We will remain
focused on driving value for our shareholders and creating clean
water solutions for customers around the world.”
Consolidated Financial Performance
For the first quarter of 2019, total revenues increased 43.2% to
$46.6 million from $32.5 million in the 2018 period. Total gross
margin of 52.2% was relatively flat compared to the prior year
period.
Total selling, general and administrative expenses (“SG&A”)
increased to $22.9 million in the first quarter of 2019 from $19.6
million in the same period of 2018.
Net loss for the first quarter of 2019 was $5.7 million,
compared to a net loss of $6.3 million in the same period of 2018.
Adjusted EBITDA was $16.5 million for the first quarter of 2019, a
60.0% increase over $10.3 million in the prior year period.
Adjusted EBITDA Margin of 35.5% for the first quarter of 2019
increased 380 basis points from 31.7% in the same period of 2018.
Adjusted EBITDA plus the principal collected on the Peru
construction contract was $17.8 million in the first quarter of
2019, an increase of 54.7% over $11.5 million in the same period of
2018.
Net cash used in operating activities for the quarter ended
March 31, 2019 was $0.4 million compared to net cash provided by
operating activities of $5.1 million for the same period of 2018.
The decrease in cash from operating activities was primarily driven
by higher cash interest expense on increased borrowings, the impact
of the adoption of the new lease accounting guidance in 2019 and
changes in working capital resulting primarily from the timing of
payments in connection with fourth quarter 2018 corporate
activities. Capital expenditures were $7.2 million for the first
quarter of 2019, compared to $2.8 million in the same period of
2018, primarily due to supporting the growth of our recently
acquired AUC business and the expansion of our plant in
Anguilla.
As of March 31, 2019, cash and cash equivalents were $47.4
million and total debt was $318.7 million.
First Quarter 2019 Segment Results
Seven Seas Water
Seven Seas Water revenues of $20.1 million for the three months
ended March 31, 2019 increased $5.4 million, or 36.4%, compared to
the same period of 2018, which were comprised of 34.5% inorganic
growth and 1.9% organic growth. Bulk water revenues increased $0.6
million, or 4.5%, compared to the prior year period, primarily due
to higher production volumes in our USVI operations compared to the
prior year, the commencement of our water contract in Anguilla and
a higher water rate at our BVI operations compared to the prior
year. This was partially offset by lower revenue in our Peru
operations due to revenue received in the prior year period in
connection with the performance of non-routine services. Rental
revenues and product sales increased $3.1 million and $1.7 million,
respectively, due to the inclusion of the AUC operations acquired
in November 2018.
Seven Seas Water gross margin for the three months ended March
31, 2019 increased 40 basis points to 56.3% compared to 55.9% in
the prior year period. Bulk water gross margin of 54.0% increased
150 basis points compared to 52.5% in the prior year period
primarily driven by lower costs as a percentage of revenue due to
lower production volumes in relation to the minimum purchase
requirements at one of our plants and higher revenues without a
commensurate increase in costs at certain other locations. Rental
and product sales gross margin of 74.4% and 17.3%, respectively,
for the three months ended March 31, 2019 had no comparative
information as both related to the acquisition of the AUC
operations in November 2018. Financing gross margin is 100% but
causes a decrease to the overall Seven Seas Water gross margin
compared to the prior year period as a result of the lower relative
contribution of financing revenues to overall revenues.
Seven Seas Water SG&A expenses for the three months ended
March 31, 2019 decreased $0.3 million to $7.3 million compared to
the prior year period. The decrease was primarily due to a decrease
of $1.5 million in share-based compensation expense driven by the
completion of the vesting of certain equity grants made in
connection with our initial public offering in 2016. This decrease
was partially offset by an increase of $1.2 million in amortization
expense of intangible assets primarily due to the acquisition of
the AUC business in November 2018.
Net income for our Seven Seas Water segment was $0.1 million for
the three months ended March 31, 2019 compared to a net loss of
$2.4 million in the same period of 2018. Adjusted EBITDA of $10.9
million for the first quarter of 2019 increased 51.2% over $7.2
million in the prior year period. Adjusted EBITDA Margin increased
530 basis points to 54.1% in the first quarter of 2019 from 48.8%
in the same period of 2018. Adjusted EBITDA plus principal
collected on the Peru construction contract was $12.2 million in
the first quarter of 2019, an increase of 45.1% over $8.4 million
in the prior year period.
Quench
Quench revenues of $26.4 million for the three months ended
March 31, 2019 increased $8.7 million, or 48.8%, compared to the
same period of 2018, which were comprised of 36.7% of inorganic
growth and 12.1% organic growth. Partially offsetting this increase
was $1.1 million lower revenue due to the divestiture of the Atlas
High Purity Solutions business in October 2018. Rental revenues
increased $4.7 million, or 33.7%, compared to the prior year
period, which was comprised of 26.6% inorganic growth from
acquisitions and 7.1% of organic growth due to additional units
placed under new leases in excess of unit attrition. Product sales
increased $4.0 million compared to the same period of 2018, which
included $2.9 million of inorganic growth primarily due to the
acquisitions of PHSI and Bluline in December 2018, and $1.1 million
of organic growth driven by higher indirect dealer equipment sales
and coffee sales.
Quench gross margin for the three months ended March 31, 2019
decreased 40 basis points to 49.1% from 49.5% for the same period
of 2018, primarily due to a decrease in rental gross margin,
partially offset by an increase in product sales gross margin.
Rental gross margin for the first quarter of 2019 was 52.8%, a
decrease of 100 basis points from 53.8% in the prior year period,
primarily due to an increase in filtration and parts expenses due
to the timing of annual maintenance performed on company-owned
equipment on lease and higher freight expense. These increases were
partially offset by lower compensation and benefits as a percentage
of revenues due to continued leveraging of the platform. Product
sales gross margin increased to 40.1% for the three months ended
March 31, 2019 from 33.7% in the prior year period, primarily
driven by the inclusion of the higher-margin indirect PHSI dealer
equipment sales.
Quench SG&A expenses for the three months ended March 31,
2019 increased $3.5 million to $14.2 million compared to the
prior year period. The increase was primarily due to $1.2 million
higher compensation and benefits expense primarily driven by
increased headcount from the inclusion of staff added from certain
acquisitions, $1.2 million higher amortization expense primarily
related to an increase in intangible assets from recent
acquisitions, and a $0.2 million increase in loss on disposal of
assets. Partially offsetting these increases was a $0.5 million
decrease in share-based compensation expense driven by the
completion of the vesting of certain equity grants made in
connection with our initial public offering.
Quench had a net loss of $2.8 million for the first quarter of
2019 compared to a net loss of $2.6 million in the prior year
period. Adjusted EBITDA of $6.8 million for the first quarter of
2019 increased 65.9% over $4.1 million in the same period of 2018.
Adjusted EBITDA Margin increased 260 basis points to 25.7% in the
first quarter of 2019 from 23.1% in the prior year period.
Corporate and Other
Corporate and Other SG&A for the three months ended March
31, 2019 increased $0.1 million compared to the same period of
2018.
2019 Outlook
For the full year 2019 outlook, the Company reaffirms that it
expects to achieve the following results:
- Revenues between $190 million and $197
million;
- Adjusted EBITDA between $67 million and
$72 million;
- Principal collected on the Peru
construction contract is projected to be $5.3 million; and
- Adjusted EBITDA plus the principal
collected on the Peru construction contract between $72 million and
$77 million.
These ranges do not include estimates in connection with any
pending or future acquisitions.
The above statements are based on current targets. These
statements are forward-looking, and actual results may differ
materially. We do not provide GAAP financial measures on a
forward-looking basis because we are unable to predict with
reasonable certainty the ultimate outcome of unusual gains and
losses, acquisition-related expenses and purchase accounting fair
value adjustments, among other factors, without unreasonable
effort. These items are uncertain, depend on various factors, and
could be material to our results computed in accordance with
GAAP.
About AquaVenture
AquaVenture is a multinational provider of WAAS® solutions that
provide customers a reliable and cost-effective source of clean
drinking and process water primarily under long-term contracts that
minimize capital investment by the customer. AquaVenture is
composed of two operating platforms: Quench, a leading provider of
filtered water systems and related services with over 140,000 units
installed at institutional and commercial customer locations across
the U.S. and Canada; and Seven Seas Water, a multinational provider
of desalination and wastewater treatment solutions, providing more
than 8.5 billion gallons of potable, high purity industrial grade
and ultra-pure water per year to governmental, municipal,
industrial and hospitality customers.
Conference Call and Webcast Information
AquaVenture will host an investor conference call on Wednesday,
May 8, 2019 at 8:00 a.m. EDT. Prior to the conference call,
AquaVenture will post an investor presentation on the Investor
Relations section of the Company’s website, www.aquaventure.com.
Interested parties are invited to listen to the conference call by
dialing 1-877-407-0789, or, for international callers,
1-201-689-8562 and ask for the AquaVenture conference call. Replays
of the entire call will be available through May 15, 2019 at
1-844-512-2921, or, for international callers, at 1-412-317-6671,
conference ID #13689745. A webcast of the conference call will also
be available through the Investor Relations section of the
Company’s website, www.aquaventure.com. A copy of this press
release is also available on the Company’s website.
Safe Harbor Statement
This release contains forward-looking statements that are made
pursuant to the safe harbor provisions of Section 27A of the
Securities Act of 1933 and of Section 21E of the Securities
Exchange Act of 1934. The forward-looking statements in this
release do not constitute guarantees of future performance.
Investors are cautioned that statements in this press release
regarding management’s future expectations, beliefs, intentions,
goals, strategies, plans or prospects, including, without
limitation, statements relating to AquaVenture’s strategic focus;
its forecast of full-year 2019 financial results; expectations
regarding future business development and acquisition activities;
its expectations regarding performance, growth, cash flows and
margins from recently completed and pending acquisitions; its
ability to capitalize on vertical integration opportunities; and
the impacts on operating results of the timing, size, integration
and accounting treatment of acquisitions, constitute
forward-looking statements. Forward-looking statements can be
identified by terminology such as “anticipate,” “believe,” “could,”
“could increase the likelihood,” “estimate,” “expect,” “intend,”
“is planned,” “may,” “should,” “will,” “will enable,” “would be
expected,” “look forward,” “may provide,” “would” or similar terms,
variations of such terms or the negative of those terms. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors including those risks,
uncertainties and factors detailed in AquaVenture’s filings with
the Securities and Exchange Commission. As a result of such risks,
uncertainties and factors, AquaVenture’s actual results may differ
materially from any future results, performance or achievements
discussed in or implied by the forward-looking statements contained
herein. AquaVenture is providing the information in this press
release as of this date and assumes no obligations to update the
information included in this press release or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
AQUAVENTURE HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN
THOUSANDS) March 31, December 31,
2019 2018 ASSETS Current Assets: Cash and cash
equivalents $ 47,357 $ 56,618 Trade receivables, net of allowances
of $1,019 and $1,034, respectively 22,578 21,437 Inventory 14,770
15,496 Current portion of long-term receivables 7,099 6,538 Prepaid
expenses and other current assets 10,154 8,272
Total current assets 101,958 108,361 Property, plant and
equipment, net 149,493 150,064 Construction in progress 17,538
15,427 Right-of-use assets 8,549 — Restricted cash 4,211 4,153
Long-term receivables 38,250 40,574 Other assets 7,696 6,251
Deferred tax asset 4,206 4,191 Intangible assets, net 200,251
205,443 Goodwill 191,178 190,999 Total
assets $ 723,330 $ 725,463 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,918
$ 8,235 Accrued liabilities 21,452 25,116 Current portion of
long-term debt 6,574 6,494 Deferred revenue 4,298
3,890 Total current liabilities 39,242 43,735
Long-term debt 312,112 313,215 Deferred tax liability 18,555 18,465
Other long-term liabilities 12,780 13,450 Operating lease
liabilities, non-current 7,724 — Total
liabilities 390,413 388,865 Commitments
and contingencies Shareholders' Equity
Ordinary shares, no par value, 250,000
shares authorized; 26,934 and 26,780shares issued and outstanding
at March 31, 2019 and December 31, 2018, respectively
— — Additional paid-in capital 583,990 582,127 Accumulated other
comprehensive income (301 ) (421 ) Accumulated deficit
(250,772 ) (245,108 ) Total shareholders' equity
332,917 336,598 Total liabilities and
shareholders' equity $ 723,330 $ 725,463
AQUAVENTURE HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three
Months Ended March 31, 2019 2018 Revenues: Bulk
water $ 14,310 $ 13,696 Rental 21,807 13,959 Product sales 9,473
3,811 Financing 972 1,048 Total
revenues 46,562 32,514 Cost of revenues: Bulk water 6,582 6,507
Rental 9,606 6,456 Product sales 6,059 2,526
Total cost of revenues 22,247 15,489 Gross profit 24,315
17,025 Selling, general and administrative expenses 22,869
19,574 Income (loss) from operations 1,446
(2,549 ) Other expense: Interest expense, net (6,560 ) (3,250 )
Other income (expense), net 51 (140 ) Loss
before income tax expense (5,063 ) (5,939 ) Income tax expense
(benefit) 601 407 Net loss (5,664 )
(6,346 ) Other comprehensive income: Foreign currency translation
adjustment 120 (83 ) Comprehensive loss $
(5,544 ) $ (6,429 ) Loss per share – basic and diluted $
(0.21 ) $ (0.24 ) Weighted-average shares outstanding –
basic and diluted 26,865 26,491
AQUAVENTURE
HOLDINGS LIMITED AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Three Months Ended March 31, 2019 2018
Cash flows from operating activities: Net loss $ (5,664 ) $ (6,346
) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation and amortization 11,958 7,860
Share-based compensation expense 1,011 3,283 Provision for bad
debts 186 249 Deferred income tax provision 77 (155 ) Inventory
adjustment 60 52 Loss on disposal of assets 529 553 Amortization of
deferred financing fees 254 239 Other 33 12 Change in operating
assets and liabilities: Trade receivables (1,325 ) 1,103 Inventory
671 (512 ) Prepaid expenses and other current assets (1,200 ) 708
Long-term receivable 1,722 1,656 Right-of-use assets 416 — Other
assets (2,358 ) (1,023 ) Current liabilities (6,599 ) (2,717 )
Operating lease liabilities, non-current (257 ) — Long-term
liabilities 57 122 Net cash provided by
operating activities (429 ) 5,084 Cash flows
from investing activities: Capital expenditures (7,177 ) (2,847 )
Proceeds from sale of fixed assets 11 — Net cash paid for
acquisition of assets or business — (6,653 )
Net cash used in investing activities (7,166 ) (9,500
) Cash flows from financing activities: Payments of long-term debt
(1,640 ) (1,808 ) Payment of deferred financing fees — (71 )
Payments of secured borrowings (158 ) — Payments of acquisition
contingent consideration (670 ) — Proceeds from exercise of stock
options 1,472 15 Shares withheld to cover minimum tax withholdings
on equity awards (620 ) (112 ) Net cash provided by
financing activities (1,616 ) (1,976 ) Effect of
exchange rates on cash, cash equivalents and restricted cash
8 (7 ) Change in cash, cash equivalents and
restricted cash (9,203 ) (6,399 ) Cash, cash equivalents and
restricted cash at beginning of period 60,771
122,359 Cash, cash equivalents and restricted cash at end of
period $ 51,568 $ 115,960
AQUAVENTURE HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
SEGMENT DATA (IN THOUSANDS) Three Months Ended
March 31, 2019 Seven Seas Corporate Water
Quench & Other Total Revenues: Bulk water
$ 14,310 $ — $ — $ 14,310 Rental 3,139 18,668 — 21,807 Product
sales 1,696 7,777 — 9,473 Financing 972 —
— 972 Total revenues 20,117
26,445 — 46,562 Gross profit: Bulk water 7,728 — — 7,728 Rental
2,336 9,865 — 12,201 Product sales 293 3,121 — 3,414 Financing
972 — — 972
Total gross profit 11,329 12,986 — 24,315 Selling, general and
administrative expenses 7,300 14,201
1,368 22,869 Income (loss) from
operations 4,029 (1,215 ) (1,368 ) 1,446 Other expense, net
(3,493 ) (1,395 ) (1,621 ) (6,509 ) Income
(loss) before income tax expense 536 (2,610 ) (2,989 ) (5,063 )
Income tax expense 442 159 —
601 Net income (loss) $ 94 $ (2,769 ) $
(2,989 ) $ (5,664 )
Three Months Ended
March 31, 2018 Seven Seas Corporate Water
Quench & Other Total Revenues: Bulk water
$ 13,696 $ — $ — $ 13,696 Rental — 13,959 — 13,959 Product sales —
3,811 — 3,811 Financing 1,048 —
— 1,048 Total revenues 14,744 17,770 — 32,514
Gross profit: Bulk water 7,189 — — 7,189 Rental — 7,503 — 7,503
Product sales — 1,285 — 1,285 Financing 1,048
— — 1,048 Total gross profit
8,237 8,788 — 17,025 Selling, general and administrative expenses
7,603 10,719 1,252
19,574 Income (loss) from operations 634 (1,931 ) (1,252 )
(2,549 ) Other expense, net (2,494 ) (765 )
(131 ) (3,390 ) Loss before income tax expense (1,860 )
(2,696 ) (1,383 ) (5,939 ) Income tax expense (benefit) 494
(87 ) — 407 Net loss $
(2,354 ) $ (2,609 ) $ (1,383 ) $ (6,346 )
AQUAVENTURE HOLDINGS LIMITED AND
SUBSIDIARIES
UNAUDITED KEY METRICS
(IN THOUSANDS)
Management uses key metrics for internal reporting and
forecasting purposes, when publicly providing its business outlook,
to evaluate the Company’s performance and to evaluate and
compensate the Company’s executives. The Company has provided these
metrics because it understands that some investors and financial
analysts find this information helpful in analyzing the Company’s
financial results and comparing the Company’s financial performance
to that of its peer companies and competitors.
NON-GAAP FINANCIAL MEASURES
Among the key metrics are non-GAAP financial measures. The
Company has provided non-GAAP financial measures in addition to
GAAP financial results because it believes that these non-GAAP
financial measures provide useful information to certain investors
and financial analysts for comparisons across accounting periods
not influenced by certain non-cash items that are not used by
management when evaluating the Company’s historical and prospective
financial performance.
Adjusted EBITDA
Adjusted EBITDA, a non-GAAP financial measure, is defined as
earnings (loss) before net interest expense, income tax expense or
benefit, depreciation and amortization as well as adjusting for the
following items: share-based compensation expense; gain or loss on
disposal of assets; acquisition-related expenses, including
professional fees, purchase consideration recorded as compensation
expense for acquired employees, and other expenses related to
acquisitions; goodwill impairment charges; changes in deferred
revenue related to our bulk water business; ERP system
implementation charges for a SaaS solution, and charges incurred in
connection with restructuring activities. Adjusted EBITDA should
not be considered a measure of financial performance under GAAP.
Management believes that the use of Adjusted EBITDA, which is used
by management as a key metric to assess performance, provides
consistency and comparability with our past financial performance,
and facilitates period-to-period comparisons of operations.
Management believes that it is useful to exclude certain charges,
such as depreciation and amortization, and non-core operational
charges, from Adjusted EBITDA because (1) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of our business operations and (2) such
expenses can vary significantly between periods.
Adjusted EBITDA Margin
Adjusted EBITDA Margin, a non-GAAP financial measure, is defined
as Adjusted EBITDA as a percentage of revenue.
A reconciliation of our GAAP net loss to Adjusted EBITDA, for
the periods presented is shown below:
Three Months Ended March 31,
2019 Seven Seas Corporate Water
Quench & Other Total (in thousands)
Net income (loss) $ 94 $ (2,769 ) $ (2,989 ) $ (5,664 )
Depreciation and amortization 5,696 6,262 — 11,958 Interest
expense, net 3,359 1,580 1,621 6,560 Income tax expense 442 159 —
601 Share-based compensation expense 592 373 46 1,011 (Gain) loss
on disposal of assets (9 ) 538 — 529 Acquisition-related expenses
357 247 161 765 Changes in deferred revenue related to our bulk
water business 345 — — 345 ERP implementation charges for a SAAS
solution — 309 — 309 Restructuring expense —
96 — 96
Adjusted EBITDA $
10,876 $ 6,795 $ (1,161 ) $ 16,510
Adjusted EBITDA Margin 54.1 % 25.7 % — % 35.5 %
Three Months Ended
March 31, 2018 Seven Seas Corporate Water
Quench & Other Total (in thousands)
Net loss $ (2,354 ) $ (2,609 ) $ (1,383 ) $ (6,346 )
Depreciation and amortization 3,564 4,296 — 7,860 Interest expense,
net 2,362 758 130 3,250 Income tax expense (benefit) 494 (87 ) —
407 Share-based compensation expense 2,084 920 279 3,283 Loss on
disposal of assets 229 324 — 553 Acquisition-related expenses 515
154 — 669 Changes in deferred revenue related to our bulk water
business 301 — — 301 ERP implementation charges for a SAAS solution
— 341 — 341
Adjusted EBITDA $ 7,195 $ 4,097 $ (974 ) $
10,318
Adjusted EBITDA Margin 48.8 % 23.1 % —
% 31.7 %
KEY METRICS
Principal collected on the Peru construction contract
As part of our Peru acquisition, we acquired the rights to a
design and construction contract for the construction of a
desalination plant and related infrastructure. Pursuant to the
contract, we are entitled to receive monthly installment payments
that continue until 2024 and are guaranteed by a major shareholder
of the customer. Due to the manner in which this contractual
arrangement is structured, these payments are accounted for as a
long-term receivable. Prior to the adoption of the new revenue
recognition standard on January 1, 2018, the principal and interest
portions of these payments were not recognized as revenue in our
consolidated financial statements and therefore were not included
in Adjusted EBITDA or in determining Adjusted EBITDA Margin. As a
result of the adoption of the new revenue recognition standard, all
financial information presented herein has been restated, including
recording the interest portion of these payments as revenue and,
thus, including them in Adjusted EBITDA and in determining Adjusted
EBITDA Margin. The principal collected on the Peru construction
contract remains the only portion of these monthly payments that is
not recognized as revenue in our consolidated financial statements,
and therefore is not included in Adjusted EBITDA or in the
determination Adjusted EBITDA Margin.
Three Months Ended March 31, 2019 Seven Seas
Corporate Water Quench
& Other Total (in thousands) Principal
collected on the Peru construction contract $ 1,289 $ — $ — $ 1,289
Three Months Ended March 31,
2018 Seven Seas Corporate Water
Quench & Other Total (in thousands)
Principal collected on the Peru construction contract $ 1,188 $ — $
— $ 1,188
Adjusted EBITDA plus Principal collected on the Peru
construction contract
We understand that many in the investment community combine our
Adjusted EBITDA and the principal we collect from the design and
construction contract for purposes of reviewing and analyzing our
financial results. Our management and board of directors also use
this combination in evaluating our performance (including in
measuring performance for a portion of the compensation of our
executive officers) because they believe it is helpful in better
understanding the cash generated from our Seven Seas Water
business. In this regard, and for the sake of clarity and
convenience, the combination of our Adjusted EBITDA and the
principal collected on the Peru construction contract is
presented.
Three Months Ended March 31,
2019 Seven Seas Corporate Water
Quench & Other Total (in thousands)
Adjusted EBITDA plus principal collected on the Peru construction
contract $ 12,165 $ 6,795 $ (1,161) $ 17,799
Three Months Ended March 31, 2018 Seven
Seas Corporate Water Quench &
Other Total (in thousands) Adjusted EBITDA plus
principal collected on the Peru construction contract $ 8,383 $
4,097 $ (974) $ 11,506
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