AquaVenture Holdings Limited (NYSE:WAAS) Q3 2018 Earnings Conference Call - Final Transcript
Nov 07, 2018 • 08:00 am ET
Good morning and welcome to the AquaVenture Holdings Third Quarter 2018 Earnings Conference Call. Today's call is being recorded and we have allocated time for prepared remarks and Q&A.
At this time, I would like to turn the conference over to Courtney Denihan, IR at AquaVenture. Thank you. Please go ahead.
Thank you, operator. Good morning, everyone. We released our earnings press release this morning and posted a slide presentation to the IR section of our website at investors.aquaventure.com. We will be referencing the slides during this call. Today's speakers are Doug Brown, CEO; Tony Ibarguen, President; and Lee Muller, CFO.
(Forward-Looking Cautionary Statements)
In addition, during today's call, we will discuss non-GAAP measures and other key metrics, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP measures to the most comparable GAAP measure can be found in our earnings release.
I would now like to turn the call over to our President, Tony Ibarguen.
Good morning, and thank you for joining us on today's call. I would like to start today's call by commenting on some financial and operational highlights from AquaVenture's third quarter of 2018. Lee will then walk you through our financial results in more detail. Finally, Doug will provide an update on our M&A pipeline and add some color on our financial outlook for the remainder of 2018, before we open up the line for your questions.
Starting on slide three, AquaVenture continued to deliver strong results in the third quarter, achieving double-digit year-over-year growth in both revenue and adjusted EBITDA. Total revenues of $36.8 million for the quarter were 23.7% higher than the third quarter of 2017. We reported adjusted EBITDA of $12.7 million, a 26.6% increase over Q3 of '17, and adjusted EBITDA margin of 34.4% reflecting margin expansion of 80 basis points. Adjusted EBITDA, plus the principal on the Peru construction contract was $13.9 million, a 24.8% increase year-over-year.
Moving to slide four, we've made several exciting announcements recently, including last week's $130 million acquisition of AUC, a provider of wastewater treatment and water reuse products and services. We're thrilled to have completed this acquisition, which expands our water-as-a-service offerings in the important wastewater treatment and water reuse market and broadens AquaVenture's portfolio in the United States. We funded the acquisition with both cash and proceeds from an expansion of our corporate credit agreement, which resulted in a net increase of $110 million of borrowings.
In our Seven Seas segment, we recently entered into a water purchase agreement with the Water Corporation of Anguilla, the country's public water utility to supply potable water under a 10-year contract. Under this agreement, we will provide water at an initial capacity of 500,000 gallons per day and will increase the capacity to 750,000 gallons per day within the next few months. Seven Seas Water's entrance into Anguilla complements