Q1 2020 Earnings Call
Good morning, and welcome to the evil plot water technologies first quarter 2020, <unk> earnings conference call. At this time, all participants have been placed on in listen only mode and the floor will be opened for your questions. Following the presentation.
After the speakers opening remarks, there will be a question and answer a period if he would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If he would like to withdraw your question. Please press the pound the key on your telephone keypad. As a reminder, this conference call is being recorded.
And your participation implies consent to our recording of this call. If you do not agree with these terms. Please disconnect at this time. Thank you I would now like to turn the call over to Dan Brailer, Vice President of Investor Relations. Please go ahead.
Good morning, everyone. Thank you for joining us for a bulk water technologies conference call to review, our first quarter 2020 financial results.
Joining me on todays call, our one Keating, President and Chief Executive Officer, and bench Das Executive Vice President and Chief Financial Officer. After our prepared remarks, well open the call to questions. We ask that you. Please keep to one question then a follow up to accommodate it's many questions as possible.
This conference call includes forward looking statements, including our expectations for fiscal year 2020, as well its expectations relating to work to segment realignment execution over digital strategy and the market for treatment of emerging contaminants actual results may differ materially from Mexico.
Patients for additional information on vocal please refer to the Companys FCC filings, including the risk factors described in Iran.
On this conference call will also have a discussion of certain non-GAAP financial measures information required by Reg G. D Exchange Act with respect to such non-GAAP financial measures is included in the presentation slides for this call.
Which can be obtained fire vocalist Investor Relations website.
All historical GAAP financial results have been reconciled and included in the appendix section of the presentation slides.
Unless otherwise specified references on this call the full year measures or two a year referred to our fiscal year, which stands on September thirtyth.
Means to access this conference call by a webcast were disclosed in the press release, which was posted on our corporate web site.
Replays of this conference call will be archived and available for the next seven days with that I would now like to turn the call over to Brian.
Thank you Dan Please turn to slide three.
Profitable growth continues to be our highest priority and we're very pleased with our first quarter results were now one year into our two segment realignment and I commend our teams operational focus and performance intensity.
Realignment continues to prove beneficial in the way, we sell our entire portfolio solutions and we're very pleased with our progress and execution in capturing our future growth opportunities there isn't an excellent position for long term profitable growth.
First quarter revenues grew over 7% driven by solid growth in both segments organic revenues increased almost 6%. We believe we're improving our market position as customers are responding favorably to our go to market strategy service revenues grew by nearly 5% driven impart by our investments and outsourced water.
And our focus on capturing the service opportunities that follow our capital projects.
Our orders continue to grow and outpaced sales again, this year and our pipeline remains robust with solid end market demand.
Adjusted EBITDA increased almost 14% to 44 million as we benefited from volume leverage mix and the benefits from our restructuring efforts.
Our digital strategy continues to be a top priority and we're working to accelerate it throughout the organization to improve operational efficiency generate stable in recurring revenues increased profitability and expand our margins.
Our customers are realizing the benefits through improved uptime, better compliance and 24, seven operational monitoring and control.
On the heels of our success of our recently launched water one pay per use model, we've decided to extend our digital strategy across multiple businesses. As an example, we're making digital investments in our municipal services business, we're expanding our feedback connection to wastewater customer sites that have been base level connected.
For several years, we're working to align all of our connected businesses to vote was companywide digital enterprise system, which reduces the cost to connect expands our functionality and allows us to accelerate the growth of our connected treatment sites and devices.
Increased functionality and businesses like our municipal services odor at corrosion control will enhance our ability to apply data analytics that will improve our performance and efficiency, while optimizing customer site applications.
Our growing order book is in part driven by our capital expenditures as we invest in a variety of high return outsource water assets for longer term customer contracts. Our trailing 12 month adjusted free cash flow is over $100 billion, and we are well above our 100% conversion target.
We're pleased to close on the sale of the men for product line on December 30, Onest, we recorded a net pre tax benefit of 49 million on the transaction and applied a 100 million dollar proceeds to reduce our indebtedness.
We have reduced our leverage by nearly a full turn over the past year to 3.4 times and we will continue to balance investing in growth opportunities, while also working to improve our capital structure.
Please turn to slide four.
The complexities in treating water are significant and growing increasing our customers compliance and production challenges. They vote was well equipped to respond to threats to the safety of our water supply.
Recycling reuse emerging contaminant management and life Sciences water purity or just a few examples of some of the increasingly pressing issues facing our local communities and water sources.
Our broad portfolio gives us a unique ability to treat challenges such as pfcs through emergency treatment and modal assets, while we determine a fit for purpose permanent solution across industrial municipal and commercial markets.
Market regulatory forces are accelerating this stabling Schmidt of P. fast water standards, yet federal state and local authorities very in minimum treatment levels and timelines and the overall treatment adoption rate is highly variable driven in part by public perspective.
Well the regulatory process evolves, we're actively engaged in responding to opportunities and leveraging our extensive service network and mobile fleet.
Based on management's estimate of large U.S.P. fast installations, we estimate our current share at approximately 30% and we expect the number of installations to grow over the coming years.
These installations include municipal drinking water military bases industrial sites and landfills.
In addition to our current technologies to remove the fast we are investing to expand our enhance our product portfolio. We're also investing and new technology trials aimed at developing and expanding PFS destruction technologies as this market evolves through the adoption of federal state and local regulations.
Please turn to slide five.
Overall, the business continues to benefit from stable and recurring revenue growth. This represents our revenue and adjusted EBITDA on a rolling 12 month basis from quarter to quarter since 2016.
Our overall revenues have grown at a rate of 8.5% with adjusted EBITDA growth over 19% during this time.
We primarily pursue capital projects to ultimately drive stable recurring and profitable service and aftermarket growth.
Currently our service business comprises 41% of total sales while service and aftermarket combined make up approximately two thirds of our business.
We continue to see strong product revenue growth of 11% pulling through an accelerating service revenue growth, which is now over 5% compounded annually since 2006, Dave.
As we've previously discussed the nature of our business is subject to quarterly variability. However, we have high visibility into our revenues from products and services on an annualized basis.
I'll now turn the presentation over to bed to review our financial results.
Thank you Rob.
Please turn to slide six.
For the first quarter revenues grew 23 billion or approximately 7% over the prior year to 346 million.
Organic revenues grew nearly 6% integrated solutions and services revenues grew approximately 8% and applied product technologies revenues increased 5% over the prior year.
Adjusted EBITDA was 43.6 billion up approximately 14% over the prior year for an overall margin of 12.6% and improvement of 70 basis points over the prior year.
First quarter profitability and margins benefited from volume leverage favorable price cost of 3 million and to segment realignment benefits results were partly offset by higher employment cost.
As Rob mentioned, we were very pleased to have completed the men core product line sale. Please note. The GAAP profitability shown on the chart include a net pre tax benefit of 49 billion, which is excluded from the adjusted metrics.
Please turn to slide seven.
For the first quarter integrated solutions and services revenues were up over 8% to 228 million.
Capital revenues were up approximately 27% while service revenues were up approximately 5%.
We experienced strong growth from customers in the microelectronics and chemical processing industries during the quarter.
Organic revenues grew almost 8% in the quarter. Our recent investment frontier contributed approximately 1 billion to growth.
Adjusted EBITDA margins increased by 100 basis points to nearly 21.4% for the quarter driven by volume mix and favorable price cost as expected higher employment costs, partly offset adjusted EBITDA growth.
Please turn to slide eight.
For the first quarter applied product technologies revenues increased approximately 5% percent to 118 million.
Organic revenues grew 2%, while foreign exchange negatively impacted revenues by approximately 1 billion. Adjusted EBITDA grew 13% to approximately 16 million for a margin of 13.4% up 100 basis points over the prior year improvement was driven by volume leverage.
Favorable mix and to segment realignment benefits.
Please turn to slide nine capital expenditures in the first quarter were approximately 18 million nearly the same as last year outsourced water projects and local fleet expansions drove most of the growth investments.
Net working capital decreased sequentially from Q4 vet why 19 by approximately 29 billion, which reflects a 23 million reduction from the men for divestiture.
Net working capital in the quarter includes approximately 2 million from acquisitions.
Please turn to slide 10.
Adjusted free cash flow for the quarter was negative 6 million and positive $103 million on a trailing 12 month basis, an increase of 86% over the prior LTM.
First quarter adjusted free cash flow was inline with our average seasonality.
For the past four years during the quarter, we financed 3.5 million of growth Capex capex investments related to outsource water initiatives.
Net leverage improved sequentially from 3.8 to 3.4 times in the quarter.
As commented earlier, we applied $100 million of net proceeds from the NIM core divestiture to pay down debt on January 17.
Our current weighted average cost of debt is approximately 5%.
Please turn to slide 11.
The 2020 long term tailwinds and uncertainties, we outlined last quarter continued to be relevant variables to our full year outlook. We're pleased with started the year and we will continue to take a balanced approach that factor in order conversion timing and second half macro economic uncertainties.
We are reaffirming our full year guidance and consistent with our comments last quarter. We continue to expect the first half of the year to be approximately 40% of the full year adjusted EBITDA Midpoints of 235 million.
Over the past four years adjusted EBITDA for the first half half has averaged approximately 40% of the full year adjusted EBITDA as shown in the appendix of the webcast presentation.
Which implies second quarter adjusted EBITDA to be in the range of 49 to 51 million.
I would now like to turn the call back over to run for his concluding remarks. Thank you bet.
Please turn to slide 12.
We're off to a solid start the year and I'm very proud of our team and our market leading position.
Our two segment realignment is resulting in a more effective organization aligned around the customer and yielding benefits, including strong order growth and a robust pipeline of activity.
We're continuing to invest in people systems and processes to fulfill our backlog in our expected demand.
Water one is our platform that digitally enables our water treatment assets and transitions our customers to pricing models based on usage.
Extending water one beyond our ISS service, the honest Asian business and are pleased with our progress.
Our digital strategy is focused on accelerating market adoption by offering customers a compelling value proposition, while improving evoke was overall operational efficiencies.
We believe our digital strategy is a competitive differentiator and customers are responding positively.
Pete fast and other emerging contaminants are creating significant challenges for customers and our portfolio of treatment alternatives and expertise have never been more important.
We have a comprehensive product portfolio extensive service network and expertise to assist customers with this growing threat to water quality.
We're fortunate to operate in an industry that we believe has significant long term tailwinds since clean water is a mission critical resource that is becoming increasingly more complex.
We believe over the long term the water treatment market can grow faster than GDP due to favorable macroeconomic trends and customer outsourcing opportunities. Our goal is to grow organically, 1% two points faster than the water treatment market.
We expect growth Capex spending to remain in the range of 3% of sales as we invest to meet growing customer demand.
Overall capital spending as a percentage of sales should be in the 5% to 6% range when factoring in maintenance Capex spending.
Additionally, we will maintain our acquisition strategy of pursuing attractively priced tuck in acquisitions to supplement organic growth and fill identified gaps, allowing us to better serve our customers.
We're pleased to have the MIM core product line in the hands of a long term trusted partner and we look forward to continued access to world class membrane technologies.
We have been diligently working to improve our balance sheet and the men quarter transaction provided an excellent AUC to opportunity to accelerate our topline.
We are committed to being the market leader with a strong and sustainable business model and has been indicated we reaffirmed our full year outlook.
As in past fiscal years, we expect the first half of the year to represent approximately 40% of our full year adjusted EBITDA with approximately 60% following in the second half of the year.
We will now open the goal to your questions.
Thank you at this time I would like to remind everyone. If you'd like to ask your question. Please press Star then the number one on your telephone keypad.
If your question has been answered and you wish to remove yourself from the Q press the pound key.
The interest of time, we do ask that you limit yourself to one question and one follow up so that everyone has a chance to ask their questions.
Our first question will come from the line of Deane Dray of RBC capital markets.
Thank you good morning, everyone. Good morning, Dave Good morning.
Hey, it was great to see this.
At this point of highlighting the expansion of digital across multiple platforms, not just water Juan it's not surprising, but it's really.
Interesting as what this growth opportunity could be so Brian could you frame for us what inning are you in here and.
Is there any concern at all with acceptance by customers 'cause water customers are notoriously slower to adopt technology. Even if you do have a better mouse trap. So what is do you want to set expectations about the adoption of digital for the.
Platform beyond 101 share gain and thanks for the question.
We're still early innings in the game of Rolling out digital I would say nine inning baseball game, we're in the top of the third.
Opportunities are tremendously you know there and we are finding them as I highlighted in the end the commentary that we've been connected on a base level line with our odor and erosion control in the municipal space.
Really around just usage of the chemicals that were being used in that space. We've also been connected and a lot of our mobile assets and we're expanding that so that it's much more effective for the customers much more usable for us around predictive analytics as we go forward so customers are accepting it because.
What is driving is efficiency in our operations and giving them 24, seven monitoring without us having to have people on site, they're very happy to see it there.
Great and then for my follow up I would like to address some of the points that you highlighted on the P. foster capabilities with evoke and so far you all been very measured in terms of what your capabilities are.
And it is my understanding is you have all of the technologies for P. Foster remediation today in house.
Really interesting you're going to add P. foster destruction.
Capabilities, which I assume is incineration, but just talk about how this develops from here is it all remediation discussions.
In terms of what the customers are asking you to do and what does that mean for evokes growth expectations profitability and so forth. It is remediation, they're looking for but one size does if at all and I think thats. The unique benefit that we have as I pointed out on slide four we upgrade later granular Act.
Debated Carbonite exchange Aro oxidation processes, we're we're focusing on advancing our I O Pete around destruction technologies, that's where we're doing some testing we actually already have destruction technologies that is.
Right already in bedded inside of our reactivation facilities. So we're doing that and driving that thats a form of consideration as you would call it and as we're reactivating carbon were destroying the PFS as it comes out but there are there other opportunities as we advance the technologies to be able to go through.
And some other methods.
Great and just last question for me if I could when you say, 30% share of this business, which I think it has to be in the very early innings in terms of P. Foster remediation. How many sites do you have currently and maybe or exit rate for the year. How many sites do you think you'll be active.
On a customer basis. So currently there we've anticipated and estimate theres more than 100 large sites room 35 to.
40 of those and it continues to grow.
As you look through the year, it's really going to depend on what the local municipalities in water districts decide they need treatment as well as customer outcry, so it's coming down to local regulations.
The pipeline is fairly robust when we look at those it's too early to speculate what we'll have by the end of the year, but we certainly expect that that to continue to grow and we're investing in mobile assets to be able to treat that as well as permanent solutions that can follow up.
Thank you.
Excellent.
Next question comes from the line of Nathan Jones of Stifel.
Good morning, everyone.
Good morning, good morning.
I'm going to start off following up.
From Danes questions on the connected strategy here.
Maybe you could talk a little bit more about the competitive landscape of that places at the new places that you pushing connected technology into I know when we get does the light industrial for one to one has very little competition heavy industrial has some competition.
Is this going to be a space that way you had that competitive advantage is it a more competitive space and does the model here, what similar to what a one way or you're going to have to put some capital spending up front ours is gonna be paid for by the customer.
So Nathan we feel like the space overall is still gives us a competitive advantage because of our footprint our network.
Ultimately them the amount of mobile assets that we have that are already deployed and our digitally enabled what we're doing is putting the new system onto our mobile assets. So that we have stronger feedback loop thats coming from that and a lot of cases, we already own those assets. So the the amount of incremental investment is very small.
All but enables us to be significantly more efficient as we're providing connected water treatment solutions to our customer base. So around the you know the light industry business that continues to grow. It continues to expand we are the national player in that and we're competing with much smaller regional.
Players that don't have the breadth and depth to be able to expand into that connected solution. The way that we are.
Okay, I think that the second one I'll do is on makes you guys true I think all of 2018 and probably most of 2019, we're talking about negative mix. As you are rolling out. These capital projects that were expected to generate more aftermarket and said this revenue into the future.
At this quarter, we're talking about positive mix in a lot of these businesses is that something that we should now continue to see as the capital projects that winning over the last couple of years now into the said, it's an optimized idle and said we should expect to see.
For me.
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Yes, so what we're seeing Nathan is the mix is becoming more normalized so the larger capital projects that have a follow on service tail are starting to manifest themselves in the numbers as we had anticipated would happen.
As you saw our total sales growth be a little greater than our service growth.
That's still is a very positive sign because as I even highlighted in this in the of the comments at the beginning as we rollout larger capital projects. We expect the service tail to continue that's why we go after those and overtime you should see that mix continue to normalize as we're seeing more this first quarter.
Okay. Thanks very much.
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Your next question comes from the line of 300 scant Jeffrey.
Good morning, Good morning will you continue to save some macro uncertainty and the second half the year. Despite the strong quarter in order. We saw so could you expand on some of the uncertainty items that you're seeing ours is largely conservative system on your pipe.
I think it's largely just being realistic around we can't predict what happens all the way at the end of the fiscal year.
What we're seeing at our our pipeline and our order rates are very strong very positive. However, you know, we always want to be cognizant of what's going on into geopolitical environment and what could occur by the end of the into the calendar year.
And train we also tend to have 60% in the second half in Q4 tends to be the strongest quarter for us. So when you think about for this quarter ways as strong as we want to be a little bit cautious.
As the macro environment unfolds.
I appreciate that.
Thanks for the earlier commentary on piece as I was hoping that you could have update us on what you're hearing or seeing from the legislative perspective.
Yes, so there's still a lot going on on the national level, a lot of debates and <unk> quite a lot of discussion this happening there.
Nothing has been set in stone and completed as of yet. So we're really focuses on the state level and the local level, what's occurring there we do spend a fair amount of time on the hill and and have a full effort on making sure that were at the front end of what's happening here with low with.
Limits being lowered and as limits are lowered the opportunities for the installations or going to increase significantly but right now it's being primarily driven on a state local level.
I appreciate it thanks for taking my question.
Your next question from the line of Andrew Capital City.
Hey, good morning, guys.
Good morning, good morning.
Run and Ben I, just want to follow up on sort of orders question. I think last quarter, you are worried a little bit about a slow down in some of your businesses chemical power even hydrocarbon in general.
Does that seem to slow a little bit from double digits to low single digits I'd imagine that lumpiness, though so maybe you can tell us if you did see any slowdown in any of those end markets that you had previously mentioned.
No nothing nothing not much has changed from last quarter I'd remind you that last quarter was tough comp.
And we had some.
Large orders in those industries you excited.
But our pipeline still looks good and robust we are continuing to see more and more of these large volume water customers look towards outsourced water, including.
Our us with water solutions, and so that's and Theyre, taking more time to commit capital expenditures.
But but we're not really seeing any material change from last quarter's pretty much settings ago. The pipeline also.
It is solid.
That's helpful. Ben and then there's certainly a much more difficult comparison trade PT this quarter, but JBT organic growth has been all over the place I think you did 20 last quarter you know into this quarter. Two in Q3 18. So should we think of ABTS are lumpy in kind of short cycle I dig project from a businesses.
This is like aquatic that regularly coming go can you give us any more color into what you think the underlying organic growth rate is of the PT business.
Yes, the best way to look at ATP is now as an LTM basis, because it normalizes that quarterly Lumpiness that we talk about US one of the reasons, we show that LTM chart, but.
But lot of that's just the size and the timing of shipments and again aquatic says one of the businesses that moved the needle.
But there are other businesses, including wastewater et cetera that that also can create some of that lumpiness, but any zoom out we look at it on an LTM basis, it's the best way to analyze the between business and Andy. The then the business is a little more product base. So it's a shorter book to Bill cycle, we do have.
The around the pipeline and and the pipeline still looks very robust. It's just it's a little bit more variable as Ben said around the lumpiness in a quarter.
Is it fair to say like last quarter that four to five of the businesses are growing are all 5 million anymore color on what's going on inside ABT, it's similar to last quarter.
Okay. Thanks, guys.
Next question, So I know.
Hi, Jane.
Thanks for taking the question let me.
Got back to one or the earlier questions regarding potential headwinds.
What is your current degree of exposure to China.
Obviously, asking the question in the context of what what we've been watching for the past 30 days.
Yes, well, what we what we sell into China is primarily focus just for China, our supply chain coming out of China is less than $10 million of direct product.
So we we know that the supply side of it is still staying strong, but we don't have any single component that is coming solely out of China. We have dual forces in multiple areas. So.
Say, where a lot of people are very concerned about the grow to virus. We feel this is.
No less than a a major impact for us in fact.
We feel very secure as we're looking forward.
Okay good to hear.
One other kind of potential headwind as well.
Thank you I'm sure you guys are aware of.
Coal fired power plant retirements I mean did this is something that historically power sector has been.
Big driver for your industrial business, what is your level of exposure specifically to coal up across the various geographies. We service all types of power generation and coal fire power plant retirements actually is not a negative to us.
Because what happens when they retire coal fired power plant as they have to treat the Ashland water. These ash ponds that have water that have been stored in them we'll have.
Many many years worth of de watering that will happen and you have to treat all of that water. It's a it's a very strong pool for our mobile assets as well as our proact business as well.
Very helpful. Appreciate it guys. Thanks.
Question comes online and Andrew.
Yeah.
Hey, guys just wanted to dig a little bit on I answer that.
They are seeing strength with microelectronics and Cpis, maybe like microelectronics has been going on for little bit now.
Can you just remind us where that what exactly on the drivers behind that.
Expect that strength to continue and then seem at CP I, just trying to get it gets some visibility as to how long how long the strength of Bob Yes. So microelectronics was really tied to expansion of capacity as well as capability when new fabs that may be coming in and then what's happening is the trends on the recycled reuse.
Backend for people were wanting to treat the wastewater versus use Virgin water same thing on CPR CPR has a lot of recycled reuse that's being you know that this being driven and just across the industrial business as a whole and we're seeing that across the ISS platform and portfolio even in my opening remarks.
One of the things I spoke to is the the trends for recycled reuse that gives us a tremendous opportunity around long term growth. That's one of the unique things about evoke was full product essential is the amount of waste water that we have on the back end, whether it's organic or inorganic waste water usage and then recycling.
We are using that water bring it back to the front in the process. So sustainability is driven as we've actually rolled out as our fourth value to the company as well as you know the trends in the marketplace as a whole to get to minimum liquid discharge. It gives us a long term growth opportunity with the portfolio that we have.
Okay, Yeah that makes sense.
Yeah, and just switching gears.
Your leverage is down a bit and you're talking about.
Continuing to focus on M&A as the use of cash.
No. It just thinking outside the box is there anything.
Yes that could evolve your digital strategy Inorganically. If you wanted to invest or is that not really scenario would be looking to do M&A.
We really focus the digital strategy around deploying digital assets across our platform of products that we haven't services, we provide there could be something on the inorganic side. If if you know some unique technologies popped up but right now everything that we have lined out in our future.
And what we've rolled out as our strategy, we have the capabilities in house to be able to execute on that.
Okay got it thank you.
Your next question following up randomly.
Hey has it gone this is Alex on for Brian.
Hi, Alex.
Hey, going back to a piece asked for a second.
We kind of wanted to talk about the pure landscapes, how many peers do you think have.
Same capabilities that you have and then had a follow up on that so very few have the full range of treatment technologies that we have in fact, I would say we're quite unique in that capability.
Most of the appears that go after it will go after with one single technology, whether its carbon or its aro or photonics change what we have as a capability to go all the way from carbon day Ob and that's that's unique again in the portfolio that of Oklahoma us across the APTP side being deployed into the iOS.
Business. So not only are we able to apply it service it and stay close to the customer. We also have the R&D side that has developed a technologies across the APC business that we have product sales that we ultimately sell to integrators Oems and other.
Design firms around book.
Great. Thanks for that color and I guess in light of that you expect as this market continues its going to become a fragmented fragmented or continue to be.
Consolidated and then I guess just in terms of the qualification processes are those ongoing now or do you expect what do you expect to have the near term here.
I think the market overall.
We will continue I mean, this going to it'll be a fragmented market around some regional plays but I do think that technology providers in the system provider such as.
Evoke will have a very strong national play across a full footprint. The other thing that you really have to bear in mind is companies have to invest to be able to prove that what they or the solutions are providing or actually solving the problems and the testing on the back side.
We're actually able to test that make sure that our systems are providing the right solutions and we work in conjunction with.
Universities as well as third party labs to ensure that what we're doing is creating the right destructive mechanisms and so it'll be something that the technologies are developed there will be a national deployment across larger players like us that are hitting.
Certain areas in certain geographies, but then you will certainly have some smaller regional players that will pop up in service just one updates.
Thank you.
Once again, if you would like to ask your question. Please press Star. One. Your next question comes from the line of Joe Giordano of Cowen.
Hey, Good morning. This is Robert on for Joe.
Just wanted to ask about on EMCOR and what the impact was in the quarter and also just wanted to see if you could talk about the cadence of men core sales.
Last year possible, just trying to get a sense of like where are the impacts can be.
Felt the most like in which quarter.
So let port Q1, traditionally it's been a very light quarter most of their sales need potential. Additionally has been in Q4, we don't disclose.
Small acquisitions or divestitures like this.
On a quarterly basis part of our process, but I can say that is it's very immaterial.
For the full year, and certainly relatively immaterial to the quarter.
And again Q4 tends to be in a strong this quarter.
Of form EMCORE.
Does that help.
Yeah that helps.
And then also just wanted to talk about.
Your organic orders orders for the quarter.
Mike how were they and then also on how much of the organic growth was from backed off backlog delivery and then could you tell us where backlog is today versus.
Last quarter and last year.
So again, our orders continue to outpace our sales.
Organically and total as you can see that.
The inorganic piece was a huge park this quarter pretty much aligned backlog remains very robust pipeline remains strong comps on orders year over year, we're very tough because last year, we had very strong orders in Q1.
But again, it's part of this is just timing the lumpiness of the land owners convert our in our pipeline converts to orders, but we still very filled very good about.
What we're seeing both in the pipeline and coming to work.
And we have a very positive outlook to Q2 as well.
Okay. Thanks, if I could sneak one more in there I'm just lumpy fast some that you see.
Incremental opportunities outside of the U.S. is that something you're thinking about.
And you don't have any sites outside of the U.S. yet do.
So you know very similar to the strategy of the business. We are we still fully integrated solutions inside of the U.S., that's where I would anticipate and we will send our mobile assets to work as well as developing solutions, we will sell our product technologies to other integrators designers and Oems outside of the U.S. through our third.
Party channel reps to be able to replicate what we're doing in the us in the international markets.
Okay. That's great. Thank you very much here for taking my questions.
Thank you that concludes our question and answer period I would now like to turn the call back over to run Keating for his closing remarks.
So thank you for your attention today. Thank you for your interest at of OCO I'd like to thank the team members that we have around the globe for delivering as they have through through 2019 and through the first quarter about 20, we're looking forward to continuing to supply the market with best in class technologies that solve the ever.
Growing challenging needs of water treatment inside of North America and around the globe and we look forward to speaking with you again next quarter, Oh, I'm, sorry sounds like with one more questions popped up.
You do have a question from Patrick Baumann of JP Morgan.
Hi, Good morning, guys, sorry, I have done a little bit late thanks for sneaking me in here.
Just in terms of the the balance sheet.
The de Levered nicely here.
Yeah, I don't know if you mentioned this in the prelude I missed the being the call, but what do you plan to deal with all that cash on the balance sheet right now.
Is there kind of.
So what's your framework, how should we be thinking about it that's the question.
So again with the men or proceeds we didnt pay down 100 million of debt you mentioned that earlier Patrick but.
We're going to we continue to our priorities remain or for cash focusing on organic growth M&A and debt reduction.
In that order.
Okay.
But but next quarter, we shouldnt we shouldn't.
We expect to see 195 million a cash the balance sheet. None of fleet 100 to that has already been used to pay down debt hundreds already been you got it got it now I understand that was post quarter that happened January 17th we paid we pay down $100 million that okay.
Got it yet makes sense. That's that's all I got thanks. Thanks, so much you're welcome yes. Thank you. So thank you again and again, thanks to the global team members that have vocal for doing of are providing the solutions. We provide and thank you for your interest will speak again next quarter.
Thank you that concludes today's o'quinn water technologies first quarter 2020, <unk> earnings Conference call. You May now disconnect your lines and have a wonderful day.
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