top of page
Evoqua To Be Charged By The SEC After Allegedly Misstating Revenue
The firm is accused of misstating financials for three years and expects to settle with the SEC for $8.5 million.
January 31, 2023
Evoqua Water Technologies (AQUA), a provider of water and wastewater treatment systems, has received a Wells Notice from the SEC following a two year investigation examining whether the improperly recognized revenue. The Wells Notice indicates staff recommends the SEC file a civil enforcement action alleging the company violated securities laws by misstating its financials in fiscal years 2016-2018.
Specifically, the allegations arise from revenue recognition practices of the Neptune-Benson business that Evoqua acquired in FY16.
Evoqua has recorded a charge of $8.5 million in anticipation of settling the matter.
In November 2022, we highlighted how Evoqua intentionally inflates Adjusted EBITDA margin by excluding purchase accounting step-up adjustments to inventory following acquisitions. Adjusted EBITDA is a key component in calculating Evoqua’s executive bonuses. The Adjusted EBITDA metric accounts for 60% of three of the five named executive officers short term bonus calculation.
Become a DuDil Insider
Get our due diligence alerts before they're released publicly & be first to know.
bottom of page