UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-K
(Mark One)
- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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: 001-34112
Energy Recovery, Inc.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
01-0616867 |
|
(State or Other Jurisdiction of Incorporation) |
(I.R.S. Employer Identification No.) |
|
1717 Doolittle Drive |
|
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San Leandro, California |
94577 |
(Address of Principal Executive Offices) (Zip Code)
(510) 483-7370
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
|
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
|
Common Stock, $0.001 par value |
ERII |
Nasdaq Stock Market |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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, or a smaller reporting 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates amounted to approximately $1.06 billion on June 30, 2022.
The number of shares of the registrant's common stock outstanding as of February 16, 2023 was 56,279,294 shares.
DOCUMENTS INCORPORATED BY REFERENCE
As noted herein, the information called for by Part III is incorporated by reference to specified portions of the registrant's definitive proxy statement to be filed in conjunction with the registrant's 2023 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the registrant's fiscal year ended December 31, 2022.
TABLE OF CONTENTS
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PART I |
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Item 1 |
Business |
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Item 1A |
Risk Factors |
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Item 1B |
Unresolved Staff Comments |
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Item 2 |
Properties |
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Item 3 |
Legal Proceedings |
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Item 4 |
Mine Safety Disclosures |
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PART II |
|
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Item 5 |
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
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Item 6 |
[Reserved] |
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Item 7 |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 8 |
Financial Statements and Supplementary Data |
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Item 9 |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A |
Controls and Procedures |
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Item 9B |
Other Information |
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Item 9C |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
PART III
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions and Director Independence
Item 14 Principal Accounting Fees and Services
PART IV
Item 15 Exhibits and Financial Statement Schedules
Item 16 Form 10-K Summary
Signatures
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Energy Recovery, Inc. | 2022 Form 10-K Annual Report
Forward-Looking Information
This Annual Report on Form 10-K for the year ended December 31, 2022, including Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" (the "MD&A") and certain information incorporated by reference, contain forward- looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this report include, but are not limited to, statements about our expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future.
Forward-looking statements represent our current expectations about future events, are based on assumptions, and involve risks and uncertainties. If the risks or uncertainties occur or the assumptions prove incorrect, then our results may differ materially from those set forth or implied by the forward-looking statements. Our forward-looking statements are not guarantees of future performance or events.
Words such as "expects," "anticipates," "aims," "projects," "intends," "plans," "believes," "estimates," "seeks," "continue," "could," "may," "potential," "should," "will," "would," variations of such words and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Readers are directed to risks and uncertainties identified under Part I, Item 1A, "Risk Factors," and elsewhere in this report for factors that may cause actual results to be different from those expressed in these forward-looking statements. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Forward-looking statements in this report include, without limitation, statements about the following:
- our belief that the pressure exchanger is the industry standard for energy recovery in the seawater reverse osmosis desalination ("SWRO") industry;
- forecasted production and evaluations and judgments regarding supply chain matters, particularly in light of the global supply environment;
- our belief that we have sufficient raw material and finished goods to mitigate supply chain issues;
- our belief that the scalability and versatility of our platform can help us achieve success in emerging markets similar to SWRO;
- our belief that the Ultra PX™ addresses key challenges associated with treating industrial wastewater in a range of reverse osmosis ("RO") applications;
- our belief that the Ultra PX can accelerate adoption of RO in the growing zero liquid discharge ("ZLD") and minimum liquid discharge ("MLD") markets;
- our belief that the Ultra PX can help make RO the preferred treatment option to achieve ZLD and MLD requirements by enhancing RO's affordability and efficiency compared to thermal treatment options.
- our estimate that our life-to-date installed energy recovery devices ("energy recovery devices") have saved water desalination customers approximately $3.9 billion in energy costs and helped our customers avoid over 30 terawatt-hours of energy usage, which represents approximately a 4% reduction in the global energy consumption for potable water utilities;
- our belief that pressure exchanger technology can provide benefits to our customers, including the reduction of capital expenditures and energy use;
- our belief that our pressure exchanger technology can address inefficiencies and waste within industrial systems and processes that involve high-pressure and low-pressure fluid flows;
- our belief that our PX® Pressure Exchanger® ("PX") has helped make SWRO an economically viable and more sustainable option in the production of potable water;
- our belief that our hydraulic turbochargers deliver substantial savings and ease of integration into desalination systems;
- our anticipation that markets not traditionally associated with desalination, such as the United States of America (the "U.S.") and China will inevitably develop and provide further revenue growth opportunities;
- our belief that countries around the world will continue to mandate ZLD or MLD requirements for specific industries;
- our belief that leveraging the Ultra PX with RO will significantly lower thermal demand;
- our belief that the PX Q400 will be the highest-performing and highest capacity PX available for SWRO desalination and industrial wastewater facilities;
- our belief that, as the existing thermal technology is replaced with RO technology, demand for our products will be created;
- our belief that our PX offers market-leading value with the highest technological and economic benefit;
Energy Recovery, Inc. | 2022 Form 10-K Annual Report | FLS 1
- our belief that ongoing operating costs rather than capital expenditures is the key factor in the selection of an energy recovery device solution for megaproject ("MPD") customers;
- our estimate that MPD customer projects represent revenue opportunities from approximately $1 million to $21 million;
- our estimate that the total capital investments by MPD customers in these large-scale infrastructure projects may range between $50 million to over $1 billion;
- our belief that initial capital expenditure rather than future ongoing operating costs is the key factor in the selection of an energy recovery device solution for original equipment manufacturer ("OEM") projects;
- our estimate that OEM customer projects represent revenue opportunities up to $1 million;
- our estimate that the total capital investments by OEM customers in these projects are typically up to $50 million;
- our belief that our PX has a competitive advantage, as compared to the Flowserve Corporation's ("Flowserve") DWEER product, because our devices are made with highly durable and corrosion-resistant aluminum oxide ("alumina") ceramic parts that are designed for a life of more than 25 years, are warrantied for high efficiencies, and cause minimal unplanned downtime, resulting in lower lifecycle cost and cost-effective energy recovery solutions;
- our belief that our PX has a distinct competitive advantage over Flowserve, Fluid Equipment Development Company ("FEDCO") and Danfoss Group's energy recovery devices because our devices provide significantly higher energy savings, have lower lifecycle maintenance costs, and are made of highly durable and corrosion-resistant alumina ceramic parts;
- our belief that our hydraulic turbochargers compete favorably with FEDCO's turbochargers based on efficiency, price, and because our hydraulic turbochargers have design advantages that enhance operational flexibility and serviceability;
- our belief that our pump solutions are competitive with these solutions because our pumps are developed specifically for RO desalination, are highly efficient, feature product-lubricated bearings, and are often purchased to compliment our energy recovery devices in small- to medium-sized plants;
- our belief that our pump solutions offer a competitive advantage compared to our competitors' solutions because our energy recovery devices provide the lowest life-cycle cost and are, therefore, the most cost-effective solutions for the RO desalination application;
- our belief that leveraging our pressure exchanger technology will unlock new commercial opportunities in the future;
- our belief that sales of carbon dioxide ("CO2") refrigeration systems will increase in response to regulations and supermarkets' search for safe natural refrigerants;
- our belief that our pressure exchanger technology can significantly aid in the reduction of the operating costs of CO2 refrigeration systems by recycling the pressure energy of CO2 gas thereby significantly reducing the energy needed to operate these systems;
- our belief that the PX G1300™ could eventually alter the standard refrigeration system architecture by reducing costs for retail end users such as grocery stores;
- our belief that we will be able to achieve efficiencies across a wider range of temperatures that exceed incumbent CO2 refrigeration technologies;
- our belief that the Ultra PX™ can address the key challenges associated with treating industrial wastewater in ultra high- pressure reverse osmosis ("UHPRO") applications;
- our belief that the Ultra PX can help make UHPRO the preferred treatment option to achieve ZLD and MLD requirements by enhancing UHPRO's affordability and efficiency compared to thermal treatment options;
- our belief that our Ultra PX enables customers to optimize their wastewater treatment process for ZLD and MLD;
- our objective of finding new applications for our technology and developing new products for use outside of desalination;
- our belief that our current facilities will be adequate for the foreseeable future;
- our belief that by investing in research and development, we will be well positioned to continue to execute on our product strategy;
- our expectation that sales outside of the U.S. will remain a significant portion of our revenue;
- our belief that the integration of Environmental, Social, and Governance ("ESG") principles into our corporate and risk management strategies can strengthen our existing business as well as our efforts to develop new applications of pressure exchanger technology for high-pressurefluid-flow environments;
- the development of major public health concerns, including the COVID-19 outbreak or other pandemics arising globally, and the future impact of such major public health concerns, and specifically in the short-term the COVID-19 pandemic, on our business and operations;
- the timing of our receipt of payment for products or services from our customers;
Energy Recovery, Inc. | 2022 Form 10-K Annual Report | FLS 2
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ERI - Energy Recovery Inc. published this content on 21 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2023 08:43:17 UTC.
