erii-20240630
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
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)
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Delaware
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01-0616867
|
|
(State or Other Jurisdiction of Incorporation)
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(I.R.S. Employer Identification No.)
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1717 Doolittle Drive, 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 Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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ERII
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The Nasdaq Stock Market LLC
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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 þ 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 and post such
files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth 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 â˜
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 is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☠No ☑
As of July 25, 2024, there were 57,724,968shares of the registrant's common stock outstanding.
ENERGY RECOVERY, INC.
TABLE OF CONTENTS
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Page No.
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Condensed Consolidated Balance Sheets - June 30, 2024 and December 31, 2023
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Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2024 and 2023
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Condensed Consolidated Statements of Comprehensive Loss- Three and Six Months Ended June 30, 2024 and 2023
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Condensed Consolidated Statements of Stockholders' Equity- Three and Six Months Ended June 30, 2024 and 2023
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Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2024 and 2023
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Energy Recovery, Inc. | Q2'2024 Form 10-Q
Forward-Looking Information
This QuarterlyReport on Form 10-Qfor the three and six monthsended June 30, 2024,including Part I, Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations"(the "MD&A"), contains 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 statement. Readers are directed to risks and
uncertainties identified under Part II, 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 statement for any reason.
Forward-looking statements in this report include, without limitation, statements about the following:
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•our belief that our PXoffers market-leading value with the highest technological and economic benefit;
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•our belief that leveraging our pressure exchanger technology will unlock new commercial opportunities in the future;
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•our belief that our PX G1300™can contribute to help make CO2-based refrigeration economically viable in a broader range of
climates;
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•our belief that our technology helps our customer achieve environmentally sustainable operations;
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•our expectation that sales outside of the U.S.will remain a significant portion of our revenue;
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•the scale of the environmental impact from the use of our solutions;
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•our belief that our sustainability goals are highly influential to our business success;
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•the timing of our receipt of payment for products or services from our customers;
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•our belief that our existing cash and cash equivalents, our short and/or long-term investments, and the ongoing cash generated
from our operations, will be sufficient to meet our anticipated liquidity needs for the foreseeable future, with the exception of a
decision to enter into an acquisition and/or fund investments in our latest technology arising from rapid market adoption that
could require us to seek additional equity or debt financing;
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•our expectations relating to the amount and timing of recognized revenue from our projects;
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•our expectations relating to expenses;
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•our expectation that we will continue to receive a tax benefit related to U.S. federal foreign-derived intangible income and
research and development tax credit;
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•the outcome of proceedings, lawsuits, disputes and claims;
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•the impact of losses due to indemnification obligations;
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•other factors disclosed under the MD&A and Part I, Item 3, "Quantitative and Qualitative Disclosures about Market Risk," and
elsewhere in this Form 10-Q.
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You should not place undue reliance on these forward-looking statements. These forward-looking statements reflect management's
opinions only as of the date of the filing of this QuarterlyReport on Form 10-Q. All forward-looking statements included in this document are
subject to additional risks and uncertainties further discussed under Part II, Item 1A, "Risk Factors,"and are based on information available to
us as of July 31, 2024. We assume no obligation to update any such forward-looking statements. Certain risks and uncertainties could
cause actual results to differ materially from those projected in the forward-looking statements. These forward-looking statements are
disclosed from time to time in ourAnnual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed
with, or furnished to, the Securities and Exchange Commission (the "SEC"), as well as in Part II, Item 1A, "Risk Factors,"within this Quarterly
Report on Form 10-Q.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| FLS 1
It is important to note that our actual results could differ materially from the results set forth or implied by our forward-looking
statements. The factors that could cause our actual results to differ from those included in such forward-looking statements are set forth
under the heading Item 1A, "Risk Factors," in our Quarterly Reports on Form 10-Q, in our Annual Reports on Form 10-K, and from time-to-
time, in our results disclosed in our Current Reports on Form 8-K. In addition, when preparing the MD&A below, we presume the readers
have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of
Regulation S-K.
We provide our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on
Schedule 14A, Forms 3, 4 and 5 filed by, or on behalf of, directors, executive officers and certain large shareholders, and any amendments to
those documents filed or furnished pursuant to the Securities Exchange Act of 1934, free of charge on the Investor Relations section of our
website, www.energyrecovery.com. These filings will become available as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC. From time to time, we may use our website as a channel of distribution of material company
information.
We also make available in the Investor Relations section of our website our corporate governance documents including our code of
business conduct and ethics and the charters of the audit, compensation and nominating and governance committees. These documents, as
well as the information on the website, are not intended to be part of this QuarterlyReport on Form 10-Q. We use the Investor Relations
section of our website as a means of complying with our disclosure obligations under Regulation FD. Accordingly, you should monitor the
Investor Relations section of our website in addition to following our press releases, SEC filings and public conference calls and webcasts.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| FLS 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30,
2024
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December 31,
2023
|
|
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(In thousands)
|
||
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ASSETS
|
||
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Current assets:
|
||
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Cash and cash equivalents
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$40,313
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$68,098
|
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Short-term investments
|
60,697
|
40,445
|
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Accounts receivable, net
|
20,670
|
46,937
|
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Inventories, net
|
33,659
|
26,149
|
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Prepaid expenses and other assets
|
3,690
|
3,843
|
|
Total current assets
|
159,029
|
185,472
|
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Long-term investments
|
37,017
|
13,832
|
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Deferred tax assets, net
|
11,441
|
10,324
|
|
Property and equipment, net
|
17,248
|
18,699
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Operating lease, right of use asset
|
10,599
|
11,469
|
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Goodwill
|
12,790
|
12,790
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Other assets, non-current
|
919
|
388
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Total assets
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$249,043
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$252,974
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LIABILITIES AND STOCKHOLDERS' EQUITY
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||
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Current liabilities:
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||
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Accounts payable
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$4,753
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$3,000
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Accrued expenses and other liabilities
|
10,153
|
15,583
|
|
Lease liabilities
|
1,909
|
1,791
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Contract liabilities
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3,214
|
1,097
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Total current liabilities
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20,029
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21,471
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Lease liabilities, non-current
|
10,415
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11,488
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Other liabilities, non-current
|
86
|
207
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Total liabilities
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30,530
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33,166
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Commitments and contingencies (Note 7)
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||
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Stockholders' equity:
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||
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Common stock
|
66
|
65
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Additional paid-in capital
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225,240
|
217,617
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Accumulated other comprehensive loss
|
(61)
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(44)
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Treasury stock
|
(80,486)
|
(80,486)
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Retained earnings
|
73,754
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82,656
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Total stockholders' equity
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218,513
|
219,808
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Total liabilities and stockholders' equity
|
$249,043
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$252,974
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See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 1
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended June 30,
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Six Months Ended June 30,
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|||
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2024
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2023
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2024
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2023
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(In thousands, except per share data)
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Revenue
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$27,199
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$20,723
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$39,289
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$34,124
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Cost of revenue
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9,633
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7,180
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14,588
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12,426
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Gross profit
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17,566
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13,543
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24,701
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21,698
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Operating expenses:
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||||
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General and administrative
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9,532
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7,269
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17,098
|
14,335
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Sales and marketing
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6,104
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5,092
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12,256
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9,986
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Research and development
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3,944
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3,768
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8,295
|
8,074
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Total operating expenses
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19,580
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16,129
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37,649
|
32,395
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Loss from operations
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(2,014)
|
(2,586)
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(12,948)
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(10,697)
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Other income (expense):
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||||
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Interest income
|
1,663
|
782
|
3,105
|
1,403
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Other non-operating expense, net
|
(49)
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(126)
|
(102)
|
(91)
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Total other income, net
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1,614
|
656
|
3,003
|
1,312
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Loss before income taxes
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(400)
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(1,930)
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(9,945)
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(9,385)
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Provision for (benefit from) income taxes
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242
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(265)
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(1,043)
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(1,424)
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Net loss
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$(642)
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$(1,665)
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$(8,902)
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$(7,961)
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Net loss per share:
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||||
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Basic
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$ (0.01)
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$ (0.03)
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$ (0.16)
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$ (0.14)
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Diluted
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$ (0.01)
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$ (0.03)
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$ (0.16)
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$ (0.14)
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Number of shares used in per share calculations:
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||||
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Basic and diluted
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57,366
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56,363
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57,234
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56,296
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See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 2
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|
Three Months Ended June 30,
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Six Months Ended June 30,
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|||
|
2024
|
2023
|
2024
|
2023
|
|
|
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(In thousands)
|
|||
|
Net loss
|
$(642)
|
$(1,665)
|
$(8,902)
|
$(7,961)
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|
Other comprehensive income (loss), net of tax
|
||||
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Foreign currency translation adjustments
|
9
|
114
|
37
|
97
|
|
Unrealized gain (loss) on investments
|
(10)
|
30
|
(54)
|
125
|
|
Total other comprehensive income (loss), net of tax
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(1)
|
144
|
(17)
|
222
|
|
Comprehensive loss
|
$(643)
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$(1,521)
|
$(8,919)
|
$(7,739)
|
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 3
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
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(In thousands, except shares)
|
|||
|
Common stock
|
||||
|
Beginning balance
|
$65
|
$64
|
$65
|
$64
|
|
Issuance of common stock, net
|
1
|
1
|
1
|
1
|
|
Ending balance
|
66
|
65
|
66
|
65
|
|
Additional paid-in capital
|
||||
|
Beginning balance
|
222,122
|
207,340
|
217,617
|
204,957
|
|
Issuance of common stock, net
|
311
|
213
|
1,501
|
378
|
|
Stock-based compensation
|
2,807
|
1,586
|
6,122
|
3,804
|
|
Ending balance
|
225,240
|
209,139
|
225,240
|
209,139
|
|
Accumulated other comprehensive loss
|
||||
|
Beginning balance
|
(60)
|
(271)
|
(44)
|
(349)
|
|
Other comprehensive (loss) income
|
||||
|
Foreign currency translation adjustments
|
9
|
114
|
37
|
97
|
|
Unrealized (loss) gain on investments
|
(10)
|
30
|
(54)
|
125
|
|
Total other comprehensive (loss) income, net
|
(1)
|
144
|
(17)
|
222
|
|
Ending balance
|
(61)
|
(127)
|
(61)
|
(127)
|
|
Treasury stock
|
||||
|
Beginning and ending balance
|
(80,486)
|
(80,486)
|
(80,486)
|
(80,486)
|
|
Retained earnings
|
||||
|
Beginning balance
|
74,396
|
54,856
|
82,656
|
61,152
|
|
Net loss
|
(642)
|
(1,665)
|
(8,902)
|
(7,961)
|
|
Ending balance
|
73,754
|
53,191
|
73,754
|
53,191
|
|
Total stockholders' equity
|
$218,513
|
$181,782
|
$218,513
|
$181,782
|
|
Common stock issued (shares)
|
||||
|
Beginning balance
|
65,477,914
|
64,491,384
|
65,029,459
|
64,225,391
|
|
Issuance of common stock, net
|
93,361
|
62,585
|
541,816
|
328,578
|
|
Ending balance
|
65,571,275
|
64,553,969
|
65,571,275
|
64,553,969
|
|
Treasury stock (shares)
|
||||
|
Beginning and ending balance
|
8,148,512
|
8,148,512
|
8,148,512
|
8,148,512
|
|
Total common stock outstanding (shares)
|
57,422,763
|
56,405,457
|
57,422,763
|
56,405,457
|
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 4
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Six Months Ended June 30,
|
||
|
2024
|
2023
|
|
|
(In thousands)
|
||
|
Cash flows from operating activities:
|
||
|
Net loss
|
$(8,902)
|
$(7,961)
|
|
Adjustments to reconcile net loss to cash provided by (used in) operating activities
|
||
|
Stock-based compensation
|
6,100
|
4,020
|
|
Depreciation and amortization
|
2,041
|
2,019
|
|
Right of use asset amortization
|
870
|
808
|
|
Accretion (amortization) of discounts (premiums) on investments
|
(596)
|
(383)
|
|
Deferred income taxes
|
(1,117)
|
(1,409)
|
|
Other non-cash adjustments
|
288
|
149
|
|
Changes in operating assets and liabilities:
|
||
|
Accounts receivable, net
|
26,235
|
18,732
|
|
Contract assets
|
64
|
1,355
|
|
Inventories, net
|
(7,880)
|
(8,097)
|
|
Prepaid and other assets
|
(568)
|
(267)
|
|
Accounts payable
|
2,278
|
804
|
|
Accrued expenses and other liabilities
|
(6,270)
|
(5,266)
|
|
Contract liabilities
|
2,027
|
19
|
|
Net cash provided by operating activities
|
14,570
|
4,523
|
|
Cash flows from investing activities:
|
||
|
Sales of marketable securities
|
-
|
2,966
|
|
Maturities of marketable securities
|
30,385
|
29,950
|
|
Purchases of marketable securities
|
(73,280)
|
(49,185)
|
|
Capital expenditures
|
(1,025)
|
(849)
|
|
Proceeds from sales of fixed assets
|
90
|
82
|
|
Net cash used in investing activities
|
(43,830)
|
(17,036)
|
|
Cash flows from financing activities:
|
||
|
Net proceeds from issuance of common stock
|
1,502
|
379
|
|
Net cash provided by financing activities
|
1,502
|
379
|
|
Effect of exchange rate differences on cash and cash equivalents
|
(24)
|
41
|
|
Net change in cash, cash equivalents and restricted cash
|
(27,782)
|
(12,093)
|
|
Cash, cash equivalents and restricted cash, beginning of year
|
68,225
|
56,458
|
|
Cash, cash equivalents and restricted cash, end of period
|
$40,443
|
$44,365
|
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 5
Note 1- Description of Business and Significant Accounting Policies
Energy Recovery, Inc. and its wholly-owned subsidiaries (the "Company" or "Energy Recovery") designs and manufactures reliable,
high-performance solutions that provide cost savings through improved energy efficiency in commercial and industrial processes, with
applications across several industries. Leveraging the Company's pressure exchanger technology, which generates little to no emissions
when operating, the Company believes its solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a
variety of commercial and industrial processes. As the world coalesces around the urgent need to address climate change and its impacts,
the Company is helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon
footprint.The Company believes that its customers do not have to sacrifice quality and cost savings for sustainability andthe Company is
committed to developing solutions that drive long-term value - both financial and environmental. The Company's solutions are marketed,
sold in, and developed for, the fluid-flow and gas markets, such as seawater and wastewater desalination, natural gas, chemical processing
and CO2-based refrigeration systems, under the trademarks ERI®, PX®, Pressure Exchanger®, PX®Pressure Exchanger®("PX"), Ultra PX™,
PX Gâ„¢, PX G1300â„¢, PX PowerTrainâ„¢, ATâ„¢, and Aquaboldâ„¢. The Company owns, manufactures and/or develops its solutions, in whole or in
part, in the United States of America (the "U.S.").
Basis of Presentation
TheCondensed Consolidated Financial Statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries.
All intercompany accounts and transactions have been eliminated in consolidation.
The accompanyingCondensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the financial statements
prepared in accordance with U.S. generally accepted accounting principles("GAAP") have been condensed or omitted pursuant to such rules
and regulations.The December 31, 2023Condensed Consolidated Balance Sheet was derived from audited financial statements and may
not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information
presented not misleading.
The June 30, 2024unauditedCondensed Consolidated Financial Statements should be read in conjunction with the audited
Consolidated Financial Statements and the notes thereto for the fiscal year ended December 31, 2023included in the Company's Annual
Report on Form 10-K filed with the SEC on February 21, 2024(the "2023 Annual Report").
The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any
future periods.
Reclassifications
Certain prior period amounts have been reclassified in theCondensed Consolidated Statement of Cash Flows and certain notes to
theCondensed Consolidated Financial Statements to conform to the current period presentation.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 6
Use of Estimates
The preparation ofCondensed Consolidated Financial Statements, in conformity with GAAP, requires the Company's management to
make judgments, assumptions and estimates that affect the amounts reported in theCondensed Consolidated Financial Statements and
accompanying notes.
The accounting policies that reflect the Company's significant estimates and judgments and that the Company believes are the most
critical to aid in fully understanding and evaluating its reported financial results are revenue recognition; granted equity award valuations;
equipment useful life and valuation; goodwill valuation and impairment; deferred taxes and valuation allowances on deferred tax assets; and
evaluation and measurement of contingencies. Those estimates could change, and as a result, actual results could differ materially from
those estimates.
The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a
revision of the carrying value of its assets or liabilities as of July 31, 2024, the date of issuance of this QuarterlyReport on Form 10-Q. These
estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these
estimates under different assumptions or conditions. The Company undertakes no obligation to publicly update these estimates for any
reason after the date of this QuarterlyReport on Form 10-Q, except as required by law.
Significant Accounting Policies
There have been no material changes to the Company's significant accounting policies in Note 1, "Description of Business and
Significant Accounting Policies- Significant Accounting Policies," of the Notes to Consolidated Financial Statements included in Item 8,
"Financial Statements and Supplementary Data," of the 2023 Annual Report.
Recently Issued Accounting Pronouncement Not Yet Adopted
There have been no issued accounting pronouncements that have not yet been adopted during the six months ended June 30, 2024
that apply to the Company other than the pronouncements disclosed in Note 1, "Description of Business and Significant Accounting Policies-
Recently Issued Accounting Pronouncement Not Yet Adopted," of the Notes to Consolidated Financial Statements included in Item 8,
"Financial Statements and Supplementary Data," of the 2023 Annual Report.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 7
Note 2- Revenue
Disaggregation of Revenue
The following tables present the disaggregated revenues by segment, and within each segment, by geographical marketbased on the
customer "shipped to" address, and by channelcustomers. Sales and usage-based taxes are excluded from revenues. See Note 9,
"Segment Reporting," for further discussion related to the Company's segments.
|
Three Months Ended June 30, 2024
|
Six Months Ended June 30, 2024
|
|||||
|
Water
|
Emerging
Technologies
|
Total
|
Water
|
Emerging
Technologies
|
Total
|
|
|
(In thousands)
|
||||||
|
Geographical market
|
||||||
|
Middle East and Africa
|
$14,467
|
$245
|
$14,712
|
$19,252
|
$246
|
$19,498
|
|
Asia
|
7,962
|
36
|
7,998
|
9,941
|
36
|
9,977
|
|
Americas
|
1,967
|
-
|
1,967
|
5,906
|
-
|
5,906
|
|
Europe
|
2,522
|
-
|
2,522
|
3,908
|
-
|
3,908
|
|
Total revenue
|
$26,918
|
$281
|
$27,199
|
$39,007
|
$282
|
$39,289
|
|
Channel
|
||||||
|
Megaproject
|
$15,815
|
$-
|
$15,815
|
$19,915
|
$-
|
$19,915
|
|
Original equipment manufacturer
|
6,909
|
36
|
6,945
|
10,255
|
36
|
10,291
|
|
Aftermarket
|
4,194
|
245
|
4,439
|
8,837
|
246
|
9,083
|
|
Total revenue
|
$26,918
|
$281
|
$27,199
|
$39,007
|
$282
|
$39,289
|
|
Three Months Ended June 30, 2023
|
Six Months Ended June 30, 2023
|
|||||
|
Water
|
Emerging
Technologies
|
Total
|
Water
|
Emerging
Technologies
|
Total
|
|
|
(In thousands)
|
||||||
|
Geographical market
|
||||||
|
Middle East and Africa
|
$10,990
|
$108
|
$11,098
|
$13,729
|
$108
|
$13,837
|
|
Asia
|
7,378
|
-
|
7,378
|
13,492
|
-
|
13,492
|
|
Americas
|
1,329
|
-
|
1,329
|
4,537
|
30
|
4,567
|
|
Europe
|
817
|
101
|
918
|
2,052
|
176
|
2,228
|
|
Total revenue
|
$20,514
|
$209
|
$20,723
|
$33,810
|
$314
|
$34,124
|
|
Channel
|
||||||
|
Megaproject
|
$12,211
|
$-
|
$12,211
|
$15,454
|
$-
|
$15,454
|
|
Original equipment manufacturer
|
4,601
|
101
|
4,702
|
11,332
|
206
|
11,538
|
|
Aftermarket
|
3,702
|
108
|
3,810
|
7,024
|
108
|
7,132
|
|
Total revenue
|
$20,514
|
$209
|
$20,723
|
$33,810
|
$314
|
$34,124
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 8
Contract Balances
The following table presents contract balances by category.
|
June 30,
2024
|
December 31,
2023
|
|
|
(In thousands)
|
||
|
Accounts receivable, net
|
$20,670
|
$46,937
|
|
Contract assets:
|
||
|
Contract assets, current (included in prepaid expenses and other assets)
|
$-
|
$592
|
|
Contract assets, non-current (included in other assets, non-current)
|
528
|
-
|
|
Total contract assets
|
$528
|
$592
|
|
Contract liabilities:
|
||
|
Contract liabilities, current
|
$3,214
|
$1,097
|
|
Contract liabilities, non-current (included in other liabilities, non-current)
|
-
|
90
|
|
Total contract liabilities
|
$3,214
|
$1,187
|
Contract Liabilities
The Company records contract liabilities, which consist of customer deposits and deferred revenue, when cash payments are
received in advance of the Company's performance. The following table presents changesin contract liabilities during the period.
|
June 30,
2024
|
December 31,
2023
|
|
|
(In thousands)
|
||
|
Contract liabilities, beginning of year
|
$1,187
|
$1,316
|
|
Revenue recognized
|
(1,056)
|
(1,254)
|
|
Cash received, excluding amounts recognized as revenue during the period
|
3,083
|
1,125
|
|
Contract liabilities, end of period
|
$3,214
|
$1,187
|
RemainingPerformance Obligations
As of June 30, 2024, the following table presents the revenue that is expected to be recognized related to performance obligations
that are unsatisfied or partially unsatisfied.
|
Period
|
Remaining
Performance
Obligations
|
|
(In thousands)
|
|
|
2024 (remaining six months)
|
$6,021
|
|
2025
|
840
|
|
2026
|
3,419
|
|
Total
|
$10,280
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 9
Note 3- Net Loss Per Share
Net lossfor the reported period is divided by the weighted average number of basic and diluted common shares outstanding during
the reported period to calculate the basic and diluted net loss per common share, respectively.
The following tables presentthe computation of basic and diluted net loss per common share.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||
|
2024
|
2023
|
2024
|
2023
|
|
|
(In thousands, except per share amounts)
|
||||
|
Numerator
|
||||
|
Net loss
|
$(642)
|
$(1,665)
|
$(8,902)
|
$(7,961)
|
|
Denominator (weighted average shares)
|
||||
|
Basic and dilutive common shares outstanding
|
57,366
|
56,363
|
57,234
|
56,296
|
|
Net loss per share
|
||||
|
Basic
|
$ (0.01)
|
$ (0.03)
|
$ (0.16)
|
$ (0.14)
|
|
Diluted
|
$ (0.01)
|
$ (0.03)
|
$ (0.16)
|
$ (0.14)
|
The following tables presentthe equity awards that are excluded from diluted net lossper share because their effect would have been
anti-dilutive.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
(In thousands)
|
||||
|
Anti-dilutive equity award shares
|
3,010
|
2,664
|
3,010
|
2,664
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 10
Note 4- Other Financial Information
Cash, Cash Equivalents and Restricted Cash
TheCondensed Consolidated Statements of Cash Flows explain the changes in the total of cash, cash equivalents and restricted
cash, such as cash amounts deposited in restricted cash accounts in connection with the Company's credit cards. The following table
presents a reconciliation of cash, cash equivalents and restricted cash, reported for each period within theCondensed Consolidated Balance
Sheets and theCondensed Consolidated Statements of Cash Flows that sum to the total of such amounts.
|
June 30,
2024
|
December 31,
2023
|
June 30,
2023
|
|
|
(In thousands)
|
|||
|
Cash and cash equivalents
|
$40,313
|
$68,098
|
$44,239
|
|
Restricted cash, non-current (included in other assets, non-current)
|
130
|
127
|
126
|
|
Total cash, cash equivalents and restricted cash
|
$40,443
|
$68,225
|
$44,365
|
Accounts Receivable, net
|
|
June 30,
2024
|
December 31,
2023
|
|
(In thousands)
|
||
|
Accounts receivable, gross
|
$20,840
|
$47,075
|
|
Allowance for doubtful accounts
|
(170)
|
(138)
|
|
Accounts receivable, net
|
$20,670
|
$46,937
|
Inventories, net
Inventory amounts are stated at the lower of cost or net realizable value, using the first-in, first-out method.
|
|
June 30,
2024
|
December 31,
2023
|
|
(In thousands)
|
||
|
Raw materials
|
$8,306
|
$8,752
|
|
Work in process
|
7,953
|
5,234
|
|
Finished goods
|
18,722
|
13,319
|
|
Inventories, gross
|
34,981
|
27,305
|
|
Valuation adjustments for excess and obsolete inventory
|
(1,322)
|
(1,156)
|
|
Inventories, net
|
$33,659
|
$26,149
|
Accrued Expenses and Other Liabilities
|
|
June 30,
2024
|
December 31,
2023
|
|
(In thousands)
|
||
|
Accrued expenses and other liabilities, current
|
||
|
Payroll, incentives and commissions payable
|
$6,874
|
$11,037
|
|
Warranty reserve
|
962
|
1,057
|
|
Income taxes payable
|
35
|
1,077
|
|
Other accrued expenses and other liabilities
|
2,282
|
2,412
|
|
Total accrued expenses and other liabilities
|
10,153
|
15,583
|
|
Other liabilities, non-current
|
86
|
207
|
|
Total accrued expenses, and current and non-current other liabilities
|
$10,239
|
$15,790
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 11
Note 5- Investments and Fair Value Measurements
Fair Value of Financial Instruments
The following table presents the Company's financial assets measured on a recurring basis by contractual maturity, including pricing
category, amortized cost, gross unrealized gains and losses, and fair value. As of the dates reported in the table, the Company had no
financial liabilities and noLevel 3 financial assets.
|
June 30, 2024
|
December 31, 2023
|
||||||||
|
Pricing
Category
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|
|
(In thousands)
|
|||||||||
|
Cash equivalents
|
|||||||||
|
Money market
securities
|
Level 1
|
$2,144
|
$-
|
$-
|
$2,144
|
$18,767
|
$-
|
$-
|
$18,767
|
|
Short-term investments
|
|||||||||
|
U.S. treasury
securities
|
Level 2
|
12,872
|
1
|
(6)
|
12,867
|
4,900
|
1
|
(1)
|
4,900
|
|
Corporate notes and
bonds
|
Level 2
|
40,278
|
2
|
(56)
|
40,224
|
25,674
|
11
|
(18)
|
25,667
|
|
Municipal and agency
notes and bonds
|
Level 2
|
7,622
|
-
|
(16)
|
7,606
|
9,887
|
-
|
(9)
|
9,878
|
|
Total short-term investments
|
60,772
|
3
|
(78)
|
60,697
|
40,461
|
12
|
(28)
|
40,445
|
|
|
Long-term investments
|
|||||||||
|
U.S. treasury
securities
|
Level 2
|
3,742
|
1
|
-
|
3,743
|
-
|
-
|
-
|
-
|
|
Corporate notes and
bonds
|
Level 2
|
16,275
|
21
|
(9)
|
16,287
|
9,229
|
28
|
(3)
|
9,254
|
|
Municipal and agency
notes and bonds
|
Level 2
|
16,993
|
2
|
(8)
|
16,987
|
4,585
|
-
|
(7)
|
4,578
|
|
Total long-term investments
|
37,010
|
24
|
(17)
|
37,017
|
13,814
|
28
|
(10)
|
13,832
|
|
|
Total short and long-term
investments
|
97,782
|
27
|
(95)
|
97,714
|
54,275
|
40
|
(38)
|
54,277
|
|
|
Total
|
$99,926
|
$27
|
$(95)
|
$99,858
|
$73,042
|
$40
|
$(38)
|
$73,044
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 12
The following table presents a summary of the fair value and gross unrealized losses on the available-for-sale securities that have
been in a continuous unrealized loss position, aggregated by type of investment instrument. The available-for-sale securities that were in an
unrealized gain position have been excluded from the table.
|
|
June 30, 2024
|
December 31, 2023
|
||
|
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
|
(In thousands)
|
||||
|
U.S. treasury securities
|
$8,957
|
$(6)
|
$2,931
|
$(1)
|
|
Corporate notes and bonds
|
41,947
|
(65)
|
15,276
|
(21)
|
|
Municipal and agency notes and bonds
|
20,594
|
(24)
|
12,956
|
(16)
|
|
Total available-for-sale investments with unrealized loss positions
|
$71,498
|
$(95)
|
$31,163
|
$(38)
|
Sales of Available-for-Sale Investments
The following table presents the sales of available-for-sale investments.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
(In thousands)
|
||||
|
Corporate notes and bonds
|
$-
|
$2,966
|
$-
|
$2,966
|
Realized losses on sales of securities were immaterial during the three and six months ended June 30, 2024 and 2023.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 13
Note 6- Lines of Credit
Credit Agreement
The Company entered into a credit agreement with JPMorgan Chase Bank, N.A.("JPMC") on December 22, 2021(as amended, the
"Credit Agreement"). The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of
$50.0 millionand includes both a revolving loan and a letters of credit ("LCs") component.
Under the Credit Agreement, as of June 30, 2024, there were norevolving loans outstanding. In addition, under the LCscomponent,
the Company utilized $19.1 millionof the maximum allowable credit line of $30.0 million, which includes newly issued LCs, and previously
issued and unexpired stand-by letters of credit ("SBLCs") and certain non-expired commitments under the Company's previous Loan and
Pledge Agreement with Citibank, N.A. which are guaranteed under the Credit Agreement.
Letters of Credit
The following table presents the total outstanding LCsand SBLCs issued by the Company to its customers related to product
warranty and performance guarantees.
|
June 30,
2024
|
December 31,
2023
|
|
|
(In thousands)
|
||
|
Outstanding letters of credit
|
$18,086
|
$19,945
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 14
Note 7- Commitments and Contingencies
Litigation
From time-to-time, the Company has been named in and subject to various proceedings and claims in connection with its business.
The Company may in the future become involved in litigation in the ordinary course of business, including litigation that could be material to
its business. The Company considers all claims, if any, on a quarterly basis and, based on known facts, assesses whether potential losses
are considered reasonably possible, probable and estimable. Based upon this assessment, the Company then evaluates disclosure
requirements and whether to accrue for such claims in its consolidated financial statements. The Company records a provision for a liability
when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are
reviewed at least quarterly and are adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other
information and events pertaining to a particular case. As of June 30, 2024, the Company was not involved in any lawsuits, legal
proceedings or claims that would have a material effect on the Company's financial position, results of operations, or cash flows. Therefore,
there were no material losses which were probable or reasonably possible.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 15
Note 8- Income Taxes
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
(In thousands, except percentages)
|
||||
|
Provision for (benefit from) income taxes
|
$242
|
$(265)
|
$(1,043)
|
$(1,424)
|
|
Discrete items
|
64
|
141
|
140
|
629
|
|
Provision for (benefit from) income taxes, excluding discrete items
|
$306
|
$(124)
|
$(903)
|
$(795)
|
|
Effective tax rate
|
(60.5%)
|
13.7%
|
10.5%
|
15.2%
|
|
Effective tax rate, excluding discrete items
|
(76.2%)
|
6.4%
|
9.1%
|
8.5%
|
The Company's interim period tax provision for and (benefit from) income taxes, respectively, is determined using an estimate ofits
annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter,the Company updates its estimate of
the annual effective tax rate, and if the estimated annual effective tax rate changes,the Company makes a cumulative adjustment in such
period. The Company's quarterly tax provision and estimate ofits annual effective tax rate are subject to variation due to several factors,
including variability in accurately predictingits pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of
special tax regimes, and changes in howthe Company does business.
For the three and six months ended June 30, 2024, the recognized provision for and (benefit from) income taxes, respectively,
resulted from the tax projection based on the full year forecasted profit and included benefitsrelated to the U.S. federal foreign-derived
intangible income ("FDII"), federalresearch and development ("R&D") tax credit, and certain permanent differences, such as share-based
compensation windfalls.
For the three and six months ended June 30, 2023, the recognized benefit from income tax resulted from the Company's loss for the
respective periods and included benefits related to the U.S. FDII and R&D tax credit, along with a discrete tax benefit due primarily to share-
basedcompensationwindfalls.
The effective tax rate excluding discrete items for the six months ended June 30, 2024, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer share-based compensation, and higher projected book
income that is reducing the effective tax rate of the projected U.S. FDII.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 16
Note 9- Segment Reporting
The Company's Chief Operating Decision-Maker ("CODM") is its President and Chief Executive Officer. The Company continues to
monitor and reviewits segment reporting structure in accordance with authoritative guidance to determine whether any changes have
occurred that would impactits reportablesegments.
The following tables presenta summary of the Company's financial information by segment and corporate operating expenses.
|
Three Months Ended June 30, 2024
|
Six Months Ended June 30, 2024
|
|||||||
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
|
|
(In thousands)
|
||||||||
|
Revenue
|
$26,918
|
$281
|
$-
|
$27,199
|
$39,007
|
$282
|
$-
|
$39,289
|
|
Cost of revenue
|
9,345
|
288
|
-
|
9,633
|
14,299
|
289
|
-
|
14,588
|
|
Gross profit (loss)
|
17,573
|
(7)
|
-
|
17,566
|
24,708
|
(7)
|
-
|
24,701
|
|
Operating expenses
|
||||||||
|
General and
administrative
|
1,912
|
984
|
6,636
|
9,532
|
3,834
|
2,002
|
11,262
|
17,098
|
|
Sales and marketing
|
3,837
|
1,700
|
567
|
6,104
|
7,582
|
3,507
|
1,167
|
12,256
|
|
Research and
development
|
1,073
|
2,871
|
-
|
3,944
|
2,173
|
6,122
|
-
|
8,295
|
|
Total operating
expenses
|
6,822
|
5,555
|
7,203
|
19,580
|
13,589
|
11,631
|
12,429
|
37,649
|
|
Operating income
(loss)
|
$10,751
|
$(5,562)
|
$(7,203)
|
$(2,014)
|
$11,119
|
$(11,638)
|
$(12,429)
|
$(12,948)
|
|
Three Months Ended June 30, 2023
|
Six Months Ended June 30, 2023
|
|||||||
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
|
|
(In thousands)
|
||||||||
|
Revenue
|
$20,514
|
$209
|
$-
|
$20,723
|
$33,810
|
$314
|
$-
|
$34,124
|
|
Cost of revenue
|
6,921
|
259
|
-
|
7,180
|
12,022
|
404
|
-
|
12,426
|
|
Gross profit (loss)
|
13,593
|
(50)
|
-
|
13,543
|
21,788
|
(90)
|
-
|
21,698
|
|
Operating expenses
|
||||||||
|
General and
administrative
|
1,860
|
947
|
4,462
|
7,269
|
3,798
|
1,915
|
8,622
|
14,335
|
|
Sales and marketing
|
3,120
|
1,441
|
531
|
5,092
|
6,295
|
2,611
|
1,080
|
9,986
|
|
Research and
development
|
843
|
2,925
|
-
|
3,768
|
2,023
|
6,051
|
-
|
8,074
|
|
Total operating
expenses
|
5,823
|
5,313
|
4,993
|
16,129
|
12,116
|
10,577
|
9,702
|
32,395
|
|
Operating income
(loss)
|
$7,770
|
$(5,363)
|
$(4,993)
|
$(2,586)
|
$9,672
|
$(10,667)
|
$(9,702)
|
$(10,697)
|
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 17
Note 10- Concentrations
Customer Revenue Concentration
The following tables presentthe customers that account for 10% or more of the Company's revenueand their related segment for
each of the periods presented. Although certain customers might account for greater than 10% of the Company's revenueat any one point in
time, the concentration of revenuebetween a limited number of customers shifts regularly, depending on when revenue is recognized. The
percentages by customer reflect specific relationships or contracts that would concentrate revenuefor the periods presented and do not
indicate a trend specific to any one customer.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||
|
|
Segment
|
2024
|
2023
|
2024
|
2023
|
|
Customer A
|
Water
|
**
|
20%
|
**
|
13%
|
|
Customer B
|
Water
|
19%
|
18%
|
13%
|
11%
|
|
Customer C
|
Water
|
18%
|
**
|
12%
|
**
|
|
Customer D
|
Water
|
15%
|
**
|
11%
|
**
|
|
Customer E
|
Water
|
**
|
**
|
**
|
12%
|
|
Customer F
|
Water
|
**
|
11%
|
**
|
**
|
|
Customer G
|
Water
|
**
|
10%
|
**
|
**
|
**Zero or less than 10%.
ENERGY RECOVERY, INC.
NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 18
Item2 - Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
Energy Recovery, Inc. (the "Company", "Energy Recovery", "we", "our" and "us") designs and manufactures solutions that make
industrial processes more efficient and sustainable. Leveraging our pressure exchanger technology, which generates little to no emissions
when operating, we believe our solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of
commercial and industrial processes. As the world coalesces around the urgent need to address climate change and its impacts,we are
helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint.We believe
that our customers do not have to sacrifice quality and cost savings for sustainability andwe are committed to developing solutions that drive
long-term value - both financial and environmental.
The original product application of our technology, the PX®Pressure Exchanger®("PX") energy recovery device, was a major
contributor to the advancement of seawater reverse osmosis desalination("SWRO"), significantly lowering the energy intensity and cost of
water production globally from SWRO. Our pressure exchanger technologyis being applied to the wastewaterfiltration market, such as
battery manufacturers, mining operations, municipalities, and other manufacturing plants that discharge wastewater with significant levels of
metals and pollutants, and has also been applied to the development of our PX G1300®for use in the CO2market.
Engineering, and research and development("R&D"), have been, and remain, an essential part of our history, culture and corporate
strategy. Since our formation, we have developed leading technology and engineering expertise through the continual evolution of our
pressure exchanger technology, which can enhance environmental sustainability and improve productivity by reducing waste and energy
consumption in high-pressure industrial fluid-flow systems. This versatile technology works as a platform to build product applications and is
at the heart of many of our products. In addition, we have engineered and developed ancillary devices, such as our hydraulic turbochargers
and circulation "booster" pumps, that complement our energy recovery devices.
Segments
Our reportable operating segments consist of the water and emerging technologies segments. These segments are based on the
industries in which the technology solutions are sold, the type of energy recovery device or other technology sold and the related solution and
service or, in the case of emerging technologies, where revenues from new and/or potential devices utilizing our pressure exchanger
technology can be brought to market. Other factors for determining the reportable operating segments include the manner in which our Chief
Operating Decision Maker ("CODM"), our President and Chief Executive Officer,evaluatesour performance combined with the nature of the
individual business activities. In addition, our corporate operating expenses include expenditures in support of the water and emerging
technologies segments. We continueto monitor and reviewour segment reporting structure in accordance with authoritative guidance to
determine whether any changes have occurred that would impactour reportable segments.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 19
Resultsof Operations
A discussion regarding our financial condition and results of operations for the three and six months ended June 30, 2024, compared
to the three and six months ended June 30, 2023, is presented below.
Revenue
Variability in revenue from quarter to quarter is typical, therefore year-on-year comparisons are not necessarily indicative of the trend
for the full year due to these variations. There is no specific seasonality in our revenues to highlight that occurs throughouta calendar year.
We generally track our revenues by channels. The channels we recognize and channel definitions we utilize are as follows:
•Megaproject ("MPD") channel:The MPD channel has been the main driver of our long-term growth as revenue from this channel
benefits from a growing number of projects as well as an increase in the capacity of these projects in some cases. MPD projects
are large-scale in nature and generally have shipment timelines from 16 to 36 months from contract date.
•Original Equipment Manufacturer ("OEM") channel:The OEM channel describes where we sell into a wide variety of industries in
the desalination, wastewater, and the refrigeration markets. This channel contains projects smaller in size and revenue, and of
shorter duration compared to those projects in the MPD channel.
•Aftermarket ("AM") channel:The AM channel represents support and services rendered to our installed customer base. AM
revenue generally fluctuates from year-to-year and is dependent on our customers' timing of product upgrades, as well as their
replenishment of spare parts and supplies. Generally, the AM channel revenue has been increasing over time.
Revenue by Channel Customers
|
Three Months Ended June 30,
|
||||||
|
2024
|
2023
|
|||||
|
Revenue
|
% of
Revenue
|
Revenue
|
% of
Revenue
|
Change
|
||
|
(In thousands, except percentages)
|
||||||
|
Megaproject
|
$15,815
|
58%
|
$12,211
|
59%
|
$3,604
|
30%
|
|
Original equipment manufacturer
|
6,945
|
26%
|
4,702
|
23%
|
2,243
|
48%
|
|
Aftermarket
|
4,439
|
16%
|
3,810
|
18%
|
629
|
17%
|
|
Total revenue
|
$27,199
|
100%
|
$20,723
|
100%
|
$6,476
|
31%
|
|
Six Months Ended June 30,
|
||||||
|
2024
|
2023
|
|||||
|
Revenue
|
% of
Revenue
|
Revenue
|
% of
Revenue
|
Change
|
||
|
(In thousands, except percentages)
|
||||||
|
Megaproject
|
$19,915
|
51%
|
$15,454
|
45%
|
$4,461
|
29%
|
|
Original equipment manufacturer
|
10,291
|
26%
|
11,538
|
34%
|
(1,247)
|
(11%)
|
|
Aftermarket
|
9,083
|
23%
|
7,132
|
21%
|
1,951
|
27%
|
|
Total revenue
|
$39,289
|
100%
|
$34,124
|
100%
|
$5,165
|
15%
|
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 20
Revenue Attributable to Primary Geographical Markets by Segments
|
Three Months Ended June 30,
|
||||||
|
2024
|
2023
|
|||||
|
Water
|
Emerging
Technologies
|
Total
|
Water
|
Emerging
Technologies
|
Total
|
|
|
(In thousands)
|
||||||
|
Middle East and Africa
|
$14,467
|
$245
|
$14,712
|
$10,990
|
$108
|
$11,098
|
|
Asia
|
7,962
|
36
|
7,998
|
7,378
|
-
|
7,378
|
|
Americas
|
1,967
|
-
|
1,967
|
1,329
|
-
|
1,329
|
|
Europe
|
2,522
|
-
|
2,522
|
817
|
101
|
918
|
|
Total revenue
|
$26,918
|
$281
|
$27,199
|
$20,514
|
$209
|
$20,723
|
|
Six Months Ended June 30,
|
||||||
|
2024
|
2023
|
|||||
|
Water
|
Emerging
Technologies
|
Total
|
Water
|
Emerging
Technologies
|
Total
|
|
|
(In thousands)
|
||||||
|
Middle East and Africa
|
$19,252
|
$246
|
$19,498
|
$13,729
|
$108
|
$13,837
|
|
Asia
|
9,941
|
36
|
9,977
|
13,492
|
-
|
13,492
|
|
Americas
|
5,906
|
-
|
5,906
|
4,537
|
30
|
4,567
|
|
Europe
|
3,908
|
-
|
3,908
|
2,052
|
176
|
2,228
|
|
Total revenue
|
$39,007
|
$282
|
$39,289
|
$33,810
|
$314
|
$34,124
|
Three months ended June 30, 2024, as compared to the three months ended June 30, 2023
The increasein MPD revenue of $3.6 millionwas due primarily to customers' project timing, and execution of these projects and
specifically related to an increase of shipments in the Middle East and Africa ("MEA") and Asia markets.
The increase in OEM revenue of $2.2 millionwas due primarily to:
•Desalination:The increase in revenue of $2.4 million was due primarily tohigher shipmentsin the Europe and MEA markets,
partially offset by a decreasein shipments to the Asia market.
•Wastewater: Revenues were stable compared to the prior year, with an increasein shipments to the Asia market, which was
partially offset by a decreasein shipments to the Europe market.
•Emerging Technology: The decrease in revenue of $0.2 million was due primarily to an installment in Europe in the prior year.
The increasein AM revenue of $0.6 million was due primarily to higher shipmentsto the Americas, Asia and Europe markets, partially
offset by lower shipments to the MEA market.
Six months ended June 30, 2024, as compared to the six months ended June 30, 2023
The increasein MPD revenue of $4.5 million wasdue primarily to customers' project timing, and execution of these projects,
specifically in theMEA and Americas markets, partially offset by lower shipments to the Asia market.
The decreasein OEM revenue of $1.2 millionwas primarily due to:
•Desalination:The increase in revenue of $0.1 million was due primarily to higher shipments to the Europe and MEAmarkets,
which were partiallyoffsetby lower shipments to the Asia market.
•Wastewater: The decrease in revenue of $1.2 millionwas due primarily to lower shipments in all markets. Prior year revenues
included a large shipment to the Asia market.
•Emerging Technology: The decrease in revenue of $0.2 million was due primarily to an installment in Europe in the prior year.
The increasein AM revenue of $2.0 million was due primarily to shipments to theAmericas, Asia, and the MEA markets.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 21
Concentration of Revenue
See Note 10, "Concentrations- Revenue by Geographic Location and Country," of the Notes to Condensed Consolidated Financial
Statements in Part I, Item 1, "Financial Statements (unaudited)," of this Quarterly Report on Form 10-Q(the "Notes") for further discussion
regarding our concentration of revenue.
Gross Profit and Gross Margin
Gross profitrepresents revenue less cost of revenue. Cost of revenue consists primarily of raw materials, personnel costs (including
share-based compensation), manufacturing overhead, warranty costs, and depreciation expense.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||
|
|
2024
|
2023
|
2024
|
2023
|
|||||||||
|
Gross
Profit
|
Gross
Margin
|
Gross
Profit
|
Gross
Margin
|
Change in Gross
Profit
|
Gross
Profit
|
Gross
Margin
%
|
Gross
Profit
|
Gross
Margin
%
|
Change in Gross
Profit
|
||||
|
(In thousands, except percentages)
|
|||||||||||||
|
Gross profit and
gross margin
|
$17,566
|
64.6%
|
$13,543
|
65.4%
|
$4,023
|
29.7%
|
29.7%
|
$24,701
|
62.9%
|
$21,698
|
63.6%
|
$3,003
|
13.8%
|
The increasein gross profit for the three and six months ended June 30, 2024, as compared to the prior year, was due primarily to an
increasein sales of PXs, partially offset by a decreasein gross margin. The decreasein gross margin for the three and six months ended
June 30, 2024, as compared to the prior year, was due primarily to higher manufacturing costs, partially offset by costs related to product mix.
Operating Expenses
The total material changes of general and administrative ("G&A"), sales and marketing ("S&M") and research and development
("R&D") operating expenses for the three and six months ended June 30, 2024, as compared to the comparable periods in the prior year, are
discussed within the following overall operating expenditures, and the segment and corporate operating expenses discussions below.
|
Three Months Ended June 30,
|
||||||||
|
2024
|
2023
|
|||||||
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
|
|
(In thousands)
|
||||||||
|
General and
administrative
|
$1,912
|
$984
|
$6,636
|
$9,532
|
$1,860
|
$947
|
$4,462
|
$7,269
|
|
Sales and marketing
|
3,837
|
1,700
|
567
|
6,104
|
3,120
|
1,441
|
531
|
5,092
|
|
Research and
development
|
1,073
|
2,871
|
-
|
3,944
|
843
|
2,925
|
-
|
3,768
|
|
Total operating
expenses
|
$6,822
|
$5,555
|
$7,203
|
$19,580
|
$5,823
|
$5,313
|
$4,993
|
$16,129
|
Three months ended June 30, 2024, as compared to the three months ended June 30, 2023
Overall Operating Expenditures.Overall operating expenditures of $19.6 million, increased $3.5 million, or 21.4%. This increasewas
due primarily to higher consulting costs related to the enhancement of our corporate growth strategy, G&A and S&M employee compensation
and benefits costs related to an increase in headcount, and an increase in share-based compensation expense due to modification of certain
equity awards and higher severance payments, both related to the termination of certain executive-level employees.
WaterSegment. Watersegment operating expenses of $6.8 million, increased by $1.0 million, or 17.2%. This increasewas due
primarilyto an increase in employee compensation costs,benefits costs, and share-based compensation expense all related to an increase
in headcount in S&M, and other R&D costs.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 22
Emerging TechnologiesSegment. Emerging Technologiessegment operating expenses of $5.6 million, increased by $0.2 million, or
4.6%. This increasewas due primarily to a higher share-based compensation expense related to additional headcount and an increase in
employee severance costs.
Corporate Operating Expenses. Corporate operating expenses of $7.2 million, increased by $2.2 million, or 44.3%. This increase
was due primarily to higher consulting costs related to the enhancement of our corporate growth strategy.
|
Six Months Ended June 30,
|
||||||||
|
2024
|
2023
|
|||||||
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
Water
|
Emerging
Technologies
|
Corporate
|
Total
|
|
|
(In thousands)
|
||||||||
|
General and
administrative
|
$3,834
|
$2,002
|
$11,262
|
$17,098
|
$3,798
|
$1,915
|
$8,622
|
$14,335
|
|
Sales and marketing
|
7,582
|
3,507
|
1,167
|
12,256
|
6,295
|
2,611
|
1,080
|
9,986
|
|
Research and
development
|
2,173
|
6,122
|
-
|
8,295
|
2,023
|
6,051
|
-
|
8,074
|
|
Total operating
expenses
|
$13,589
|
$11,631
|
$12,429
|
$37,649
|
$12,116
|
$10,577
|
$9,702
|
$32,395
|
Six months ended June 30, 2024, as compared to the six months ended June 30, 2023
Overall Operating Expenditures. Overall operating expenditures of $37.6 million, increased by $5.3 million, or 16.2%. This increase
was due primarily to higher consulting costs related to the enhancement of our corporate growth strategyand an increase in employee
compensation and benefits costs, recruiting costs, travel expenses, and an increase in share-based compensation expense due to
modification of certain equity awards and higher severance payments, both related to the termination of certain executive-level employees.
WaterSegment. Water segment operating expenses of $13.6 million, increased by $1.5 million, or 12.2%. This increasewas due
primarily to higher employee compensation and benefits costs and share-based compensation expense in S&M related to an increase in
headcount to support our existing desalination operations and our growth in wastewater. In addition, non-employee operating expenses were
higher due primarily to an increase in consultant costs to support our growth in desalination and wastewater.
Emerging TechnologiesSegment. Emerging Technologiesoperating expenses of $11.6 million, increased by $1.1 million, or 10.0%.
This increasewas due primarily to higher employee compensation and benefits costs, and share-based compensation expense, both related
to an increase in headcount in S&M and R&D, and an increase in severance cost.
Corporate Operating Expenses. Corporate operating expenses of $12.4 million, increased by $2.7 million, or 28.1%. This increase
was due primarily to higher employee compensation and benefits costs, and share-based compensation expense, related to an increase in
headcount in G&A, an increase in recruiting costs, and an increase in travel costs. In addition, the increase in non-employee operating
expenses was due primarily to higher consulting costs related to the enhancement of our corporate growth strategy.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 23
Other Income, Net
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
(In thousands)
|
||||
|
Interest income
|
$1,663
|
$782
|
$3,105
|
$1,403
|
|
Other non-operating expense, net
|
(49)
|
(126)
|
(102)
|
(91)
|
|
Total other income, net
|
$1,614
|
$656
|
$3,003
|
$1,312
|
The increasein "Total other income, net" in the three and six months ended June 30, 2024, as compared to the comparable periods in
the prior year, was due primarily to an increase ininterest yields and an increase in short- and long-term investments.
Income Taxes
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
|
2024
|
2023
|
2024
|
2023
|
|
(In thousands, except percentages)
|
||||
|
(Benefit from) provision for income taxes
|
$242
|
$(265)
|
$(1,043)
|
$(1,424)
|
|
Discrete items
|
64
|
141
|
140
|
629
|
|
(Benefit from) provision for income taxes, excluding discrete items
|
$306
|
$(124)
|
$(903)
|
$(795)
|
|
Effective tax rate
|
(60.5%)
|
13.7%
|
10.5%
|
15.2%
|
|
Effective tax rate, excluding discrete items
|
(76.2%)
|
6.4%
|
9.1%
|
8.5%
|
The interim period tax provision for and (benefit from) income taxes, respectively, is determined using an estimate ofour annual
effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter,we update our estimate of the annual effective
tax rate, and if the estimated annual effective tax rate changes,we make a cumulative adjustment in such period. The quarterly tax provision
and estimate ofour annual effective tax rate are subject to variation due to several factors, including variability in accurately predictingour
pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in howwe do
business.
For the three and six months ended June 30, 2024, the recognized provision for and (benefit from) income taxes, respectively,
resulted from the tax projection based on the full year forecasted profit and included benefitsrelated to the U.S. federal foreign-derived
intangible income ("FDII"), federal R&D tax credit, and certain permanent differences, such as share-based compensation windfalls.
For the three and six months ended June 30, 2023, the recognized benefit from income tax resulted from the Company's loss for the
respective periods and included benefits related to the U.S. FDII and R&D tax credit, along with a discrete tax benefit due primarily to share-
based compensation windfalls.
The effective tax rate excluding discrete items for the six months ended June 30, 2024, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer share-based compensation, and higher projected book
income that is reducing the effective tax rate of the projected U.S. FDII.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 24
Liquidity and Capital Resources
Overview
From time-to-time, management and our Board of Directors review our liquidity and future cash needs and may make a decision to
(1) return capital to our shareholders through a share repurchase program or dividend payout; or (2) seek additional debt or equity financing.
As of June 30, 2024, our principal sources of liquidity consisted of (i) unrestricted cash and cash equivalents of $40.3 million; (ii)investment-
grade short-term and long-term marketable debt instrumentsof $97.7 millionthat are primarily invested in U.S. treasury securities, corporate
notes and bonds, and municipal and agency notes and bonds; and (iii) accounts receivable, net of allowances, of $20.7 million. As of
June 30, 2024, there was unrestricted cash of $0.9 millionheld outside the U.S.We invest cash not needed for current operations
predominantly in investment-grade, marketable debt instruments with the intent to make such funds available for future operating purposes,
as needed. Although these securities are available for sale, we generally hold these securities to maturity, and therefore, do not currently see
a need to trade these securities in order to support our liquidity needs in the foreseeable future. We believe the risk of this portfolio to us is in
the ability of the underlying companies or government agencies to cover their obligations at maturity, not in our ability to trade these securities
at a profit. Based on current projections, we believe existing cash balances and future cash inflows from this portfolio will meet our liquidity
needs for at least the next 12 months.
Credit Agreement
We entered into a credit agreement with JPMorgan Chase Bank, N.A.("JPMC") on December 22, 2021(as amended, the "Credit
Agreement"). The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of $50.0 millionand
includes both a revolving loan and a letters of credit ("LCs") component. The maximum allowable LCsunder the credit line component ofthe
Credit Agreementis $30.0 million. As of June 30, 2024, we were in compliance with all covenants under the Credit Agreement.
Under the Credit Agreement, as of June 30, 2024, there were norevolving loans outstanding. In addition, as of June 30, 2024, under
the LCscomponent, we utilized $19.1 millionof the maximum allowable credit line of $30.0 million, which included newly issued LCs, and
previously issued and unexpired stand-by letters of credits ("SBLCs") and certain non-expired commitments under the previous Loan and
Pledge Agreement with Citibank, N.A., which are guaranteed under the Credit Agreement. As of June 30, 2024, there was $18.1 millionof
outstanding LCs. These LCs had a weighted average remaining life of approximately 16 months.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 25
Cash Flows
|
Six Months Ended June 30,
|
|||
|
2024
|
2023
|
Change
|
|
|
|
(In thousands)
|
||
|
Net cash provided by operating activities
|
$14,570
|
$4,523
|
$10,047
|
|
Net cash used in investing activities
|
(43,830)
|
(17,036)
|
(26,794)
|
|
Net cash provided by financing activities
|
1,502
|
379
|
1,123
|
|
Effect of exchange rate differences on cash and cash equivalents
|
(24)
|
41
|
(65)
|
|
Net change in cash, cash equivalents and restricted cash
|
$(27,782)
|
$(12,093)
|
$(15,689)
|
Cash Flows from Operating Activities
Net cash provided by operating activitiesis subject to the project driven, non-cyclical nature of our business. Operating cash flow can
fluctuate significantly from year to year, due to the timing of receipts of large project orders. Operating cash flow may be negative in one year
and significantly positive in the next, consequently individual quarterly results and comparisons may not necessarily indicate a significant
trend, either positive or negative.
The highernet cash provided byoperating assets and liabilities for the six months ended June 30, 2024, as compared to the prior
year, was due primarily to the following factors:
•Accounts receivable and contract assets:an increaseincash provided related to the timing of billings related to shipments of
product or certification of installations, and collections on the account receivable balances;
•Accounts payable:an increase in cash provided related to the timing of vendor invoices received and payments made on open
vendor balances; and
•Contract liabilities:an increase in cash provided related to the timing of customer deposits.
Cash Flows from Investing Activities
Net cash used in investing activitiesprimarily relates to sales, maturities and purchasesof investment-grade marketable debt
instruments, such as corporate notes and bonds, and capital expenditures supporting our growth. We believe our investments in marketable
debt instruments are structured to preserve principal and liquidity while at the same time maximizing yields without significantly increasing
risk. The highernet cash used ininvesting activities of $26.8 millionin the six months ended June 30, 2024, as compared to the prior year,
was primarilydriven by $26.6 millionof net cash used for purchase of marketable debt instruments and a $0.2 millionincrease in cash used
for capital expenditures.
Cash Flows from Financing Activities
Net cash provided by financing activitiesprimarily for the six months ended June 30, 2024, as compared to the cash provided by
financing activities in the prior year, was due primarily to an increase of cash from exercises of employee stock options granted under our
equity incentive plans.
Liquidity and Capital Resource Requirements
We believe that our existing resources and cash generated from our operations will be sufficient to meet our anticipated capital
requirements for at least the next 12 months. However, we may need to raise additional capital or incur additional indebtedness to continue
to fund our operations or to support acquisitions in the future and/or to fund investments in our latest technology arising from rapid market
adoption. These needs could require us to seek additional equity or debt financing. Our future capital requirements will depend on many
factors including the continuing market acceptance of our products, our rate of revenue growth, the timing of new product introductions, the
expansion of our R&D, manufacturing and S&M activities, and the timing and extent of our expansion into new geographic territories. In
addition, we may enter into potential material investments in, or acquisitions of, complementary businesses, services or technologies in the
future which could also require us to seek additional equity or debt financing. Should we need additional liquidity or capital funds, these funds
may not be available to us on favorable terms, or at all.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 26
Recent Accounting Pronouncements
Refer to Note 1, "Description of Business and Significant Accounting Policies- Significant Accounting Policies," of the Notes to
Condensed Consolidated Financial Statements in Part I, Item 1, "Financial Statements (unaudited)," of this Quarterly Report on Form 10-Q.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk may be found primarily in two areas, foreign currency and interest rates.
Foreign Currency Risk
Our foreign currency exposures are due to fluctuations in exchange rates for the U.S.dollar ("USD") versus the British pound, Saudi
riyal, Emirati dirham, European euro, Chinese yuan, Indian rupee and Canadian dollar. Changes in currency exchange rates could adversely
affect our consolidated operating results or financial position.
Our revenue contracts have been denominated in the USD. At times, our international customers may have difficulty in obtaining
the USD to pay our receivables, thus increasing collection risk and potential bad debt expense. To the extent we expand our international
sales, a larger portion of our revenue could be denominated in foreign currencies. As a result, our cash and operating results could be
increasingly affected by changes in exchange rates.
In addition, we pay many vendors in foreign currency and, therefore, are subject to changes in foreign currency exchange rates. Our
international sales and service operations incur expense that is denominated in foreign currencies. This expense could be materially affected
by currency fluctuations. Our international sales and services operations also maintain cash balances denominated in foreign currencies. To
decrease the inherent risk associated with translation of foreign cash balances into our reporting currency, we do not maintain excess cash
balances in foreign currencies.
We have not hedged our exposure to changes in foreign currency exchange rates because expenses in foreign currencies have been
insignificant to date and exchange rate fluctuations have had little impact on our operating results and cash flows. In addition, we do not
have any exposure to the Russian ruble.
Interest Rate and Credit Risks
The primary objective of our investment activities is to preserve principal and liquidity while at the same time maximizing yields without
significantly increasing risk. We invest primarily ininvestment-grade short-term and long-term marketable debt instrumentsthat are subject
to counter-party credit risk. To minimize this risk, we invest pursuant to an investment policy approved by our Board of Directors. The policy
mandates high credit rating requirements and restricts our exposure to any single corporate issuer by imposing concentration limits.
As of June 30, 2024, our investment portfolio of $97.7 million, in investment-grade marketable debt instruments, such as U.S. treasury
securities, corporate notes and bonds, and municipal and agency notes and bonds, are classified aseither short-term and/or long-term
investmentson ourCondensed Consolidated Balance Sheets. These investments are subject to interest rate fluctuations and decrease in
market value to the extent interest rates increase, which occurred during the six months ended June 30, 2024. To minimize the exposure
due to adverse shifts in interest rates, we maintain investments with a weighted average maturity of approximately thirteen months. As of
June 30, 2024, a hypothetical 1% increase in interest rates would have resulted in a less than $0.6 million decreasein the fair value of our
investments in marketable debt instruments as of such date.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 27
Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief Executive Officerand our Interim Chief Accounting Officer, have
evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as
of the end of the period covered by this report.
Based on that evaluation, our President and Chief Executive Officerand our Interim Chief Accounting Officerhave concluded that, as
of June 30, 2024, our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
We have been, and may be from time to time, involved in legal proceedings or subject to claims incident to the ordinary course of
business. We are not presently a party to any legal proceedings that we believe are likely to have a material adverse effect on our business,
financial condition, or operating results. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because
of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be
obtained.
Item 1A -Risk Factors
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, "Risk Factors," in the 2023 Annual
Report.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Mine Safety Disclosures
Not applicable.
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 28
Item 5 - Other Information
During the three months ended June 30, 2024, no director or officer(within the meaning of Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended) has adoptedor terminatedany Rule 10b5-1 trading arrangement and/or any non-Rule 10b5-1 trading
arrangement (as defined in Item 408 of Regulation S-K).
Item 6 - Exhibits
A list of exhibits filed or furnished with this report or incorporated herein by reference is found in the Exhibit Index below.
|
Exhibit
Number
|
Exhibit Description
|
Incorporated by Reference
|
|||
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
||
|
8-K
|
001-34112
|
10.1
|
7/2/2024
|
||
|
8-K
|
001-34112
|
10.1
|
7/31/2024
|
||
|
31.1*
|
|||||
|
31.2*
|
|||||
|
32.1**
|
|||||
|
101
|
Inline XBRL Document Set for the consolidated financial statements and accompanying notes in
Part I, "Financial Information" of this Quarterly Report on Form 10-Q.
|
||||
|
104
|
Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101
Inline XBRL Document Set.
|
*Filed herewith.
**The certification furnished in Exhibit 32.1is not deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that
section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
|
ENERGY RECOVERY, INC.
|
|||
|
|
|||
|
Date:
|
July 31, 2024
|
By:
|
/s/ DAVID W. MOON
|
|
David W. Moon
|
|||
|
President and Chief Executive Officer
|
|||
|
(Principal Executive Officer)
|
|||
|
Date:
|
July 31, 2024
|
By:
|
/s/ BRANDON YOUNG
|
|
Brandon Young
|
|||
|
Interim Chief Accounting Officer
|
|||
|
(Principal Financial and Accounting Officer)
|
Energy Recovery, Inc. | Q2'2024 Form 10-Q| 29
Attachments
Disclaimer
ERI - Energy Recovery Inc. published this content on 31 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2024 21:23:07 UTC.
