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11/05/09

Energy Recovery, Inc. Reports Third Quarter 2009 Financial Results


SAN LEANDRO, Calif.--(BUSINESS WIRE)--Nov. 5, 2009-- Energy Recovery, Inc. (Nasdaq:ERII), a leader in the design and development of energy recovery devices for desalination, announced today the results of its third quarter ended September 30, 2009. In the third quarter, ERI achieved net revenue of $9.5 million and a net profit of $550,000 or $0.01 per diluted share. Both the net revenue and net profit were in line with the Company’s guidance.

“Our third quarter results were in line with our expectations and we are preparing for a busy fourth quarter,” said GG Pique, President and CEO of Energy Recovery, Inc. “In addition, we are starting to book orders for delivery in 2010 and, with the credit markets beginning to stabilize, we believe the stage is being set for improvement in top line growth in 2010 and even more growth in 2011 as pent-up demand is satisfied.”

ERI provides the following guidance for the fourth quarter of 2009 and the full year:

  Q4 2009   Fiscal Year 2009
 
Estimated net revenue $14.5 to $16.5 million $46 to $48 million
 
Estimated net income $1.4 to $2.1 million $3.5 to $4.0 million
 
Estimated earnings per diluted share $0.03 to $0.04 $0.07 to $0.08

ERI estimates that for 2010, its net revenue will improve by 25% over 2009.

Forward Looking Statements

This press release includes “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements about ERI’s estimated net revenue, net income and earnings per diluted share for the fourth quarter of 2009 and for the 2009 and 2010 fiscal years. Because such forward-looking statements involve risks and uncertainties, the Company's actual results may differ materially from the predictions in those forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, delays in, or cancellation of, the construction of desalination plants, the inability of our customers to obtain project financing, delays in governmental approvals, changes in end users’ budgets for desalination plants or the timing of their purchasing decisions, the world economic crisis and other risks detailed in the Company's filings with the Securities and Exchange Commission (“SEC”). All forward-looking statements are made as of today, and the Company assumes no obligation to update such statements. For more details relating to the risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, please refer to the Company's SEC filings.

Conference Call to Discuss Third Quarter 2009 Results

The conference call scheduled today at 1:30 p.m. PDT will be in a "listen-only" mode for all participants other than the investment professionals who regularly follow the Company. The toll-free phone number for the call is 888-549-7750 or 480-629-9866 and the access code is 4171252. Callers should dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at 800-406-7325 or 303-590-3030, Access Code: 4171252, until Thursday, November 19, 2009. Investors may also access the live call or the replay over the internet at www.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.

About ERI®

Energy Recovery, Inc. (NASDAQ:ERII) designs and develops energy recovery devices that help make desalination affordable by significantly reducing energy consumption. ERI’s PX Pressure Exchanger™ (PX™) device is a rotary positive displacement pump that recovers energy from the high pressure reject stream of seawater reverse osmosis systems at up to 98% efficiency. The company is headquartered in the San Francisco Bay Area with offices in key desalination centers worldwide, including Madrid, Shanghai, Florida and the United Arab Emirates. For more information on ERI and PX technology, please visit www.energyrecovery.com.

Unaudited Financial Results

ENERGY RECOVERY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

September 30,
2009

 

December 31,
2008

ASSETS
Current assets:
Cash and cash equivalents $ 74,725 $ 79,287
Restricted cash 2,938 246
Accounts receivable, net of allowance for doubtful accounts of $28 and $59 at September 30, 2009 and December 31, 2008, respectively 10,319 20,615
Unbilled receivables, current 6,315 4,948
Inventories 10,510 8,493
Deferred tax assets, net 1,950 1,755
Prepaid income taxes 749

-

Prepaid expenses and other current assets   1,515     984  
Total current assets 109,021 116,328
Unbilled receivables, non-current 229 1,929
Restricted cash, non-current 2,588 19
Property and equipment, net 7,031 1,845
Intangible assets, net 309 321
Deferred tax assets, non-current, net 106 119
Other assets, non-current   52     51  
Total assets $ 119,336   $ 120,612  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 803 $ 2,270
Accrued expenses and other current liabilities 4,778 4,787
Income taxes payable 38 1,657
Accrued warranty reserve 312 270
Deferred revenue 1,549 4,000
Current portion of long-term debt 128 172
Current portion of capital lease obligations   36     37  
Total current liabilities 7,644 13,193
Long-term debt 245 385
Capital lease obligations, non-current

-

27
Other non-current liabilities   4     8  
Total liabilities   7,893     13,613  
Commitments and Contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding

-

-

Common stock, $0.001 par value; 200,000,000 shares authorized; 50,164,317 and 50,015,718 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively 50 50
Additional paid-in capital 100,749 98,527
Notes receivable from stockholders (88 ) (296 )
Accumulated other comprehensive loss (63 ) (44 )
Retained earnings   10,795     8,762  
Total stockholders’ equity   111,443     106,999  
Total liabilities and stockholders’ equity $ 119,336   $ 120,612  

ENERGY RECOVERY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

  Three Months Ended

September 30,

  Nine Months Ended

September 30,

  2009       2008     2009       2008  
Net revenue $ 9,545 $ 9,044 $ 31,280 $ 30,125
Cost of revenue   3,387     3,497     11,251     11,122  
Gross profit 6,158 5,547 20,029 19,003
Operating expenses:
General and administrative 3,043 2,696 9,705 8,211
Sales and marketing 1,634 1,467 4,795 4,263
Research and development   779     678     2,409     1,723  
Total operating expenses   5,456     4,841     16,909     14,197  
Income from operations 702 706 3,120 4,806
Other income (expense):
Interest expense (10 ) (17 ) (34 ) (62 )
Interest and other income (expense), net   30     217     59     841  
Income before provision for income taxes 722 906 3,145 5,585
Provision for income taxes   172     283     1,112     2,186  
Net income $ 550   $ 623   $ 2,033   $ 3,399  
Earnings per share:
Basic $ 0.01   $ 0.01   $ 0.04   $ 0.08  
Diluted $ 0.01   $ 0.01   $ 0.04   $ 0.07  
Number of shares used in per share calculations:
Basic   50,160     49,646     50,120     43,114  
Diluted   52,584     52,396     52,614     45,647  

Source: Energy Recovery, Inc.

Energy Recovery, Inc.
Tom Willardson, 510-483-7370
Chief Financial Officer