Energy Recovery Inc Reports Second Quarter 2011 Financial Results
SECOND QUARTER HIGHLIGHTS
- Second quarter net revenue of $6.6 million
- Gross margin of 35%
- Net loss of $3.3 million
- Loss per share of $0.06
SAN LEANDRO, Calif.--(BUSINESS WIRE)-- Energy Recovery Inc (Nasdaq: ERII), a leader in the design and development of energy recovery devices for desalination and industrial processes, announced today the results of its second quarter ended June 30, 2011. ERI achieved net revenue of $6.6 million for the quarter, reflecting a 50% decrease over the same period last year. The revenue decline was caused by decreased shipments of PX devices, turbochargers and pumps, and to a lesser extent, parts and services associated with aftermarket sales. Sales of PX devices and related products and services accounted for approximately 46% of our revenue compared to 69% in the second quarter of 2010, while turbochargers and pumps comprised approximately 54% of our revenue compared to 31% in the same quarter of the prior year. The shift in product mix favoring turbochargers and pumps, along with increased underutilization of our manufacturing facilities, resulted in decreased gross margin of 35% compared to 50% in the second quarter of 2010.
General and administrative expenses increased by $669,000, or 18%, to $4.3 million for the three months ended June 30, 2011 from $3.7 million for the same period in 2010. The increase in general and administrative expenses was caused by costs associated with the CFO transition, recruiting costs to fill other strategic positions, and other compensation expenses. The amortization of intangible assets decreased by $338,000, or 49%, to $345,000 in the current quarter from $683,000 in the same period of 2010 due to the full amortization of backlog acquired in connection with the purchase of Pump Engineering LLC. Non-operating income changed favorably by $154,000 for the three months ended June 30, 2011 primarily due to $58,000 in net foreign currency gains recorded during the second quarter of 2011 compared to ($85,000) in net foreign currency losses recorded during the second quarter of 2010 along with a minor decrease in interest expense.
ERI reported a net loss of $3.3 million, or ($0.06) per share, for the three months ended June 30, 2011 compared to a net loss of $0.3 million, or ($0.01) per share, for the same period last year. For the six-month period in 2011, ERI reported a net loss of $5.1 million, or ($0.10) per share, compared to a net loss of $0.3 million, or ($0.00) per share for the same period last year.
Thomas S. Rooney, Jr., ERI’s president and chief executive officer, commented, “The desalination industry continues to suffer from a lack of new plant construction—a ‘hangover’ effect from the global economic crisis. We see little mega-project activity in the current year,” says Rooney, “although 2012 is showing some signs of life. To compensate for this temporary lull in sales activity, we are focused on cost reduction initiatives, the first of which includes the consolidation of manufacturing operations at our corporate headquarters in California. Moreover, we are evaluating investment opportunities to achieve strategic diversification in other addressable markets such as oil and gas.”
Conference Call to Discuss Second Quarter 2011 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 sell-side investment professionals who regularly follow the Company. The toll-free phone number for the call is 1-888-549-7750 or local 480-629-9866, and the access code is 4454707. Callers should dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at 1-800-406-7325 or 1-303-590-3030 (access code: 4454707) until Thursday, August 18, 2011. Investors may also access the live call or the replay over the internet at www.streetevents.com or www.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.
About Energy Recovery Inc
Energy Recovery Inc (NASDAQ: ERII) designs and develops energy recovery devices that significantly reduce energy consumption in desalination and other industrial processes. Energy Recovery’s portfolio includes notable technologies such as the PX Pressure Exchanger™ (PX™) device, the ERI™ TurboCharger hydraulic turbine energy recovery device, and the ERI™ AquaBold™ and ERI™ AquaSpire™ high-pressure pump. In total, Energy Recovery has more than 12,000 devices installed, reducing the carbon footprint of desalination by saving 1 GW of energy and offsetting CO2 emissions by more than 5.2 million tons per year. The company is headquartered in the San Francisco Bay Area with offices in key centers worldwide, including Madrid, Shanghai, and Dubai. For more information about Energy Recovery Inc, please visit www.energyrecovery.com.
Unaudited Consolidated Financial Results
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ENERGY RECOVERY INC |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share data) |
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(unaudited) |
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Three Months Ended
June 30, |
Six Months Ended
June 30, |
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| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||
| Net revenue | $ | 6,632 | $ | 13,304 | $ | 16,999 | $ | 25,919 | |||||||||||||||
| Cost of revenue | 4,304 | 6,676 | 10,007 | 11,933 | |||||||||||||||||||
| Gross profit | 2,328 | 6,628 | 6,992 | 13,986 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 4,325 | 3,656 | 8,382 | 7,389 | |||||||||||||||||||
| Sales and marketing | 2,009 | 2,142 | 4,079 | 4,102 | |||||||||||||||||||
| Research and development | 871 | 863 | 1,900 | 1,691 | |||||||||||||||||||
| Amortization of intangible assets | 345 | 683 | 691 | 1,366 | |||||||||||||||||||
| Total operating expenses | 7,550 | 7,344 | 15,052 | 14,548 | |||||||||||||||||||
| Loss from operations | (5,222 | ) | (716 | ) | (8,060 | ) | (562 | ) | |||||||||||||||
| Interest expense | (5 | ) | (17 | ) | (25 | ) | (38 | ) | |||||||||||||||
| Other non-operating income (expense), net | 61 | (81 | ) | 255 | (99 | ) | |||||||||||||||||
| Loss before provision from income taxes | (5,166 | ) | (814 | ) | (7,830 | ) | (699 | ) | |||||||||||||||
| Benefit from income taxes | (1,828 | ) | (492 | ) | (2,734 | ) | (445 | ) | |||||||||||||||
| Net loss | $ | (3,338 | ) | $ | (322 | ) | $ | (5,096 | ) | $ | (254 | ) | |||||||||||
| Basic and diluted net loss per share | $ | (0.06 | ) | $ | (0.01 | ) | $ | (0.10 | ) | $ | (0.00 | ) | |||||||||||
| Shares used in computing basic and diluted net loss per share | 52,605 | 52,078 | 52,592 | 51,661 | |||||||||||||||||||
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ENERGY RECOVERY INC |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in thousands, except share data and par value) |
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(unaudited) |
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June 30,
2011 |
December 31,
2010 |
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| ASSETS | |||||||||||||
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Current assets: |
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Cash and cash equivalents |
$ | 50,396 | $ | 55,338 | |||||||||
| Restricted cash | 4,465 | 4,636 | |||||||||||
| Accounts receivable, net of allowance for doubtful accounts of $89 and $44 at June 30, 2011 and December 31, 2010, respectively | 8,375 | 9,649 | |||||||||||
| Unbilled receivables, current | 4,211 | 2,278 | |||||||||||
| Inventories | 9,704 | 9,772 | |||||||||||
| Deferred tax assets, net | 2,097 | 2,097 | |||||||||||
| Prepaid expenses and other current assets | 6,528 | 4,428 | |||||||||||
| Total current assets | 85,776 | 88,198 | |||||||||||
| Restricted cash, non-current | 1,067 | 2,244 | |||||||||||
| Property and equipment, net | 21,382 | 22,314 | |||||||||||
| Goodwill | 12,790 | 12,790 | |||||||||||
| Other intangible assets, net | 7,660 | 8,352 | |||||||||||
| Other assets, non-current | 2 | 19 | |||||||||||
| Total assets | $ | 128,677 | $ | 133,917 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 1,741 | $ | 1,429 | |||||||||
| Accrued expenses and other current liabilities | 5,836 | 5,248 | |||||||||||
| Income taxes payable | 26 | 13 | |||||||||||
| Accrued warranty reserve | 763 | 1,028 | |||||||||||
| Deferred revenue | 330 | 2,341 | |||||||||||
| Current portion of long-term debt | 128 | 128 | |||||||||||
| Current portion of capital lease obligations | 119 | 160 | |||||||||||
| Total current liabilities | 8,943 | 10,347 | |||||||||||
| Long-term debt | 21 | 85 | |||||||||||
| Capital lease obligations, non-current | 37 | 144 | |||||||||||
| Deferred tax liabilities, non-current, net | 317 | 317 | |||||||||||
| Deferred revenue, non-current | 216 | 157 | |||||||||||
| Other non-current liabilities | 2,079 | 2,067 | |||||||||||
| Total liabilities | 11,613 | 13,117 | |||||||||||
| 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; 52,636,004 and 52,596,170 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively | 53 | 53 | |||||||||||
| Additional paid-in capital | 113,387 | 112,025 | |||||||||||
| Notes receivable from stockholders | (23 | ) | (38 | ) | |||||||||
| Accumulated other comprehensive loss | (97 | ) | (80 | ) | |||||||||
| Retained earnings | 3,744 | 8,840 | |||||||||||
| Total stockholders’ equity | 117,064 | 120,800 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 128,677 | $ | 133,917 | |||||||||
Energy Recovery Inc
Alexander J. Buehler, 510-483-7370
Chief
Financial Officer
Source: Energy Recovery Inc
Released August 4, 2011