SAN LEANDRO, Calif.--(BUSINESS WIRE)--November 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:

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.

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.

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.

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

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

	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