Exhibit 99.1

Energy Recovery Posts Strong Quarterly Product Revenue Growth in Second Quarter

SAN LEANDRO, Calif. - August 5, 2021 - Energy Recovery, Inc. (Nasdaq: ERII) today announced its financial results for the second quarter ended June 30, 2021, achieving seven percent growth in product revenue, compared to the second quarter of 2020.

“Our desalination business continues to thrive, driven in part by returning demand in segments and regions hard-hit by COVID-19,” said Robert Mao, Chairman of the Board, President and Chief Executive Officer of Energy Recovery.

Mr. Mao continued, “We continue to make material progress in diversification efforts of our pressure exchanger technology. We have been awarded projects in the chemical manufacturing, landfill leachate and lithium-ion battery manufacturing facilities in China for our new Ultra PX energy recovery device, a testament to our efforts to educate the industrial wastewater treatment market on the Ultra PX’s energy-saving benefits. Furthermore, our confidence in our PX G1300 energy recovery device for CO2 refrigeration has grown stronger through successful tests that underscore the significant financial and sustainability benefits we can bring end customers such as supermarkets. We are already seeking our first commercial deployment and believe our technology can make the transition from climate-damaging hydrofluorocarbons to sustainable natural refrigeration alternatives attractive for retailers. We are excited by these new opportunities and believe our strategy of pressure exchanger diversification will continue to drive long-term value creation for Energy Recovery shareholders.”

Financial Results
Three Months Ended June 30,Six Months Ended June 30,
(In millions, except net income per share, percentages and basis points)
Product revenue$20.6 $19.3 7%$49.5 $38.3 30%
License and development revenue (1)
— 24.4 (100%)— 26.9 (100%)
Total revenue$20.6 $43.6 (53%)$49.5 $65.2 (24%)
Product gross profit$13.4 $12.7 6%$33.4 $26.0 28%
Product gross margin65.1 %66.0 %(90) bps67.4 %68.0 %(60) bps
Operating expense$13.1 $15.8 (17%)$27.0 $31.5 (14%)
Operating income$0.3 $21.3 (99%)$6.4 $21.4 (70%)
Net income$1.1 $16.9 (94%)$7.9 $17.5 (55%)
Diluted net income per share$0.02 $0.30 $(0.28)$0.13 $0.31 $(0.18)
Operating cash flow$11.5 $5.6 $5.9$11.5 $(0.3)$11.8
Cash and investments$120.7 $96.9 25%$120.7 $96.9 25%
(1)In June 2020, the Company terminated the VorTeq License Agreement with Schlumberger Technology Corporation. As there were no future performance obligations to be recognized under the VorTeq License Agreement after the effective date, the Company recognized in full the remaining deferred revenue balance of $24.4 million in the second quarter of fiscal year 2020. In addition, no future license and development revenue was recognized under the VorTeq License Agreement after the second quarter of fiscal year 2020.

Product Channel Revenue
Three Months Ended June 30,Six Months Ended June 30,
(In millions, except percentages)
Original equipment manufacturer4.34.16%7.17.6(7%)
Total product revenue$20.6$19.37%$49.5$38.330%

“We experienced another solid financial quarter at Energy Recovery,” said Joshua Ballard, Chief Financial Officer of Energy Recovery. “Growth remains steady and stable across all sales channels despite a slight temporary decline in aftermarket sales this quarter. Importantly, our year-to-date operating expenditures, excluding impairment charges, remain 8% below 2020 as we continue to manage this growth prudently. The notable year-to-date 44% increase in sales and marketing spend reflects investments in support of this growth, offset entirely by reduced R&D spend largely due to VorTeq. Finally, despite nearly $12 million in share buybacks and increased investments in inventory, our cash and security balances remain at historic highs following record sales in the first quarter.”

Second Quarter 2021 Business Highlights
Water Segment
Steady product revenue growth in the second quarter was driven by megaproject (“MPD”) and original equipment manufacturer (“OEM”) channels, with year-to-date sales representing growth of 30% across all channels, compared to the same period in 2020. The MPD channel continues to drive stable growth from large scale SWRO projects, while the OEM channel is beginning to rebound. This upward trend within the OEM channel is being driven primarily by large greenfield plant installations and brownfield retrofits, which include upgrades to existing operations leveraging our pressure exchanger technology and ancillary equipment.
Our continued focus on manufacturing efficiencies, cost discipline and mix normalization is expected to improve the product gross margin profile from the low margin observed in second quarter. Gross margin was lower this quarter largely due to product mix as we sold a higher mix of non-PX products during the quarter from our growth in OEM sales.

Emerging Technologies Segment
Testing of our PX G1300 energy recovery device for CO2 refrigeration continues to affirm expected energy savings and system efficiency gains we can achieve for CO2 refrigeration systems. We are seeking our first commercial deployment of the PX G1300.
We are continuing our live well field trials of the VorTeq. The next scheduled field trial will test our efforts to extend the service life of the VorTeq cartridges.
Excluding 2020 impairment costs, operating expenses in this segment decreased year-over-year, due primarily to reduced development expenditures related to the VorTeq which were partially offset by a shift of R&D investment to our commercial refrigeration efforts.

Bottom Line Summary
On a quarterly basis, we reported a net income of $1.1 million, or $0.02 per diluted share, for the second quarter ended June 30, 2021, compared to a net income of $16.9 million, or $0.30 per diluted share, for the second quarter ended June 30, 2020, which included $17.2 million, net of tax, related to the termination of the VorTeq License Agreement and the impairment of related long-lived assets.

Cash Flow Highlights
The Company finished the first quarter ended June 30, 2021 with cash and cash equivalents of $103.3 million, and short-term investments of $17.4 million, which represents a combined total of $120.7 million.

Forward-Looking Statements
Certain matters discussed in this press release and on the conference call are “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, including the Company’s belief that the company is embarking on a path of sustainable, disciplined and diversified growth; our ability to develop pressure exchanged-based solutions for new industries; our belief that our carbon dioxide commercial refrigeration solution excels in warmer climates as compared to the market-leading technology; our belief that the Company’s future is bright; our belief that the Company can work towards a more diversified revenue stream for the future; and our belief that the Company is making significant progress in our emerging technology projects. These forward-looking statements are based on information currently available to us and on management’s beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. Potential risks and uncertainties include any other factors that may have been discussed herein regarding the risks and uncertainties of the Company’s business, and the risks discussed under “Risk Factors” in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) for the year ended December 31, 2020, as well as other reports filed by the Company with the SEC from time to time. Because such forward-looking statements involve risks and uncertainties, the Company’s actual results may differ materially from the predictions in these forward-looking statements. All forward-looking statements are made as of today, and the Company assumes no obligation to update such statements.

Conference Call to Discuss Second Quarter 2021 Financial Results
Thursday, August 5, 2021, 2:00 PM PDT / 5:00 PM EDT
Listen-only, US / Canada Toll-Free: +1 (877) 709-8150
Listen-only, Local / International Toll: +1 (201) 689-8354
Access code: 13720677

Expiration: Sunday, September 5, 2021
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13720677

Investors may also access the live call or the replay over the internet at ir.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.

Disclosure Information
Energy Recovery uses the investor relations section on its website as means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Energy Recovery’s investor relations website in addition to following Energy Recovery’s press releases, SEC filings, and public conference calls and webcasts.

About Energy Recovery
Energy Recovery creates technologies that solve complex challenges for industrial fluid-flow markets worldwide. Building on our pressure exchanger technology platform, we design and manufacture solutions that make industrial processes more efficient and sustainable. What began as a game-changing invention for desalination has grown into a global business accelerating the environmental sustainability of customers’ operations in multiple industries. Headquartered in the San Francisco Bay Area, Energy Recovery has manufacturing, research and development facilities across California and Texas with sales and on-site technical support available globally. For more information, please visit www.energyrecovery.com.

Investor Relations
+1 (281) 962-8105

June 30,
December 31,
(In thousands)
Current assets:
Cash and cash equivalents$103,302 $94,255 
Short-term investments17,394 20,446 
Accounts receivable, net7,599 11,792 
Inventories, net15,289 11,748 
Prepaid expenses and other assets, current4,265 4,950 
Total current assets147,849 143,191 
Deferred tax assets, net12,471 11,030 
Property and equipment, net20,443 20,176 
Operating lease, right of use asset15,383 16,090 
Goodwill and other intangible assets12,833 12,839 
Other assets, non-current365 988 
Total assets$209,344 $204,314 
Current liabilities:
Accounts payable$2,278 $1,118 
Accrued expenses and other liabilities, current8,397 11,816 
Lease liabilities, current1,473 1,243 
Contract liabilities, current1,117 1,552 
Total current liabilities13,265 15,729 
Lease liabilities, non-current15,682 16,443 
Other liabilities, non-current571 518 
Total liabilities29,518 32,690 
Stockholders’ equity:
Common stock63 62 
Additional paid-in capital191,087 179,161 
Accumulated other comprehensive (loss) income(53)53 
Treasury stock(42,040)(30,486)
Retained earnings30,769 22,834 
Total stockholders’ equity179,826 171,624 
Total liabilities and stockholders’ equity$209,344 $204,314 

 Three Months Ended June 30,Six Months Ended June 30,
 (In thousands, except per share data)
Product revenue$20,607 $19,256 $49,547 $38,257 
Product cost of revenue7,181 6,549 16,162 12,233 
Product gross profit13,426 12,707 33,385 26,024 
License and development revenue— 24,352 — 26,895 
Operating expenses:
General and administrative6,175 5,599 12,781 12,480 
Sales and marketing2,537 1,497 5,240 3,635 
Research and development4,424 6,352 8,926 13,061 
Amortization of intangible assets
Impairment of long-lived assets— 2,332 — 2,332 
Total operating expenses13,139 15,784 26,954 31,516 
Income from operations287 21,275 6,431 21,403 
Other income (expense):
Interest income51 255 143 675 
Other non-operating expense, net(12)(18)(22)(30)
Total other income, net39 237 121 645 
Income before income taxes326 21,512 6,552 22,048 
(Benefit from) provision for income taxes(743)4,586 (1,383)4,501 
Net income$1,069 $16,926 $7,935 $17,547 
Net income per share:
Basic0.02 0.30 0.14 0.32 
Diluted0.02 0.30 0.13 0.31 
Number of shares used in per share calculations:
Basic57,253 55,614 57,066 55,513 
Diluted58,999 56,371 58,822 56,438 

Six Months Ended June 30,
(In thousands)
Cash flows from operating activities:
Net income$7,935 $17,547 
Adjustments to reconcile net income to cash provided by (used in) operating activities
Stock-based compensation3,341 2,595 
Depreciation and amortization2,733 2,751 
Amortization of premiums and discounts on investments139 215 
Deferred income taxes(1,441)4,666 
Impairment of long-lived assets— 2,332 
Other non-cash adjustments149 228 
Changes in operating assets and liabilities:
Accounts receivable, net4,193 101 
Contract assets1,356 (198)
Inventories, net(3,621)260 
Prepaid and other assets(47)(278)
Accounts payable1,237 1,285 
Accrued expenses and other liabilities(3,999)(4,009)
Contract liabilities(434)(27,789)
Net cash provided by (used in) operating activities11,541 (294)
Cash flows from investing activities:
Sales of marketable securities— 9,767 
Maturities of marketable securities14,861 43,286 
Purchases of marketable securities(12,034)(12,855)
Capital expenditures(2,449)(4,410)
Net cash provided by investing activities383 35,788 
Cash flows from financing activities:
Net proceeds from issuance of common stock8,697 1,128 
Tax payment for employee shares withheld— (23)
Repurchase of common stock(11,554)— 
Net cash (used in) provided by financing activities(2,857)1,105 
Effect of exchange rate differences on cash and cash equivalents(20)(15)
Net change in cash, cash equivalents and restricted cash9,047 36,584 
Cash, cash equivalents and restricted cash, beginning of year94,358 26,488 
Cash, cash equivalents and restricted cash, end of period$103,405 $63,072 

Three Months Ended June 30, 2021Three Months Ended June 30, 2020 (Recast)
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Product revenue$20,568 $39 $— $20,607 $19,256 $— $— $19,256 
Product cost of revenue7,181 — — 7,181 6,549 — — 6,549 
Product gross profit13,387 39 — 13,426 12,707 — — 12,707 
License and development revenue— — — — — 24,352 — 24,352 
Operating expenses
General and administrative1,776 1,315 3,084 6,175 1,967 1,150 2,482 5,599 
Sales and marketing2,121 229 187 2,537 1,124 262 111 1,497 
Research and development595 3,829 — 4,424 960 5,392 — 6,352 
Amortization of intangible assets— — — — 
Impairment of long-lived assets— — — — — 2,332 — 2,332 
Total operating expenses4,495 5,373 3,271 13,139 4,055 9,136 2,593 15,784 
Operating income (loss)$8,892 $(5,334)$(3,271)287 $8,652 $15,216 $(2,593)21,275 
Other income, net39 237 
Income before income taxes$326 $21,512 

Six Months Ended June 30, 2021Six Months Ended June 30, 2020 (Recast)
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Product revenue$49,508 $39 $— $49,547 $38,257 $— $— $38,257 
Product cost of revenue16,162 — — 16,162 12,233 — — 12,233 
Product gross profit33,346 39 — 33,385 26,024 — — 26,024 
License and development revenue— — — — — 26,895 — 26,895 
Operating expenses
General and administrative3,333 2,481 6,967 12,781 4,046 2,642 5,792 12,480 
Sales and marketing4,285 408 547 5,240 2,800 574 261 3,635 
Research and development1,096 7,830 — 8,926 1,862 11,199 — 13,061 
Amortization of intangible assets— — — — 
Impairment of long-lived assets— — — — — 2,332 — 2,332 
Total operating expenses8,721 10,719 7,514 26,954 8,716 16,747 6,053 31,516 
Operating income (loss)$24,625 $(10,680)$(7,514)6,431 $17,308 $10,148 $(6,053)21,403 
Other income, net121 645 
Income before income taxes$6,552 $22,048