00014215172021--12-31Q2falseus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberus-gaap:ProductMemberP6MP1Y00014215172021-01-012021-06-30xbrli:shares00014215172021-07-30iso4217:USD00014215172021-06-3000014215172020-12-3100014215172020-01-012020-06-3000014215172021-04-012021-06-3000014215172020-04-012020-06-300001421517us-gaap:ProductMember2021-04-012021-06-300001421517us-gaap:ProductMember2020-04-012020-06-300001421517us-gaap:ProductMember2021-01-012021-06-300001421517us-gaap:ProductMember2020-01-012020-06-300001421517us-gaap:LicenseAndServiceMember2021-04-012021-06-300001421517us-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517us-gaap:LicenseAndServiceMember2021-01-012021-06-300001421517us-gaap:LicenseAndServiceMember2020-01-012020-06-30iso4217:USDxbrli:shares0001421517us-gaap:CommonStockMember2021-03-310001421517us-gaap:CommonStockMember2020-03-310001421517us-gaap:CommonStockMember2020-12-310001421517us-gaap:CommonStockMember2019-12-310001421517us-gaap:CommonStockMember2021-04-012021-06-300001421517us-gaap:CommonStockMember2020-04-012020-06-300001421517us-gaap:CommonStockMember2021-01-012021-06-300001421517us-gaap:CommonStockMember2020-01-012020-06-300001421517us-gaap:CommonStockMember2021-06-300001421517us-gaap:CommonStockMember2020-06-300001421517us-gaap:AdditionalPaidInCapitalMember2021-03-310001421517us-gaap:AdditionalPaidInCapitalMember2020-03-310001421517us-gaap:AdditionalPaidInCapitalMember2020-12-310001421517us-gaap:AdditionalPaidInCapitalMember2019-12-310001421517us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001421517us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001421517us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001421517us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300001421517us-gaap:AdditionalPaidInCapitalMember2021-06-300001421517us-gaap:AdditionalPaidInCapitalMember2020-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001421517us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001421517us-gaap:TreasuryStockMember2021-03-310001421517us-gaap:TreasuryStockMember2020-03-310001421517us-gaap:TreasuryStockMember2020-12-310001421517us-gaap:TreasuryStockMember2019-12-310001421517us-gaap:TreasuryStockMember2021-04-012021-06-300001421517us-gaap:TreasuryStockMember2020-04-012020-06-300001421517us-gaap:TreasuryStockMember2021-01-012021-06-300001421517us-gaap:TreasuryStockMember2020-01-012020-06-300001421517us-gaap:TreasuryStockMember2021-06-300001421517us-gaap:TreasuryStockMember2020-06-300001421517us-gaap:RetainedEarningsMember2021-03-310001421517us-gaap:RetainedEarningsMember2020-03-310001421517us-gaap:RetainedEarningsMember2020-12-310001421517us-gaap:RetainedEarningsMember2019-12-310001421517us-gaap:RetainedEarningsMember2021-04-012021-06-300001421517us-gaap:RetainedEarningsMember2020-04-012020-06-300001421517us-gaap:RetainedEarningsMember2021-01-012021-06-300001421517us-gaap:RetainedEarningsMember2020-01-012020-06-300001421517us-gaap:RetainedEarningsMember2021-06-300001421517us-gaap:RetainedEarningsMember2020-06-3000014215172020-06-3000014215172019-12-310001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMember2021-04-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMember2021-01-012021-06-300001421517erii:WaterMembererii:MiddleEastAndAfricaMember2021-04-012021-06-300001421517erii:EmergingTechnologiesSegmentMembererii:MiddleEastAndAfricaMember2021-04-012021-06-300001421517erii:MiddleEastAndAfricaMember2021-04-012021-06-300001421517erii:WaterMembererii:MiddleEastAndAfricaMember2021-01-012021-06-300001421517erii:EmergingTechnologiesSegmentMembererii:MiddleEastAndAfricaMember2021-01-012021-06-300001421517erii:MiddleEastAndAfricaMember2021-01-012021-06-300001421517erii:WaterMembersrt:AsiaMember2021-04-012021-06-300001421517srt:AsiaMembererii:EmergingTechnologiesSegmentMember2021-04-012021-06-300001421517srt:AsiaMember2021-04-012021-06-300001421517erii:WaterMembersrt:AsiaMember2021-01-012021-06-300001421517srt:AsiaMembererii:EmergingTechnologiesSegmentMember2021-01-012021-06-300001421517srt:AsiaMember2021-01-012021-06-300001421517erii:WaterMembersrt:AmericasMember2021-04-012021-06-300001421517erii:EmergingTechnologiesSegmentMembersrt:AmericasMember2021-04-012021-06-300001421517srt:AmericasMember2021-04-012021-06-300001421517erii:WaterMembersrt:AmericasMember2021-01-012021-06-300001421517erii:EmergingTechnologiesSegmentMembersrt:AmericasMember2021-01-012021-06-300001421517srt:AmericasMember2021-01-012021-06-300001421517erii:WaterMembersrt:EuropeMember2021-04-012021-06-300001421517srt:EuropeMembererii:EmergingTechnologiesSegmentMember2021-04-012021-06-300001421517srt:EuropeMember2021-04-012021-06-300001421517erii:WaterMembersrt:EuropeMember2021-01-012021-06-300001421517srt:EuropeMembererii:EmergingTechnologiesSegmentMember2021-01-012021-06-300001421517srt:EuropeMember2021-01-012021-06-300001421517erii:WaterMember2021-04-012021-06-300001421517erii:EmergingTechnologiesSegmentMember2021-04-012021-06-300001421517erii:WaterMember2021-01-012021-06-300001421517erii:EmergingTechnologiesSegmentMember2021-01-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMembererii:EmergingTechnologiesSegmentMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2021-04-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMembererii:EmergingTechnologiesSegmentMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2021-01-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:OriginalEquipmentManufacturerMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2021-04-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:OriginalEquipmentManufacturerMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2021-01-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:AftermarketMember2021-04-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2021-04-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:AftermarketMember2021-01-012021-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2021-01-012021-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMember2020-04-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMember2020-01-012020-06-300001421517erii:WaterMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517erii:EmergingTechnologiesSegmentMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517erii:WaterMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-300001421517erii:EmergingTechnologiesSegmentMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-300001421517erii:WaterMember2020-04-012020-06-300001421517erii:EmergingTechnologiesSegmentMember2020-04-012020-06-300001421517erii:WaterMember2020-01-012020-06-300001421517erii:EmergingTechnologiesSegmentMember2020-01-012020-06-300001421517erii:WaterMembererii:MiddleEastAndAfricaMember2020-04-012020-06-300001421517erii:EmergingTechnologiesSegmentMembererii:MiddleEastAndAfricaMember2020-04-012020-06-300001421517erii:MiddleEastAndAfricaMember2020-04-012020-06-300001421517erii:WaterMembererii:MiddleEastAndAfricaMember2020-01-012020-06-300001421517erii:EmergingTechnologiesSegmentMembererii:MiddleEastAndAfricaMember2020-01-012020-06-300001421517erii:MiddleEastAndAfricaMember2020-01-012020-06-300001421517erii:WaterMembersrt:AsiaMember2020-04-012020-06-300001421517srt:AsiaMembererii:EmergingTechnologiesSegmentMember2020-04-012020-06-300001421517srt:AsiaMember2020-04-012020-06-300001421517erii:WaterMembersrt:AsiaMember2020-01-012020-06-300001421517srt:AsiaMembererii:EmergingTechnologiesSegmentMember2020-01-012020-06-300001421517srt:AsiaMember2020-01-012020-06-300001421517erii:WaterMembersrt:AmericasMember2020-04-012020-06-300001421517erii:EmergingTechnologiesSegmentMembersrt:AmericasMember2020-04-012020-06-300001421517srt:AmericasMember2020-04-012020-06-300001421517erii:WaterMembersrt:AmericasMember2020-01-012020-06-300001421517erii:EmergingTechnologiesSegmentMembersrt:AmericasMember2020-01-012020-06-300001421517srt:AmericasMember2020-01-012020-06-300001421517erii:WaterMembersrt:EuropeMember2020-04-012020-06-300001421517srt:EuropeMembererii:EmergingTechnologiesSegmentMember2020-04-012020-06-300001421517srt:EuropeMember2020-04-012020-06-300001421517erii:WaterMembersrt:EuropeMember2020-01-012020-06-300001421517srt:EuropeMembererii:EmergingTechnologiesSegmentMember2020-01-012020-06-300001421517srt:EuropeMember2020-01-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMembererii:EmergingTechnologiesSegmentMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2020-04-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMembererii:EmergingTechnologiesSegmentMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:MegaprojectMember2020-01-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:OriginalEquipmentManufacturerMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2020-04-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:OriginalEquipmentManufacturerMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:OriginalEquipmentManufacturerMember2020-01-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:AftermarketMember2020-04-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2020-04-012020-06-300001421517erii:WaterMembererii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:EmergingTechnologiesSegmentMembererii:AftermarketMember2020-01-012020-06-300001421517erii:PXPumpsAndTurboDevicesMembererii:AftermarketMember2020-01-012020-06-300001421517erii:VorTeqLicenseAgreementMembererii:SchlumbergerTechnologyCorporationMemberus-gaap:OilAndGasMembersrt:AffiliatedEntityMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-3000014215172020-01-012020-12-3100014215172021-07-012021-06-3000014215172022-01-012021-06-300001421517us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMember2021-06-300001421517us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashAndCashEquivalentsMember2020-12-310001421517us-gaap:CashAndCashEquivalentsMember2021-06-300001421517us-gaap:CashAndCashEquivalentsMember2020-12-310001421517us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001421517us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001421517us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001421517us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001421517us-gaap:ShortTermInvestmentsMember2021-06-300001421517us-gaap:ShortTermInvestmentsMember2020-12-310001421517us-gaap:FairValueMeasurementsRecurringMember2021-06-300001421517us-gaap:FairValueMeasurementsRecurringMember2020-12-310001421517us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001421517us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-06-300001421517us-gaap:CorporateDebtSecuritiesMember2021-06-300001421517us-gaap:CorporateDebtSecuritiesMember2020-12-310001421517us-gaap:CorporateDebtSecuritiesMember2021-04-012021-06-300001421517us-gaap:CorporateDebtSecuritiesMember2020-04-012020-06-300001421517us-gaap:CorporateDebtSecuritiesMember2021-01-012021-06-300001421517us-gaap:CorporateDebtSecuritiesMember2020-01-012020-06-300001421517us-gaap:StandbyLettersOfCreditMembererii:LoanAndPledgeAgreementMember2021-01-012021-06-300001421517erii:LoanAndPledgeAgreementMembererii:OtherFinancialInstitutionMemberus-gaap:LineOfCreditMember2021-06-30xbrli:pure0001421517us-gaap:StandbyLettersOfCreditMembererii:LoanAndPledgeAgreementMemberus-gaap:LineOfCreditMember2021-01-012021-06-300001421517us-gaap:StandbyLettersOfCreditMember2021-06-300001421517us-gaap:StandbyLettersOfCreditMember2020-12-3100014215172021-03-3100014215172020-03-310001421517erii:March2021AuthorizationMember2021-03-090001421517erii:March2021AuthorizationMember2021-01-012021-06-300001421517us-gaap:ProductMembererii:WaterMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517us-gaap:ProductMemberus-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517us-gaap:ProductMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517us-gaap:ProductMembererii:WaterMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517us-gaap:ProductMemberus-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517us-gaap:ProductMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517us-gaap:OperatingSegmentsMember2021-04-012021-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517us-gaap:OperatingSegmentsMember2021-01-012021-06-300001421517us-gaap:CorporateNonSegmentMember2021-04-012021-06-300001421517us-gaap:CorporateNonSegmentMember2021-01-012021-06-300001421517us-gaap:ProductMembererii:WaterMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517us-gaap:ProductMemberus-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517us-gaap:ProductMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517us-gaap:ProductMembererii:WaterMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517us-gaap:ProductMemberus-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517us-gaap:ProductMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517us-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-04-012020-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-300001421517us-gaap:OperatingSegmentsMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517us-gaap:OperatingSegmentsMember2020-04-012020-06-300001421517erii:WaterMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517us-gaap:OilAndGasMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517us-gaap:OperatingSegmentsMember2020-01-012020-06-300001421517us-gaap:CorporateNonSegmentMember2020-04-012020-06-300001421517us-gaap:CorporateNonSegmentMember2020-01-012020-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerAMember2021-04-012021-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerAMember2020-04-012020-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerAMember2021-01-012021-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerAMember2020-01-012020-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerBMember2021-04-012021-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerBMember2020-04-012020-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerBMember2021-01-012021-06-300001421517erii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembererii:CustomerBMember2020-01-012020-06-300001421517erii:WaterMembererii:CustomerCMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-06-300001421517erii:CustomerDMembererii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-04-012020-06-300001421517erii:CustomerDMembererii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-06-300001421517erii:CustomerDMembererii:WaterMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-06-300001421517us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:LicenseAndServiceMember2020-01-012020-06-30

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, 2021
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
erii-20210630_g1.jpg
Energy Recovery, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware01-0616867
(State or Other Jurisdiction of Incorporation)(I.R.S. Employer Identification No.)

1717 Doolittle Drive, San Leandro, California 94577
(Address of Principal Executive Offices) (Zip Code)

(510483-7370
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueERIIThe Nasdaq Stock Market LLC

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  
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 30, 2021, there were 57,152,300 shares of the registrant’s common stock outstanding.





Table of Contents
ENERGY RECOVERY, INC.
TABLE OF CONTENTS
Page No.

Energy Recovery, Inc. | Q2'2021 Form 10-Q



Table of Contents
Forward-Looking Information

This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2021, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (the “MD&A”) and certain information incorporated by reference, contain 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 statements. 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 statements for any reason.

Forward-looking statements in this report include, without limitation, statements about the following:
our belief that the pressure exchanger is the industry standard for energy recovery in the seawater reverse osmosis (“SWRO”) industry;
our belief that pressure exchanger technology can provide benefits to our customers, including the reduction of capital expenditures and energy use;
our belief that the integration of Environmental, Social and Governance (“ESG”) principles into our corporate and risk management strategies can strengthen our existing business as well as our efforts to develop new applications of pressure exchanger technology for high-pressure fluid-flow environments;
our belief that our enhanced safety measures will allow us to help contain the spread of coronavirus (“COVID-19”);
the development of major public health concerns, including the COVID-19 outbreak or other pandemics arising globally, and the future impact of such major public health concerns, and specifically in the short-term the COVID-19 pandemic, on our business and operations;
our belief that our pressure exchanger technology can address inefficiencies and waste within industrial systems and processes that involve high-pressure and low-pressure fluid flows;
our belief that our PX® Pressure Exchanger® (“PX”) has helped make SWRO desalination an economically viable and more sustainable option in the production of potable water;
our belief that markets not traditionally associated with desalination, including the United States of America (“U.S.”) will inevitably develop and provide further revenue growth opportunities;
our belief that, as the existing thermal technology is replaced with reverse osmosis (“RO”) technology, demand for our products will be created;
our belief that ongoing operating costs rather than capital expenditures is the key factor in the selection of an energy recovery device (“ERD”) solution for megaproject (“MPD”) customers;
our belief that our PX offers market-leading efficiency and reduction of total lifecycle cost to the end client;
our estimate that MPD customer projects represent revenue opportunities from approximately $1 million to $18 million;
our belief that initial capital expenditure rather than future ongoing operating costs is the key factor in selection of an ERD solution for original equipment manufacturer (“OEM”) projects;
our belief that our PX has a competitive advantage, as compared to the Flowserve Corporation’s DWEER product, because our devices are made with highly durable and corrosion-resistant aluminum oxide (“alumina”) ceramic parts that are designed for a life of more than 25 years, are warrantied for high efficiencies, and cause minimal unplanned downtime, resulting in lower lifecycle costs;
Energy Recovery, Inc. | Q2'2021 Form 10-Q | FLS 1



Table of Contents
our belief that our PX has a distinct competitive advantage over Fluid Equipment Development Company’s (“FEDCO”) turbochargers and Danfoss Group’s iSave ERDs because our devices provide up to 98% efficiency, have lower lifecycle maintenance costs, and are made of highly durable and corrosion-resistant alumina ceramic parts;
our belief that our Turbochargers compete favorably with FEDCO’s turbochargers based on efficiency, price, and because our Turbochargers have design advantages that enhance efficiency, operational flexibility and serviceability;
our belief that our existing cash and cash equivalents, our short-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;
our expectation that we will be able to enforce our intellectual property (“IP”) rights;
our expectation that the adoption of new accounting standards will not have a material impact on our financial position or results of operations; and
other factors disclosed under the MD&A and Item 3, “Quantitative and Qualitative Disclosures about Market Risk,” and elsewhere in this Form 10-Q.

You should not place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date of the filing of this Quarterly Report 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 August 6, 2021. We assume no obligation to update any such forward-looking statements, certain risks and uncertainties which could cause actual results to differ materially from those projected in the forward-looking statements, as disclosed from time to time in our Annual 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. 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, and in our Annual Reports on Form 10-K, and from time-to-time, in our results disclosed on our Current Reports on Form 8-K.

We provide our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, Proxy Statements, 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 Quarterly Report 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. | Q2'2021 Form 10-Q | FLS 2



Table of Contents
PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements (unaudited)

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,
2021
December 31,
2020
(In thousands)
ASSETS
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 
LIABILITIES AND STOCKHOLDERS’ EQUITY
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 
Commitments and contingencies (Note 7)
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 

See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2021 Form 10-Q | 1



Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 (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 assets3 4 7 8 
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 

See Accompanying Notes to Condensed Consolidated Financial Statements


Energy Recovery, Inc. | Q2'2021 Form 10-Q | 2



Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 (In thousands)
Net income$1,069 $16,926 $7,935 $17,547 
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments5 10 (20)(15)
Unrealized (loss) gain on investments(38)441 (86)171 
Total other comprehensive (loss) income, net of tax(33)451 (106)156 
Comprehensive income$1,036 $17,377 $7,829 $17,703 

See Accompanying Notes to Condensed Consolidated Financial Statements


Energy Recovery, Inc. | Q2'2021 Form 10-Q | 3



Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
 (In thousands, except shares)
Common stock
Beginning balance$63 $61 $62 $61 
Issuance of common stock, net  1  
Ending balance63 61 63 61 
Additional paid-in capital
Beginning balance187,083 171,954 179,161 170,028 
Issuance of common stock, net2,638 687 8,696 1,105 
Stock-based compensation1,366 1,088 3,230 2,596 
Ending balance191,087 173,729 191,087 173,729 
Accumulated other comprehensive (loss) income
Beginning balance(20)(332)53 (37)
Other comprehensive (loss) income
Foreign currency translation adjustments5 10 (20)(15)
Unrealized (loss) gain on investments(38)441 (86)171 
Total other comprehensive (loss) income, net(33)451 (106)156 
Ending balance(53)119 (53)119 
Treasury stock
Beginning balance(30,486)(30,486)(30,486)(30,486)
Common stock repurchased(11,554) (11,554) 
Ending balance(42,040)(30,486)(42,040)(30,486)
Retained earnings
Beginning balance29,700 (2,932)22,834 (3,553)
Net income1,069 16,926 7,935 17,547 
Ending balance30,769 13,994 30,769 13,994 
Total stockholders’ equity$179,826 $157,417 $179,826 $157,417 
Common stock issued (shares)
Beginning balance62,877,567 60,999,233 61,798,004 60,717,702 
Issuance of common stock, net389,726 134,084 1,469,289 415,615 
Ending balance63,267,293 61,133,317 63,267,293 61,133,317 
Treasury stock (shares)
Beginning balance5,455,935 5,455,935 5,455,935 5,455,935 
Common stock repurchased656,938  656,938  
Ending balance6,112,873 5,455,935 6,112,873 5,455,935 
Total common stock outstanding (shares)57,154,420 55,677,382 57,154,420 55,677,382 


See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2021 Form 10-Q | 4



Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,
20212020
(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)
Other5  
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 

See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q2'2021 Form 10-Q | 5


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 — Description of Business and Significant Accounting Policies

Energy Recovery, Inc. and its wholly-owned subsidiaries (the “Company” or “Energy Recovery”) create technologies that solve complex challenges for industrial fluid-flow markets worldwide. Building on the Company’s pressure exchanger technology platform, the Company designs and manufactures solutions that improve operational efficiency by reducing waste, energy consumption and costs across a range of industrial processes. What began as a game-changing invention for desalination has grown into a global business advancing the environmental sustainability of the Company’s customers’ operations in multiple industries. The Company’s solutions are marketed, sold in, or developed for, the fluid-flow and gas markets, such as water, industrial waste, oil & gas, chemical processing and refrigeration, under the trademarks ERI®, Ultra PX, PX®, Pressure Exchanger®, PX Pressure Exchanger® (“PX”), PX PowerTrain, VorTeq, IsoBoost®, AT, AquaBold, and PX G1300. The Company owns, manufactures and/or develops its solutions, in whole or in part, in the United States of America (“U.S.”).

Basis of Presentation

The Condensed 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 accompanying Condensed 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, 2020 Condensed 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, 2021 unaudited Condensed 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, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2021 (the “2020 Annual Report”).

All adjustments consisting of normal recurring adjustments that are necessary to present fairly the financial position, results of operations and cash flows for the interim periods have been made. 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 the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, and certain notes to the Condensed Consolidated Financial Statements, to conform to the current period presentation.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements, in conformity with GAAP, requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes.

The accounting policies that reflect the Company’s more 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; valuation of stock options; valuation and impairment of goodwill; inventory; 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.

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 6


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Due to the novel coronavirus (“COVID-19”) pandemic, and the impact on the Company’s customers, there has been uncertainty and disruption in the global economy and financial markets. 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 August 6, 2021, the date of issuance of this Quarterly Report 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 update publicly these estimates for any reason after the date of this Quarterly Report on Form 10-Q, except as required by law.

Significant Accounting Policies

Except for adopting new accounting pronouncements, as noted under “Recently Adopted Accounting Pronouncements,” there have been no material changes to the Company’s significant accounting policies in Note 1, “Description of Business and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data,” in the 2020 Annual Report.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard is effective for interim and annual periods beginning after December 15, 2020. The Company adopted ASU 2019-12 on January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial condition, results of operations, and cash flows.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provided optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The FASB later issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, to clarify the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848 (“ASU 2021-01”). Entities may apply the provisions of the new standards as of the beginning of the reporting period when the election is made (i.e., as early as the first quarter of 2020). Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed. An entity may elect to apply amendments prospectively through December 31, 2022. The optional expedients were available to be used upon issuance of this guidance but the Company has not yet applied the guidance because the Company has not yet modified its existing contract for reference rate reform. The Company does not expect the provisions of ASU 2020-04 or ASU 2021-01 to have a material impact on its financial condition, results of operation, and cash flows.

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 7


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 — Revenue

Disaggregation of Revenue

The following tables present the disaggregated revenues by product and service line, product revenue by geography based on the “shipped to” addresses of the Company’s customers, product revenue by channel, and product revenue by segment (Water and Emerging Technologies segment). Sales and usage-based taxes are excluded from revenues. See Note 10, “Segment Reporting,” for further discussion related to the Company’s segments.
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
WaterEmerging TechnologiesTotalWaterEmerging TechnologiesTotal
(In thousands)
Revenue by product and service line
PXs, pumps and turbo devices, and other$20,568 $39 $20,607 $49,508 $39 $49,547 
Revenue by primary geographical markets
Middle East and Africa$16,401 $39 $16,440 $37,361 $39 $37,400 
Asia2,325  2,325 9,503  9,503 
Americas945  945 1,368  1,368 
Europe897  897 1,276  1,276 
Total revenue$20,568 $39 $20,607 $49,508 $39 $49,547 
Product revenue by channel
Megaproject$13,236 $39 $13,275 $36,993 $39 $37,032 
Original equipment manufacturer4,274  4,274 7,065  7,065 
Aftermarket3,058  3,058 5,450  5,450 
Total product revenue$20,568 $39 $20,607 $49,508 $39 $49,547 

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 8


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended June 30, 2020Six Months Ended June 30, 2020
WaterEmerging TechnologiesTotalWaterEmerging TechnologiesTotal
(In thousands)
Revenue by product and service line
PXs, pumps and turbo devices, and other$19,256 $ $19,256 $38,257 $ $38,257 
License and development 24,352 24,352  26,895 26,895 
Total revenue$19,256 $24,352 $43,608 $38,257 $26,895 $65,152 
Revenue by primary geographical markets
Middle East and Africa$16,504 $ $16,504 $32,735 $ $32,735 
Asia617  617 1,392  1,392 
Americas1,161 24,352 25,513 2,362 26,895 29,257 
Europe974  974 1,768  1,768 
Total product revenue$19,256 $24,352 $43,608 $38,257 $26,895 $65,152 
Product revenue by channel
Megaproject$11,965 $ $11,965 $26,422 $ $26,422 
Original equipment manufacturer4,050  4,050 7,606  7,606 
Aftermarket3,241  3,241 4,229  4,229 
Total product revenue$19,256 $ $19,256 $38,257 $ $38,257 

In June 2020, the Company and Schlumberger Technology Corporation (“Schlumberger”) entered into an agreement to terminate the 2015 license agreement between the Company and Schlumberger (the “VorTeq License Agreement”) to provide Schlumberger with the exclusive worldwide rights to the VorTeq technology. The termination of the VorTeq License Agreement was effective June 1, 2020. 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.

Contract Balances

The following table presents contract balances by category.
June 30,
2021
December 31,
2020
(In thousands)
Accounts receivable, net$7,599 $11,792 
Contract assets:
Contract assets, current (included in prepaid expenses and other assets, current)$536 $1,309 
Contract assets, non-current (included in other assets, non-current) 583 
Total contract assets$536 $1,892 
Contract liabilities:
Contract liabilities, current$1,117 $1,552 
Contract liabilities, non-current (included in other liabilities, non-current)89 88 
Total contract liabilities$1,206 $1,640 

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 9


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company records contract liabilities when cash payments are received in advance of the Company’s performance. The following table presents significant changes in contract liabilities during the period.
June 30,
2021
December 31,
2020
(In thousands)
Contract liabilities balance, beginning of year$1,640 $28,866 
Revenue recognized(1,232)(28,414)
Cash received, excluding amounts recognized as revenue during the period798 1,188 
Contract liabilities balance, end of period$1,206 $1,640 

Transaction Price Allocated to the Remaining Performance Obligations

The following table presents the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied.
 June 30,
2021
(In thousands)
Future performance obligations by year
2021 (remaining six months)$4,036 
202212,191 
Total future performance obligations$16,227 

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 10


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 — Net Income Per Share

Net income for the reported period is divided by the weighted average number of common shares outstanding during the reported period to calculate basic net income per common share. Basic net income per share excludes any dilutive effect of stock options and restricted stock units ("RSU").

Diluted net income per common share reflects the potential dilution that would occur if outstanding stock options to purchase common stock were exercised for shares of common stock, using the treasury stock method, and the shares of common stock underlying each outstanding RSU were issued (outstanding stock options to purchase common stock and RSUs collectively referred to as, “stock awards”).

The following table presents the computation of basic and diluted net income per share.
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
(In thousands, except per share amounts)
Numerator
Net income$1,069 $16,926 $7,935 $17,547 
Denominator (weighted average shares)
Basic common shares outstanding57,253 55,614 57,066 55,513 
Dilutive stock awards1,746 757 1,756 925 
Diluted common shares outstanding58,999 56,371 58,822 56,438 
Net income per share
Basic0.02 0.30 0.14 0.32 
Diluted0.02 0.30 0.13 0.31 

Certain shares of common stock issuable under stock awards have been omitted from the diluted net income per share calculations because their inclusion is considered anti-dilutive. The following table presents the weighted potential common shares issuable under stock awards that were excluded from the computation of diluted net income per share.
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
(In thousands)
Anti-dilutive stock awards6 2,893 457 1,989 

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 11


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 — Other Financial Information

Cash, Cash Equivalents and Restricted Cash

The Condensed Consolidated Statements of Cash Flows explain the changes in the total of cash, cash equivalents and restricted cash. The following table presents a reconciliation of cash, cash equivalents and restricted cash(1) reported within the Condensed Consolidated Balance Sheets that sum to the total of such amounts presented.
June 30,
2021
December 31,
2020
June 30,
2020
(In thousands)
Cash and cash equivalents$103,302 $94,255 $62,970 
Restricted cash, non-current (included in other assets, non-current)103 103 102 
Total cash, cash equivalents and restricted cash$103,405 $94,358 $63,072 
(1)    The Company pledged and deposited cash amounts into restricted cash accounts in connection with the Company’s credit cards.

Accounts Receivable, net

The following table presents the components of accounts receivable, net.
 June 30,
2021
December 31,
2020
(In thousands)
Accounts receivable, gross$7,716 $12,189 
Allowance for doubtful accounts (1)
(117)(397)
Accounts receivable, net$7,599 $11,792 
(1)    The Company wrote-off $0.3 million of uncollectible receivables, which had been previously reserved as of December 31, 2020, during the second quarter of 2021.

Inventories

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method. The following table presents inventory by category.
 June 30,
2021
December 31,
2020
(In thousands)
Raw materials$5,161 $4,260 
Work in process2,740 2,360 
Finished goods7,388 5,128 
Inventories, net$15,289 $11,748 

Valuation adjustments for excess and obsolete inventory reflected as a reduction of inventory was $0.6 million and $0.5 million at June 30, 2021 and December 31, 2020, respectively.

Prepaid and Other Current Assets
 June 30,
2021
December 31,
2020
(In thousands)
Contract assets, current$536 $1,309 
Cloud computing arrangement implementation costs1,095 1,087 
Other prepaid expenses and current assets2,634 2,554 
Total prepaid and other current assets$4,265 $4,950 

Energy Recovery, Inc. | Q2'2021 Form 10-Q | 12


Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Goodwill and Other Intangible Assets
June 30,
2021
December 31,
2020
(In thousands)
Goodwill$12,790 $12,790 
Other intangible assets43 49 
Total goodwill and other intangible assets$12,833 $12,839 

Accrued Expenses and Other Current Liabilities
 June 30,
2021
December 31,
2020
(In thousands)
Payroll, incentives and commissions payable$5,614 $8,400