Exhibit 99.1
erilogoh4c.jpg

Energy Recovery Reports its First Quarter 2025 Financial Results

SAN LEANDRO, Calif. - May 7, 2025 – Energy Recovery, Inc. (Nasdaq:ERII) (“Energy Recovery” or the “Company”) today announced its financial results for the first quarter ended March 31, 2025.

First Quarter Highlights
•Q1’25 financial results were in-line with internal expectations and consistent with our communicated expectations for quarterly revenue cadence in 2025.
•Revenue of $8.1 million, a decrease of $4.0 million as compared to Q1’2024 due to timing of revenue from contracted projects.
•Gross margin of 55.3%, a decrease of 370 bps, as compared to Q1’2024, due primarily to a decrease in revenue spread over fixed costs.
•Operating expenses of $17.0 million, a decrease of 5.8%, as compared to Q1’2024, due primarily to a decrease in employee costs, partially offset by $0.5 million of restructuring charges, $0.4 million of impairment costs, and an increase in costs related to our manufacturing transformation.
•Loss from operations of $12.6 million, a decrease of 14.9%, as compared to Q1’2024, mainly due to lower revenue and lower gross margin.
•Net loss of $9.9 million and adjusted EBITDA(1) loss of $8.7 million.
•Cash and investments of $106.7 million, which includes cash, cash equivalents, and short- and long-term investments.

In conjunction with these financial results, management has released a letter to shareholders reviewing business and financial updates from the first quarter and discussing our outlook for 2025. This letter is located under “Financial Info” in the “Investors” section on the Energy Recovery website (https://ir.energyrecovery.com/financial-information).

Financial Highlights
Quarter to Date
202520242025 vs. 2024
(In millions, except net loss per share, percentages and basis points)
Revenue$8.1$12.1down 33%
Gross margin55.3%59.0%down 370 bps
Operating margin(155.8%)(90.4%)NM
Net loss($9.9)($8.3)down 20%
Net loss per share($0.18)($0.14)down $0.04
Effective tax rate14.0%13.5%
Cash provided by operations$10.7$6.5




Non-GAAP Financial Highlights (1)
Quarter to Date
202520242025 vs. 2024
(In millions, except adjusted net loss per share, percentages and basis points)
Adjusted operating margin(120.4%)(59.4%)NM
Adjusted net loss($7.0)($4.6)down 52%
Adjusted net loss per share($0.13)($0.08)down $0.05
Adjusted EBITDA($8.7)($6.2)
Free cash flow$10.5$5.7
(1)Refer to the sections “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for definitions of our non-GAAP financial measures and reconciliations of GAAP to non-GAAP amounts, respectively.
NM    Not Meaningful

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. These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. Potential risks and uncertainties include risks relating to the future demand for the Company’s products, risks relating to performance by our customers and third-party partners, risks relating to the timing of revenue, and 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, 2024, 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.



Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including adjusted operating margin, adjusted net loss, adjusted net loss per share, adjusted EBITDA and free cash flow. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions, and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Notes to the Financial Results
•Adjusted operating margin is a non-GAAP financial measure that the Company defines as loss from operations which excludes i) stock-based compensation; ii) executive transition costs, such as executive search costs, retention costs, one-time severance costs and one-time corporate growth strategy costs; and iii) restructuring charges, divided by revenues.
•Adjusted net loss is a non-GAAP financial measure that the Company defines as net loss which excludes i) stock-based compensation; ii) executive transition costs; iii) restructuring charges; iv) impairment of long-lived assets; and v) the applicable tax effect of the excluded items including the stock-based compensation discrete tax item.
•Adjusted net loss per share is a non-GAAP financial measure that the Company defines as net loss, which excludes i) stock-based compensation; ii) executive transition costs; iii) restructuring charges; iv) impairment of long-lived assets; and v) the applicable tax effect of the excluded items including the stock-based compensation discrete tax item, divided by basic shares outstanding.
•Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net loss which excludes i) depreciation and amortization; ii) stock-based compensation; iii) executive transition costs; iv) restructuring charges; v) impairment of long-lived assets; vi) other income, net, such as interest income and other non-operating income (expense), net; and vii) benefit from income taxes.
•Free cash flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities less capital expenditures.


Conference Call to Discuss Financial Results

LIVE CONFERENCE Q&A CALL:
Wednesday, May 7, 2025, 2:00 PM PT / 5:00 PM ET
US / Canada Toll-Free: +1 (888) 645-4404
Local / International Toll: +1 (862) 298-0702

CONFERENCE Q&A CALL REPLAY:
Available approximately three hours after conclusion of the live call.
Expiration: Saturday, June 7, 2025
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13753398

Investors may also access the live call and the replay over the internet on the “Events” page of the Company’s website located at https://ir.energyrecovery.com/news-events/ir-calendar.




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 (Nasdaq: ERII) is a trusted global leader in energy efficiency technology. Building on the Company’s pressure exchanger technology platform, the Company designs and manufactures reliable, high-performance solutions that generate cost savings and increase energy efficiency across several industries. With a strong foundation in the desalination industry, the Company has delivered transformative solutions that optimize operations and deliver positive environmental impact to its customers worldwide for more than 30 years. Headquartered in the San Francisco Bay Area, the Company has manufacturing and research and development facilities across California with sales and on-site technical support available globally. To learn more, visit https://energyrecovery.com/.


Contact
Investor Relations
ir@energyrecovery.com



ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,
2025		December 31,
2024
(In thousands)
ASSETS
Cash, cash equivalents and investments$106,730 $99,851 
Accounts receivable and contract assets34,787 66,842 
Inventories, net32,410 24,906 
Prepaid expenses and other assets3,850 3,889 
Property, equipment and operating leases23,753 25,119 
Goodwill12,790 12,790 
Deferred tax assets and other assets11,074 9,395 
TOTAL ASSETS$225,394 $242,792 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable, accrued expenses, and other liabilities, current$14,676 $20,837 
Contract liabilities and other liabilities, non-current1,497 628 
Lease liabilities11,108 11,317 
Total liabilities27,281 32,782 
Stockholders’ equity198,113 210,010 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$225,394 $242,792 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended March 31,
 20252024
 (In thousands, except per share data)
Revenue$8,065 $12,090 
Cost of revenue3,607 4,955 
Gross profit4,458 7,135 
Operating expenses
General and administrative8,574 7,566 
Sales and marketing4,906 6,152 
Research and development3,001 4,351 
Restructuring charges539 — 
Total operating expenses17,020 18,069 
Loss from operations(12,562)(10,934)
Other income, net1,079 1,389 
Loss before income taxes(11,483)(9,545)
Benefit from income taxes(1,603)(1,285)
Net loss$(9,880)$(8,260)
Net loss per share
Basic$ (0.18)$ (0.14)
Diluted$ (0.18)$ (0.14)
Number of shares used in per share calculations
Basic54,902 57,102 
Diluted54,902 57,102 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20252024
(In thousands)
Cash flows from operating activities:
Net loss$(9,880)$(8,260)
Non-cash adjustments1,891 3,300 
Net cash provided by operating assets and liabilities18,667 11,457 
Net cash provided by operating activities10,678 6,497 
Cash flows from investing activities:
Net investment in marketable securities12,855 (4,249)
Capital expenditures(191)(824)
Proceeds from sales of fixed assets10 87 
Net cash provided by (used in) investing activities12,674 (4,986)
Cash flows from financing activities:
Net proceeds from issuance of common stock616 1,190 
Repurchase of common stock(4,490)— 
Net cash (used in) provided by financing activities(3,874)1,190 
Effect of exchange rate differences33 (19)
Net change in cash, cash equivalents and restricted cash$19,511 $2,682 
Cash, cash equivalents and restricted cash, end of period$49,268 $70,907 



ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)

Channel Revenue
Three Months Ended March 31,
20252024vs. 2024
(In thousands, except percentages)
Aftermarket$4,028$4,644down 13%
Original equipment manufacturer4,0013,346up 20%
Megaproject364,100down 99%
Total revenue$8,065$12,090down 33%
Segment Activity
Three Months Ended March 31,
20252024
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Revenue$8,064 $1 $— $8,065 $12,089 $1 $— $12,090 
Cost of revenue3,561 46 — 3,607 4,954 1 — 4,955 
Gross profit (loss)4,503 (45)— 4,458 7,135 — — 7,135 
Operating expenses
General and administrative1,573 755 6,246 8,574 1,922 1,018 4,626 7,566 
Sales and marketing3,145 1,270 491 4,906 3,745 1,807 600 6,152 
Research and development1,178 1,823 — 3,001 1,100 3,251 — 4,351 
Restructuring charges210 123 206 539 — — — — 
Total operating expenses6,106 3,971 6,943 17,020 6,767 6,076 5,226 18,069 
Operating income (loss)$(1,603)$(4,016)$(6,943)(12,562)$368 $(6,076)$(5,226)(10,934)
Other income, net1,079 1,389 
Income before income taxes$(11,483)$(9,545)

Stock-based Compensation
 Three Months Ended March 31,
 20252024
(In thousands)
Stock-based compensation expense charged to:
Cost of revenue$148 $343 
General and administrative870 1,407 
Sales and marketing679 1,010 
Research and development266 523 
Total stock-based compensation expense$1,963 $3,283 



ENERGY RECOVERY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1)
(Unaudited)

This press release includes certain non-GAAP financial information because we plan and manage our business using such information. The following table reconciles the GAAP financial information to the non-GAAP financial information.

Quarter-to-Date
Q1'2025Q1'2024
(In millions, except shares, per share and percentages)
Operating margin
(155.8)%(90.4)%
Stock-based compensation24.3 27.2 
Executive transition costs— 3.9 
Restructuring charges6.7 — 
Impairment of long-lived assets4.4 — 
Adjusted operating margin
(120.4)%(59.4)%
Net loss
$(9.9)$(8.3)
Stock-based compensation
2.0 3.3 
Executive transition costs (2)
— 0.4 
Restructuring charges (2)
0.5 — 
Impairment of long-lived assets (2)
0.3 — 
Stock-based compensation discrete tax item0.1 (0.1)
Adjusted net loss
$(7.0)$(4.6)
Net loss per share
$(0.18)$(0.14)
Adjustments to net loss per share (3)
0.05 0.06 
Adjusted net loss per share
$(0.13)$(0.08)
Net loss
$(9.9)$(8.3)
Stock-based compensation2.0 3.3 
Depreciation and amortization1.0 1.0 
Executive transition costs— 0.5 
Restructuring charges0.5 — 
Impairment of long-lived assets0.4 — 
Other income, net
(1.1)(1.4)
Benefit from income taxes(1.6)(1.3)
Adjusted EBITDA
$(8.7)$(6.2)
Free cash flow
Net cash provided by operating activities$10.7 $6.5 
Capital expenditures(0.2)(0.8)
Free cash flow$10.5 $5.7 
(1)Amounts may not total due to rounding.
(2)Amounts presented are net of tax.
(3)Refer to the sections “Use of Non-GAAP Financial Measures” for description of items included in adjustments.