(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Page No. | ||
Condensed Consolidated Balance Sheets — March 31, 2025 and December 31, 2024 | ||
Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2025 and 2024 | ||
Condensed Consolidated Statements of Comprehensive Loss — Three Months Ended March 31, 2025 and 2024 | ||
Condensed Consolidated Statements of Stockholders’ Equity — Three Months Ended March 31, 2025 and 2024 | ||
Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2025 and 2024 | ||
Exhibit Index | ||
•our belief that our PX offers market-leading value with the highest technological and economic benefit; |
•our belief that leveraging our pressure exchanger technology will unlock new commercial opportunities in the future; |
•our belief that our PX G1300™ can contribute to help make CO2-based refrigeration more economically viable in a broader range of climates; |
•our belief that our technology helps our customer achieve environmentally sustainable operations; |
•our expectation that sales outside of the U.S. will remain a significant portion of our revenue; |
•the scale of the environmental impact from the use of our solutions; |
•the timing of our receipt of payment for products or services from our customers; |
•our belief that our existing cash and cash equivalents, our short and/or long-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 expectations relating to the amount and timing of recognized revenue from our projects; |
•our expectation that we will continue to receive a tax benefit related to U.S. federal foreign-derived intangible income and research and development tax credit; |
•the outcome of proceedings, lawsuits, disputes and claims; |
•the impact of losses due to indemnification obligations; |
•other factors disclosed under the MD&A and Part I, Item 3, “Quantitative and Qualitative Disclosures about Market Risk,” and elsewhere in this Form 10-Q. |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ | $ | |
Short-term investments | |||
Accounts receivable, net | |||
Inventories, net | |||
Prepaid expenses and other assets | |||
Total current assets | |||
Long-term investments | |||
Deferred tax assets, net | |||
Property and equipment, net | |||
Operating lease, right of use asset | |||
Goodwill | |||
Other assets, non-current | |||
Total assets | $ | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
Current liabilities: | |||
Accounts payable | $ | $ | |
Accrued expenses and other liabilities | |||
Lease liabilities | |||
Contract liabilities | |||
Total current liabilities | |||
Lease liabilities, non-current | |||
Other liabilities, non-current | |||
Total liabilities | |||
Commitments and contingencies (Note 7) | |||
Stockholders’ equity: | |||
Common stock | |||
Additional paid-in capital | |||
Accumulated other comprehensive income | |||
Treasury stock | ( | ( | |
Retained earnings | |||
Total stockholders’ equity | |||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | |||
2025 | 2024 | ||
(In thousands, except per share data) | |||
Revenue | $ | $ | |
Cost of revenue | |||
Gross profit | |||
Operating expenses: | |||
General and administrative | |||
Sales and marketing | |||
Research and development | |||
Restructuring charges | |||
Total operating expenses | |||
Loss from operations | ( | ( | |
Other income (expense): | |||
Interest income | |||
Other non-operating income (expense), net | ( | ||
Total other income, net | |||
Loss before income taxes | ( | ( | |
Benefit from income taxes | ( | ( | |
Net loss | $( | $( | |
Net loss per share: | |||
Basic | $ ( | $ ( | |
Diluted | $ ( | $ ( | |
Number of shares used in per share calculations: | |||
Basic and diluted |
Three Months Ended March 31, | ||||
2025 | 2024 | |||
(In thousands) | ||||
Net loss | $( | $( | ||
Other comprehensive loss, net of tax | ||||
Foreign currency translation adjustments | ( | |||
Unrealized loss on investments | ( | ( | ||
Total other comprehensive loss, net of tax | ( | ( | ||
Comprehensive loss | $( | $( |
Three Months Ended March 31, | ||||
2025 | 2024 | |||
(In thousands, except shares) | ||||
Common stock | ||||
Beginning balance | $ | $ | ||
Issuance of common stock, net | — | |||
Ending balance | ||||
Additional paid-in capital | ||||
Beginning balance | ||||
Issuance of common stock, net | ||||
Stock-based compensation | ||||
Ending balance | ||||
Accumulated other comprehensive income (loss) | ||||
Beginning balance | ( | |||
Other comprehensive loss | ||||
Foreign currency translation adjustments | ( | |||
Unrealized loss on investments | ( | ( | ||
Total other comprehensive loss, net | ( | ( | ||
Ending balance | ( | |||
Treasury stock | ||||
Beginning balance | ( | ( | ||
Common stock repurchased | ( | — | ||
Ending balance | ( | ( | ||
Retained earnings | ||||
Beginning balance | ||||
Net loss | ( | ( | ||
Ending balance | ||||
Total stockholders’ equity | $ | $ | ||
Common stock issued (shares) | ||||
Beginning balance | ||||
Issuance of common stock, net | ||||
Ending balance | ||||
Treasury stock (shares) | ||||
Beginning balance | ||||
Common stock repurchased | — | |||
Ending balance | ||||
Total common stock outstanding (shares) |
Three Months Ended March 31, | ||||
2025 | 2024 | |||
(In thousands) | ||||
Cash flows from operating activities: | ||||
Net loss | $( | $( | ||
Adjustments to reconcile net loss to cash provided by operating activities | ||||
Stock-based compensation | ||||
Depreciation and amortization | ||||
Right of use asset amortization | ||||
Accretion (amortization) of discounts (premiums) on investments | ( | ( | ||
Deferred income taxes | ( | ( | ||
Impairment of long-lived assets | ||||
Other non-cash adjustments | ||||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | ||||
Contract assets | ||||
Inventories, net | ( | ( | ||
Prepaid and other assets | ( | ( | ||
Accounts payable | ||||
Accrued expenses and other liabilities | ( | ( | ||
Contract liabilities | ||||
Net cash provided by operating activities | ||||
Cash flows from investing activities: | ||||
Maturities of marketable securities | ||||
Purchases of marketable securities | ( | ( | ||
Capital expenditures | ( | ( | ||
Proceeds from sales of fixed assets | ||||
Net cash provided by (used in) investing activities | ( | |||
Cash flows from financing activities: | ||||
Net proceeds from issuance of common stock | ||||
Repurchase of common stock | ( | |||
Net cash (used in) provided by financing activities | ( | |||
Effect of exchange rate differences on cash and cash equivalents | ( | |||
Net change in cash, cash equivalents and restricted cash | ||||
Cash, cash equivalents and restricted cash, beginning of year | ||||
Cash, cash equivalents and restricted cash, end of period | $ | $ |
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||||||
Water | Emerging Technologies | Total | Water | Emerging Technologies | Total | |||||||
(In thousands) | ||||||||||||
Geographical market | ||||||||||||
Asia1 | $ | $ | $ | $ | $ | $ | ||||||
Middle East and Africa | ||||||||||||
Europe | ||||||||||||
Americas | ||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | ||||||
Channel | ||||||||||||
Aftermarket | $ | $ | $ | $ | $ | $ | ||||||
Original equipment manufacturer | ||||||||||||
Megaproject | ||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
March 31, 2025 | December 31, 2024 | |||
(In thousands) | ||||
Accounts receivable, net | $ | $ | ||
Contract assets, current (included in prepaid expenses and other assets) | $ | $ | ||
Contract liabilities: | ||||
Contract liabilities, current | $ | $ | ||
Total contract liabilities | $ | $ |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Contract liabilities, beginning of year | $ | $ | |
Revenue recognized | ( | ( | |
Cash received, excluding amounts recognized as revenue during the period | |||
Contract liabilities, end of period | $ | $ |
Period | Remaining Performance Obligations | ||
(In thousands) | |||
2025 (remaining nine months) | $ | ||
2026 | |||
Total | $ |
Three Months Ended March 31, | ||||
2025 | 2024 | |||
(In thousands, except per share amounts) | ||||
Numerator | ||||
Net loss | $( | $( | ||
Denominator (weighted average shares) | ||||
Basic and dilutive common shares outstanding | ||||
Net loss per share | ||||
Basic | $ ( | $ ( | ||
Diluted | $ ( | $ ( |
Three Months Ended March 31, | |||
2025 | 2024 | ||
(In thousands) | |||
Anti-dilutive equity award shares |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Cash and cash equivalents | $ | $ | |
Restricted cash, non-current (included in other assets, non-current) | |||
Total cash, cash equivalents and restricted cash | $ | $ |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Accounts receivable, gross | $ | $ | |
Allowance for doubtful accounts | ( | ( | |
Accounts receivable, net | $ | $ |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Raw materials | $ | $ | |
Work in process | |||
Finished goods | |||
Inventories, gross | |||
Valuation adjustments for excess and obsolete inventory | ( | ( | |
Inventories, net | $ | $ |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Accrued expenses and other liabilities, current | |||
Payroll, incentives and commissions payable | $ | $ | |
Warranty reserve | |||
Restructuring accrual | |||
Income taxes payable | |||
Other accrued expenses and other liabilities | |||
Total accrued expenses and other liabilities | |||
Other liabilities, non-current | |||
Total accrued expenses, and current and non-current other liabilities | $ | $ |
Segment | Corporate | Total Expense | ||||||
Water | Emerging Technology | |||||||
(In thousands) | ||||||||
Amount recognized in 2024 | ||||||||
Amount recognized in 2025 | ||||||||
Total restructuring expenses recognized | $ | $ | $ | $ |
Severance and Benefits | |
(In thousands) | |
Balance, as of December 31, 2024 | $ |
Restructuring provision | |
Cash paid | ( |
Balance, as of March 31, 2025 | $ |
March 31, 2025 | December 31, 2024 | ||||||||||||||||
Pricing Category | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||
(In thousands) | |||||||||||||||||
Cash equivalents | |||||||||||||||||
Money market securities | Level 1 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
U.S. treasury securities | Level 2 | ||||||||||||||||
Total cash equivalents | |||||||||||||||||
Short-term investments | |||||||||||||||||
U.S. treasury securities | Level 2 | ||||||||||||||||
Corporate notes and bonds | Level 2 | ||||||||||||||||
Total short-term investments | |||||||||||||||||
Long-term investments | |||||||||||||||||
U.S. treasury securities | Level 2 | ||||||||||||||||
Corporate notes and bonds | Level 2 | ( | |||||||||||||||
Municipal and agency notes and bonds | Level 2 | ( | ( | ||||||||||||||
Total long-term investments | ( | ( | |||||||||||||||
Total short and long-term investments | ( | ( | |||||||||||||||
Total | $ | $ | $( | $ | $ | $ | $( | $ |
March 31, 2025 | December 31, 2024 | ||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||
(In thousands) | |||||||
Corporate notes and bonds | ( | ||||||
Municipal and agency notes and bonds | ( | ( | |||||
Total available-for-sale investments with unrealized loss positions | $ | $( | $ | $( |
March 31, 2025 | December 31, 2024 | ||
(In thousands) | |||
Outstanding letters of credit | $ | $ | |
Three Months Ended March 31, | |||
2025 | 2024 | ||
(In thousands, except percentages) | |||
Benefit from income taxes | $( | $( | |
Discrete items | |||
Benefit from income taxes, excluding discrete items | $( | $( | |
Effective tax rate | |||
Effective tax rate, excluding discrete items |
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | ||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | ||||||||
(In thousands) | |||||||||||||||
Revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||
Cost of revenue | |||||||||||||||
Gross profit (loss) | ( | ||||||||||||||
Operating expenses | |||||||||||||||
General and administrative | |||||||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
Restructuring charges | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating income (loss) | $( | $( | $( | $( | $ | $( | $( | $( |
Three Months Ended March 31, | ||||||
Segment | 2025 | 2024 | ||||
Customer A | Water | ** | ||||
Customer B | Water | ** | ||||
Customer C | Water | ** |
Number of Shares Purchased | Average Price Paid per Share(1) | Plan Activity | |||||
(In millions) | |||||||
February 2025 Authorization | $ | ||||||
Repurchases under February 2025 Authorization | $ | ( | |||||
Remaining amount under February 2025 Authorization | $ |
Three Months Ended March 31, | |||||||||||
2025 | 2024 | ||||||||||
Revenue | % of Revenue | Revenue | % of Revenue | Change | |||||||
(In thousands, except percentages) | |||||||||||
Aftermarket | $4,028 | 50% | $4,644 | 38% | $(616) | (13%) | |||||
Original equipment manufacturer | 4,001 | 50% | 3,346 | 28% | 655 | 20% | |||||
Megaproject | 36 | —% | 4,100 | 34% | (4,064) | (99%) | |||||
Total revenue | $8,065 | 100% | $12,090 | 100% | $(4,025) | (33%) |
Three Months Ended March 31, | |||||||||||
2025 | 2024 | ||||||||||
Water | Emerging Technologies | Total | Water | Emerging Technologies | Total | ||||||
(In thousands) | |||||||||||
Asia1 | $3,438 | $— | $3,438 | $1,979 | $— | $1,979 | |||||
Middle East and Africa | 2,880 | 1 | 2,881 | 4,785 | 1 | 4,786 | |||||
Europe | 1,075 | — | 1,075 | 1,386 | — | 1,386 | |||||
Americas | 671 | — | 671 | 3,939 | — | 3,939 | |||||
Total revenue | $8,064 | $1 | $8,065 | $12,089 | $1 | $12,090 |
Three Months Ended March 31, | |||||
2025 | 2024 | Change | |||
(In thousands, except percentage and basis point) | |||||
Gross profit | $4,458 | $7,135 | $(2,677) | ||
Gross margin | 55.3% | 59.0% | (370) bps |
Three Months Ended March 31, | ||||||||||||||||
2025 | 2024 | |||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | |||||||||
(In thousands) | ||||||||||||||||
General and administrative | $1,573 | $755 | $6,246 | $8,574 | $1,922 | $1,018 | $4,626 | $7,566 | ||||||||
Sales and marketing | 3,145 | 1,270 | 491 | 4,906 | 3,745 | 1,807 | 600 | 6,152 | ||||||||
Research and development | 1,178 | 1,823 | — | 3,001 | 1,100 | 3,251 | — | 4,351 | ||||||||
Restructuring charges | 210 | 123 | 206 | 539 | — | — | — | — | ||||||||
Total operating expenses | $6,106 | $3,971 | $6,943 | $17,020 | $6,767 | $6,076 | $5,226 | $18,069 |
Three Months Ended March 31, | |||
2025 | 2024 | ||
(In thousands) | |||
Interest income | $1,073 | $1,442 | |
Other non-operating income (expense), net | 6 | (53) | |
Total other income, net | $1,079 | $1,389 |
Three Months Ended March 31, | |||
2025 | 2024 | ||
(In thousands, except percentages) | |||
Benefit from income taxes | $(1,603) | $(1,285) | |
Discrete items | 52 | 76 | |
Benefit from income taxes, excluding discrete items | $(1,551) | $(1,209) | |
Effective tax rate | 14.0% | 13.5% | |
Effective tax rate, excluding discrete items | 13.5% | 12.7% |
Three Months Ended March 31, | |||||
2025 | 2024 | Change | |||
(In thousands) | |||||
Net cash provided by operating activities | $10,678 | $6,497 | $4,181 | ||
Net cash provided by (used in) investing activities | 12,674 | (4,986) | 17,660 | ||
Net cash (used in) provided by financing activities | (3,874) | 1,190 | (5,064) | ||
Effect of exchange rate differences on cash and cash equivalents | 33 | (19) | 52 | ||
Net change in cash, cash equivalents and restricted cash | $19,511 | $2,682 | $16,829 |
Exhibit Number | Exhibit Description | |
31.1* | ||
31.2* | ||
32.1** | ||
101 | Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, “Financial Information” of this Quarterly Report on Form 10-Q. | |
104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
ENERGY RECOVERY, INC. | |||||
Date: | May 7, 2025 | By: | /s/ DAVID W. MOON | ||
David W. Moon | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
Date: | May 7, 2025 | By: | /s/ MICHAEL S. MANCINI | ||
Michael S. Mancini | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) | |||||