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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 March 31, 2025
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
ER_Logo_Primary_Horiz_RGB-titlepage.jpg
Energy Recovery, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
01-0616867
(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 class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.001 par value
ERII
The 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 April 30, 2025, there were 54,499,225 shares of the registrant’s common stock outstanding.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q)
Table of Contents
TABLE OF CONTENTS
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
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | FLS 1
Table of Contents
Forward-Looking Information
This Quarterly Report on Form 10-Q for the three months ended March 31, 2025, including Part I, Item 2, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” (the “MD&A”), contains 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 statement.  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 statement for any reason.
Forward-looking statements in this report include, without limitation, statements about the following:
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.
You should not place undue reliance on these forward-looking statements.  These forward-looking statements 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 May 7, 2025.  We assume no obligation to update any such forward-looking statements.  Certain risks and uncertainties could cause
actual results to differ materially from those projected in the forward-looking statements.  These forward-looking statements are 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.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | FLS 2
Table of Contents
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, in our Annual Reports on Form 10-K, and from time-to-
time, in our results disclosed in our Current Reports on Form 8-K.  In addition, when preparing the MD&A below, we presume the readers
have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of
Regulation S-K.
We provide our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, Proxy Statements on
Schedule 14A, 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. | Q1'2025 Quarterly Report (Form 10-Q) | 1
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1 — Financial Statements (unaudited)
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
2025
December 31,
2024
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$49,137
$29,627
Short-term investments
34,408
48,392
Accounts receivable, net
32,389
64,066
Inventories, net
32,410
24,906
Prepaid expenses and other assets
6,248
6,665
Total current assets
154,592
173,656
Long-term investments
23,185
21,832
Deferred tax assets, net
10,645
9,004
Property and equipment, net
14,585
15,424
Operating lease, right of use asset
9,168
9,695
Goodwill
12,790
12,790
Other assets, non-current
429
391
Total assets
$225,394
$242,792
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$3,404
$3,109
Accrued expenses and other liabilities
11,272
17,728
Lease liabilities
2,357
2,020
Contract liabilities
1,401
571
Total current liabilities
18,434
23,428
Lease liabilities, non-current
8,751
9,297
Other liabilities, non-current
96
57
Total liabilities
27,281
32,782
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock
67
66
Additional paid-in capital
237,550
235,010
Accumulated other comprehensive income
75
98
Treasury stock
(135,405)
(130,870)
Retained earnings
95,826
105,706
Total stockholders’ equity
198,113
210,010
Total liabilities and stockholders’ equity
$225,394
$242,792
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 2
Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
2025
2024
 
(In thousands, except per share data)
Revenue
$8,065
$12,090
Cost of revenue
3,607
4,955
Gross profit
4,458
7,135
Operating expenses:
General and administrative
8,574
7,566
Sales and marketing
4,906
6,152
Research and development
3,001
4,351
Restructuring charges
539
Total operating expenses
17,020
18,069
Loss from operations
(12,562)
(10,934)
Other income (expense):
Interest income
1,073
1,442
Other non-operating income (expense), net
6
(53)
Total other income, net
1,079
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:
Basic and diluted
54,902
57,102
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 3
Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Three Months Ended March 31,
2025
2024
 
(In thousands)
Net loss
$(9,880)
$(8,260)
Other comprehensive loss, net of tax
Foreign currency translation adjustments
(16)
28
Unrealized loss on investments
(7)
(44)
Total other comprehensive loss, net of tax
(23)
(16)
Comprehensive loss
$(9,903)
$(8,276)
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 4
Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 
Three Months Ended March 31,
 
2025
2024
 
(In thousands, except shares)
Common stock
Beginning balance
$66
$65
Issuance of common stock, net
1
Ending balance
67
65
Additional paid-in capital
Beginning balance
235,010
217,617
Issuance of common stock, net
615
1,190
Stock-based compensation
1,925
3,315
Ending balance
237,550
222,122
Accumulated other comprehensive income (loss)
Beginning balance
98
(44)
Other comprehensive loss
Foreign currency translation adjustments
(16)
28
Unrealized loss on investments
(7)
(44)
Total other comprehensive loss, net
(23)
(16)
Ending balance
75
(60)
Treasury stock
Beginning balance
(130,870)
(80,486)
Common stock repurchased
(4,535)
Ending balance
(135,405)
(80,486)
Retained earnings
Beginning balance
105,706
82,656
Net loss
(9,880)
(8,260)
Ending balance
95,826
74,396
Total stockholders’ equity
$198,113
$216,037
Common stock issued (shares)
Beginning balance
66,182,906
65,029,459
Issuance of common stock, net
350,146
448,455
Ending balance
66,533,052
65,477,914
Treasury stock (shares)
Beginning balance
11,397,045
8,148,512
Common stock repurchased
279,295
Ending balance
11,676,340
8,148,512
Total common stock outstanding (shares)
54,856,712
57,329,402
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 5
Table of Contents
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2025
2024
(In thousands)
Cash flows from operating activities:
Net loss
$(9,880)
$(8,260)
Adjustments to reconcile net loss to cash provided by operating activities
Stock-based compensation
1,963
3,283
Depreciation and amortization
962
1,029
Right of use asset amortization
464
431
Accretion (amortization) of discounts (premiums) on investments
(231)
(231)
Deferred income taxes
(1,641)
(1,328)
Impairment of long-lived assets
353
Other non-cash adjustments
21
116
Changes in operating assets and liabilities:
Accounts receivable, net
31,677
21,882
Contract assets
378
Inventories, net
(7,645)
(5,723)
Prepaid and other assets
(37)
(545)
Accounts payable
176
1,140
Accrued expenses and other liabilities
(6,712)
(7,589)
Contract liabilities
830
2,292
Net cash provided by operating activities
10,678
6,497
Cash flows from investing activities:
Maturities of marketable securities
27,224
16,534
Purchases of marketable securities
(14,369)
(20,783)
Capital expenditures
(191)
(824)
Proceeds from sales of fixed assets
10
87
Net cash provided by (used in) investing activities
12,674
(4,986)
Cash flows from financing activities:
Net proceeds from issuance of common stock
616
1,190
Repurchase of common stock
(4,490)
Net cash (used in) provided by financing activities
(3,874)
1,190
Effect of exchange rate differences on cash and cash equivalents
33
(19)
Net change in cash, cash equivalents and restricted cash
19,511
2,682
Cash, cash equivalents and restricted cash, beginning of year
29,757
68,225
Cash, cash equivalents and restricted cash, end of period
$49,268
$70,907
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 6
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”) designs and manufactures reliable,
high-performance solutions that generate cost savings by increasing energy efficiency and reducing carbon emissions across several
industries.  Leveraging the Company’s pressure exchanger technology, which generates little to no emissions when operating, the Company
believes its solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of commercial and
industrial processesAs the world coalesces around the urgent need to address climate change and its impacts, the Company is helping
companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint.  The Company
believes that its customers do not have to sacrifice quality and cost savings for sustainability and the Company is committed to developing
solutions that drive long-term value – both financial and environmental.  The Company’s solutions are marketed, sold in, and developed for,
the fluid-flow and gas markets, such as seawater and wastewater desalination, natural gas, chemical processing and CO2-based refrigeration
systems, under the trademarks ERI®, PX®, Pressure Exchanger®, PX® Pressure Exchanger® (“PX”), Ultra PX, PX G, PX G1300®,
PX PowerTrain, AT, and Aquabold.  The Company owns, manufactures and/or develops its solutions, in whole or in part, in the United
States of America (the “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, 2024 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 March 31, 2025 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, 2024 included in the Company’s Annual
Report on Form 10-K filed with the SEC on February 26, 2025 (the “2024 Annual Report”).
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.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 7
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 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; stock-based compensation expense;
equipment useful life and valuation; goodwill valuation and impairment; inventory valuation and allowances, 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.
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 May 7, 2025, 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 publicly update these estimates for any
reason after the date of this Quarterly Report on Form 10-Q, except as required by law.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies in Note 1, “Description of Business and
Significant Accounting Policies - Significant Accounting Policies,” of the Notes to Consolidated Financial Statements included in Item 8,
“Financial Statements and Supplementary Data,” of the 2024 Annual Report. See Note 12, “Stock-Based Compensation - Performance
Restricted Stock Units” for further discussion regarding the Company’s Performance Restricted Stock Units (“PRSUs”) issued during the
three months ended March 31, 2025. 
Recently Issued Accounting Pronouncement Not Yet Adopted
There have been no issued accounting pronouncements that have not yet been adopted during the three months ended March 31,
2025 that apply to the Company other than the pronouncements disclosed in Note 1, “Description of Business and Significant Accounting
Policies - Recently Issued Accounting Pronouncement Not Yet Adopted,” of the Notes to Consolidated Financial Statements included in Item
8, “Financial Statements and Supplementary Data,” of the 2024 Annual Report.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 8
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2Revenue
Disaggregation of Revenue
The following table presents the disaggregated revenues by segment, and within each segment, by geographical market based on the
customer “shipped to” address, and by channel customers.  Sales and usage-based taxes are excluded from revenues.  See Note 9,
Segment Reporting,” for further discussion related to the Company’s segments.
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
$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
Channel
Aftermarket
$4,027
$1
$4,028
$4,643
$1
$4,644
Original equipment manufacturer
4,001
4,001
3,346
3,346
Megaproject
36
36
4,100
4,100
Total revenue
$8,064
$1
$8,065
$12,089
$1
$12,090
1 Within the Asia market, India represented revenue of $1,456, or 18% of total revenue during the three months ended March 31, 2025.
Contract Balances
The following table presents contract balances by category.
March 31,
2025
December 31,
2024
(In thousands)
Accounts receivable, net
$32,389
$64,066
Contract assets, current (included in prepaid expenses and other assets)
$2,398
$2,776
Contract liabilities:
Contract liabilities, current
$1,401
$571
Total contract liabilities
$1,401
$571
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 9
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Contract Liabilities
The Company records contract liabilities, which consist of customer deposits and deferred revenue, when cash payments are
received in advance of the Company’s performance.  The following table presents the change in contract liability balances during the reported
periods.
March 31,
2025
December 31,
2024
(In thousands)
Contract liabilities, beginning of year
$571
$1,187
Revenue recognized
(34)
(1,085)
Cash received, excluding amounts recognized as revenue during the period
864
469
Contract liabilities, end of period
$1,401
$571
Remaining Performance Obligations
As of March 31, 2025, the following table presents the revenue that is expected to be recognized related to performance obligations
that are unsatisfied or partially unsatisfied.
Period
Remaining
Performance
Obligations
(In thousands)
2025 (remaining nine months)
$5,101
2026
3,418
Total
$8,519
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 10
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3Net Loss Per Share
Net loss for the reported period is divided by the weighted average number of basic and diluted common shares outstanding during
the reported period to calculate the basic and diluted net loss per share, respectively.  Outstanding stock options to purchase common
shares, unvested restricted stock units (“RSUs”), and unvested performance restricted stock units (“PRSUs”) are collectively referred to as
“equity awards.”
Basic net loss per share is computed using the weighted average number of common shares outstanding during the period.
Diluted net loss per share is computed using the weighted average number of common and potentially dilutive shares
outstanding during the period, using the treasury stock method.  Any anti-dilutive effect of equity awards outstanding is not
included in the computation of diluted net loss per share.
The following table presents the computation of basic and diluted net loss per share.
Three Months Ended March 31,
2025
2024
(In thousands, except per share amounts)
Numerator
Net loss
$(9,880)
$(8,260)
Denominator (weighted average shares)
Basic and dilutive common shares outstanding
54,902
57,102
Net loss per share
Basic
$ (0.18)
$ (0.14)
Diluted
$ (0.18)
$ (0.14)
The following table presents the equity awards that are excluded from diluted net loss per share because their effect would have been
anti-dilutive.
 
Three Months Ended March 31,
 
2025
2024
(In thousands)
Anti-dilutive equity award shares
2,806
3,286
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 11
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4Other 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, such as cash amounts deposited in restricted cash accounts in connection with the Company’s credit cards.  The following table
presents a reconciliation of cash, cash equivalents and restricted cash, reported for each period within the Condensed Consolidated Balance
Sheets and the Condensed Consolidated Statements of Cash Flows that sum to the total of such amounts.
March 31,
2025
December 31,
2024
(In thousands)
Cash and cash equivalents
$49,137
$29,627
Restricted cash, non-current (included in other assets, non-current)
131
130
Total cash, cash equivalents and restricted cash
$49,268
$29,757
Accounts Receivable, net
 
March 31,
2025
December 31,
2024
(In thousands)
Accounts receivable, gross
$32,610
$64,287
Allowance for doubtful accounts
(221)
(221)
Accounts receivable, net
$32,389
$64,066
Inventories, net
Inventory amounts are stated at the lower of cost or net realizable value, using the first-in, first-out method.
 
March 31,
2025
December 31,
2024
(In thousands)
Raw materials
$9,644
$8,829
Work in process
8,054
6,417
Finished goods
15,582
10,463
Inventories, gross
33,280
25,709
Valuation adjustments for excess and obsolete inventory
(870)
(803)
Inventories, net
$32,410
$24,906
Accrued Expenses and Other Liabilities
 
March 31,
2025
December 31,
2024
(In thousands)
Accrued expenses and other liabilities, current
Payroll, incentives and commissions payable
$4,932
$10,179
Warranty reserve
1,002
1,090
Restructuring accrual
1,029
2,476
Income taxes payable
958
947
Other accrued expenses and other liabilities
3,351
3,036
Total accrued expenses and other liabilities
11,272
17,728
Other liabilities, non-current
96
57
Total accrued expenses, and current and non-current other liabilities
$11,368
$17,785
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 12
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restructuring
During the fourth quarter of fiscal year 2024, the Company implemented a restructuring plan which included reductions in its
workforce in all functions of the organization, primarily in its San Leandro location, in order to lower the Company’s operating cost structure,
and to position the Company for profitable growth.  The Company recorded a restructuring charge of approximately $3.0 million.  This charge
relates to severance and benefits, including reemployment assistance, for 38 terminated employees, which was approximately 15% of the
Company’s workforceThe implementation of the restructuring plan was substantially complete by the end of the first quarter of fiscal year
2025 and the Company does not expect to incur significant additional expenses related to the restructuring.  All expenses associated with the
Company’s restructuring plan are included inRestructuring charges” in the Condensed Consolidated Statements of Operations.
 
Segment
Corporate
Total Expense
 
Water
Emerging
Technology
(In thousands)
Amount recognized in 2024
1,147
832
497
2,476
Amount recognized in 2025
210
123
206
539
Total restructuring expenses recognized
$1,357
$955
$703
$3,015
The following table presents the change in the Company’s restructuring accrual balances during the reported period:
Severance and
Benefits
(In thousands)
Balance, as of December 31, 2024
$2,476
Restructuring provision
539
Cash paid
(1,986)
Balance, as of March 31, 2025
$1,029
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 13
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5Investments and Fair Value Measurements
Fair Value of Financial Instruments
The following table presents the Company’s financial assets measured on a recurring basis by contractual maturity, including pricing
category, amortized cost, gross unrealized gains and losses, and fair value.  As of March 31, 2025 and December 31, 2024, the Company
had no financial liabilities and no Level 3 financial assets.
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
$5,560
$
$
$5,560
$2,580
$
$
$2,580
U.S. treasury
securities
Level 2
5,498
5,498
Total cash equivalents
11,058
11,058
2,580
2,580
Short-term investments
U.S. treasury
securities
Level 2
17,380
17
17,397
20,303
42
20,345
Corporate notes and
bonds
Level 2
16,970
41
17,011
27,995
52
28,047
Total short-term investments
34,350
58
34,408
48,298
94
48,392
Long-term investments
U.S. treasury
securities
Level 2
3,510
13
3,523
999
1
1,000
Corporate notes and
bonds
Level 2
14,598
66
14,664
18,983
65
(13)
19,035
Municipal and
agency notes and
bonds
Level 2
4,999
(1)
4,998
1,799
(2)
1,797
Total long-term investments
23,107
79
(1)
23,185
21,781
66
(15)
21,832
Total short and long-term
investments
57,457
137
(1)
57,593
70,079
160
(15)
70,224
Total
$68,515
$137
$(1)
$68,651
$72,659
$160
$(15)
$72,804
The following table presents a summary of the fair value and gross unrealized losses on the available-for-sale securities that have
been in a continuous unrealized loss position, aggregated by type of investment instrument.  The available-for-sale securities that were in an
unrealized gain position have been excluded from the table.
 
March 31, 2025
December 31, 2024
 
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(In thousands)
Corporate notes and bonds
7,569
(13)
Municipal and agency notes and bonds
3,997
(1)
1,797
(2)
Total available-for-sale investments with unrealized loss positions
$3,997
$(1)
$9,366
$(15)
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 14
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6Lines of Credit
Credit Agreement
The Company entered into a credit agreement with JPMorgan Chase Bank, N.A. (“JPMC”) on December 22, 2021 (as amended, the
Credit Agreement”).  The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of
$50.0 million and includes both a revolving loan and a letters of credit (“LCs”) component. 
Under the Credit Agreement, as of March 31, 2025, there were no revolving loans outstanding.  In addition, under the LCs
component, the Company utilized $15.7 million of the maximum allowable credit line of $30.0 million, which includes newly issued LCs and
previously issued and unexpired stand-by letters of credit (“SBLCs”).
Letters of Credit
The following table presents the total outstanding LCs and SBLCs issued by the Company to its customers related to product
warranty and performance guarantees
March 31,
2025
December 31,
2024
(In thousands)
Outstanding letters of credit
$15,675
$15,708
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 15
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7Commitments and Contingencies
Sublease
On March 10, 2025, the Company entered into an agreement to sublease its Katy, Texas operating lease. The sublease commenced
on March 10, 2025 and will expire on December 31, 2029. The sublease is classified as an operating lease and has a remaining lease term
of 4.75 years as of March 31, 2025. Sublease income was immaterial during the three months ended March 31, 2025 and is recorded as a
reduction of lease expense in general and administrative within the Company’s Condensed Consolidated Statements of Operations.
The Company considered the sublease to be an indicator of impairment of the original lease. The Company compared the
undiscounted cash flows from the sublease to the carrying value of the Katy, Texas operating lease, which included the associated right-of-
use asset and leasehold improvements. The Company concluded that the carrying value was not recoverable as it exceeded the estimated
undiscounted cash flows.
The Company calculated the impairment charge by comparing the carrying value of the Katy, Texas operating lease to its fair value,
which was calculated based on the net discounted cash flows associated with the sublease. The Company recorded a total impairment
charge of $0.4 million, of which $0.2 million and $0.2 million was recorded against the right-of-use asset and the associated leasehold
improvements, respectively. The allocation of the impairment charge was based on the relative carrying value of the assets. The impairment
charge was recorded in general and administrative within the Company’s Condensed Consolidated Statements of Operations.
Litigation
From time-to-time, the Company has been named in and subject to various proceedings and claims in connection with its business. 
The Company may in the future become involved in litigation in the ordinary course of business, including litigation that could be material to
its business.  The Company considers all claims, if any, on a quarterly basis and, based on known facts, assesses whether potential losses
are considered reasonably possible, probable and estimable.  Based upon this assessment, the Company then evaluates disclosure
requirements and whether to accrue for such claims in its consolidated financial statements.  The Company records a provision for a liability
when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.  These provisions are
reviewed at least quarterly and are adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other
information and events pertaining to a particular case.  As of March 31, 2025, the Company was not involved in any lawsuits, legal
proceedings or claims that would have a material effect on the Company’s financial position, results of operations, or cash flows.  Therefore,
there were no material losses which were probable or reasonably possible.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 16
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8Income Taxes
 
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%
The Company’s interim period tax benefit from income taxes is determined using an estimate of its annual effective tax rate, adjusted
for discrete items, if any, that arise during the periodEach quarter, the Company updates its estimate of the annual effective tax rate, and if
the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.  The Company’s quarterly tax
provision and estimate of its annual effective tax rate are subject to variation due to several factors, including variability in accurately
predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in
how the Company does business.
For the three months ended March 31, 2025, the recognized benefit from income taxes resulted from the tax projection based on the
full year forecasted profit and included benefits related to the U.S. federal foreign-derived intangible income (“FDII”), federal research and
development (“R&D”) tax credit, certain permanent differences, such as stock-based compensation shortfalls, and partial release of California
valuation allowance.
For the three months ended March 31, 2024, the recognized benefit from income taxes resulted from the loss for the quarter and
included benefits related to the U.S. FDII and federal R&D tax credit, partially offset by certain permanent differences, such as share-based
compensation.
The effective tax rate excluding discrete items for the three months ended March 31, 2025, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer stock-based compensation, and lower projected U.S. FDII
benefits.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 17
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9Segment Reporting
The Company’s Chief Operating Decision-Maker (“CODM”) is its President and Chief Executive Officer.  The Company continues to
monitor and review its segment reporting structure in accordance with authoritative guidance to determine whether any changes have
occurred that would impact its reportable segments.
The following table presents a summary of the Company’s financial information by segment, including significant segment expenses,
and corporate operating expenses.
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
$8,064
$1
$
$8,065
$12,089
$1
$
$12,090
Cost of revenue
3,561
46
3,607
4,954
1
4,955
Gross profit (loss)
4,503
(45)
4,458
7,135
7,135
Operating expenses
General and
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
Operating income (loss)
$(1,603)
$(4,016)
$(6,943)
$(12,562)
$368
$(6,076)
$(5,226)
$(10,934)
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 18
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10Concentrations
Customer Revenue Concentration
The following table presents the customers that account for 10% or more of the Company’s revenue and their related segment for
each of the periods presented.  Although certain customers might account for greater than 10% of the Company’s revenue at any one point in
time, the concentration of revenue between a limited number of customers shifts regularly, depending on when revenue is recognized.  The
percentages by customer reflect specific relationships or contracts that would concentrate revenue for the periods presented and do not
indicate a trend specific to any one customer.
Three Months Ended March 31,
 
Segment
2025
2024
Customer A
Water
12%
** 
Customer B
Water
** 
18%
Customer C
Water
** 
13%
**Zero or less than 10%.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 19
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 11Stockholders’ Equity
Share Repurchase Program
The Company’s Board, from time-to-time, has authorized a share repurchase program under which the Company may, at the
discretion of management, repurchase its outstanding common stock in the open market, or in privately negotiated transactions, in
compliance with applicable state and federal securities laws.  The timing and amounts of any purchase under the Company’s share
repurchase program is based on market conditions and other factors including price, regulatory requirements, and capital availability.  The
Company accounts for stock repurchases under these programs using the cost method.  As of March 31, 2025, the Company has
repurchased 11.7 million shares of its common stock at an aggregate cost of $135.0 million under all share repurchase programs.
February 2025 Authorization
On February 26, 2025, the Company announced that the Board authorized a share repurchase program under which the Company
may repurchase its outstanding common stock, at the discretion of management, for up to $30.0 million in aggregate cost, which included
both the share value of the acquired common stock and the fees charged in connection with acquiring the common stock (the “February 2025
Authorization”). The February 2025 Authorization will expire in February 2026.
The following table presents the share repurchase activities under the February 2025 Authorization as of March 31, 2025.
Number of Shares
Purchased
Average Price Paid
per Share(1)
Plan Activity
(In millions)
February 2025 Authorization
$30.0
Repurchases under February 2025 Authorization
279,295
$16.07
(4.5)
Remaining amount under February 2025 Authorization
$25.5
(1)Excluding commissions
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 20
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12Stock-based Compensation
Performance Restricted Stock Units
On January 23, 2025, the Compensation Committee of the Board adopted a new form of PRSU award agreement under the 2020
Equity Incentive Plan (the “2020 Plan”), to among other things, define the terms of the performance metrics and performance period for such
PRSUs. During the three months ended March 31, 2025, the Company granted 287,298 PRSUs.
PRSUs outstanding at March 31, 2025 generally vest over 3 years and are dependent upon continued employment and meeting
certain cumulative revenue and cumulative adjusted EBITDA targets. 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. As PRSUs vest, the units will be settled in shares of common stock.  The number of
potential shares issued based on PRSUs granted during the three months ended March 31, 2025 is dependent on the level of achievement of
the performance targets discussed above, which ranges from 0 shares to up to 863,298 shares of common stock.  The units are valued
based on the Company’s market price on the date of grant. As of March 31, 2025, no expense has been recognized in relation to the PRSUs
as the performance conditions are not considered probable.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 21
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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Overview
Energy Recovery, Inc. (the “Company”, “Energy Recovery”, “we”, “our” and “us”) designs and manufactures solutions that make
industrial processes more efficient and sustainable.  Leveraging our pressure exchanger technology, which generates little to no emissions
when operating, we believe our solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of
commercial and industrial processesAs the world coalesces around the urgent need to address climate change and its impacts, we are
helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint.  We believe
that our customers do not have to sacrifice quality and cost savings for sustainability and we are committed to developing solutions that drive
long-term value – both financial and environmental.
The original product application of our technology, the PX® Pressure Exchanger® (“PX”) energy recovery device, was a major
contributor to the advancement of seawater reverse osmosis desalination (“SWRO”), significantly lowering the energy intensity and cost of
water production globally from SWRO.  Our pressure exchanger technology is being applied to the wastewater filtration market, such as
battery manufacturers, mining operations, municipalities, and other manufacturing plants that discharge wastewater with significant levels of
metals and pollutants, and has also been applied to the development of our PX G1300® for use in the CO2 market.
Engineering, and research and development (“R&D”), have been, and remain, an essential part of our history, culture and corporate
strategy.  Since our formation, we have developed leading technology and engineering expertise through the continual evolution of our
pressure exchanger technology, which can enhance environmental sustainability and improve productivity by reducing waste and energy
consumption in high-pressure industrial fluid-flow systems.  This versatile technology works as a platform to build product applications and is
at the heart of many of our products.  In addition, we have engineered and developed ancillary devices, such as our hydraulic turbochargers
and circulation “booster” pumps, that complement our energy recovery devices.
Segments
Our reportable operating segments consist of the water and emerging technologies segments.  These segments are based on the
industries in which the technology solutions are sold, the type of energy recovery device or other technology sold and the related solution and
service or, in the case of emerging technologies, where revenues from new and/or potential devices utilizing our pressure exchanger
technology can be brought to market.  Other factors for determining the reportable operating segments include the manner in which our Chief
Operating Decision Maker (“CODM”), our President and Chief Executive Officer, evaluates our performance combined with the nature of the
individual business activities.  In addition, our corporate operating expenses include expenditures in support of the water and emerging
technologies segments.  We continue to monitor and review our segment reporting structure in accordance with authoritative guidance to
determine whether any changes have occurred that would impact our reportable segments.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 22
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Results of Operations
A discussion regarding our financial condition and results of operations for the three months ended March 31, 2025, compared to the
three months ended March 31, 2024, is presented below.
Revenue
As a significant portion of our revenue is derived from large project contract deliveries that are between 16 to 36 months from contract
date, variability in revenue from quarter to quarter is typical, therefore year-on-year comparisons are not necessarily indicative of the trend for
the full year due to these variations.  There is no specific seasonality in our revenues to highlight.
Revenue by Channel Customers
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%)
Revenue Attributable to Primary Geographical Markets by Segments
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
1 Within the Asia market, India represented revenue of $1,456, or 18% of total revenue during the three months ended March 31, 2025
Three months ended March 31, 2025, as compared to the three months ended March 31, 2024
The decrease in megaproject (“MPD”) revenue of $4.1 million was due primarily to lower shipments to the Middle East and Africa
(“MEA”) and Americas as compared to the three months ended March 31, 2024.
The increase in original equipment manufacturer (“OEM”) revenue of $0.7 million was primarily due to higher shipments to the Asia
and MEA markets, partially offset by lower shipments to the Americas and Europe markets.
The decrease in aftermarket (“AM”) revenue of $0.6 million was due primarily to lower shipments to the America markets, partially
offset by higher shipments to the Asia market.
Concentration of Revenue
See Note 10, “Concentrations,of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements
(unaudited),” of this Quarterly Report on Form 10-Q (the “Notes”) for further discussion regarding our concentration of revenue.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 23
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Gross Profit and Gross Margin
Gross profit represents revenue less cost of revenue.  Cost of revenue consists primarily of raw materials, personnel costs (including
stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense.
 
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
The decrease in gross profit and gross margin for the three months ended March 31, 2025, as compared to the prior year, was due
primarily to lower sales volume spread over fixed costs during the three months ended March 31, 2025.
Operating Expenses
The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and research and development
(“R&D”) operating expenses for the three months ended March 31, 2025, as compared to the comparable period in the prior year, are
discussed within the following overall operating expenditures, and the segment and corporate operating expenses discussions below.
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, as compared to the three months ended March 31, 2024
Overall Operating Expenditures.  Overall operating expenditures decreased by $1.0 million, or (5.8%).  This decrease was due
primarily to a decrease in employee costs, such as employee compensation and stock-based compensation, partially offset by restructuring
charges, and an increase in consulting costs.  Changes in non-employee costs included:
G&Ahigher consulting costs related to the enhancement of our corporate strategy as well as $0.4 million of impairment costs
associated with the sublease of our Katy, Texas lease.
R&D:  lower Emerging Technologies segment development costs.
Water Segment.  Water segment operating expenses decreased by $0.7 million, or (9.8%).  This decrease was due primarily to lower
employee costs, including commission costs and stock-based compensation costs.
Emerging Technologies Segment.  Emerging Technologies operating expenses decreased by $2.1 million, or (34.6%)This decrease
was due primarily to lower development costs and lower employee costs, primarily related to stock-based compensation.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 24
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Corporate Operating Expenses.  Corporate operating expenses increased by $1.7 million, or 32.9%.  This increase was due primarily
to increases in consulting, restructuring, and recruiting costs, as well as impairment costs associated with the sublease of the Katy, Texas
lease. The increase was partially offset by lower employee costs.
Restructuring Charges.  During the fourth quarter of fiscal year 2024, we implemented a restructuring plan which included reductions
in our workforce in all functions of the organization, primarily in our San Leandro location, in order to lower our operating cost structure, and
to position the Company for profitable growth. We recorded a restructuring charge of $3.0 million, of which $0.5 million was recorded during
the first quarter of fiscal year 2025This charge relates to severance and benefits, including reemployment assistance, for 38 terminated
employees, which was approximately 15% of our workforce.  The implementation of the restructuring plan was substantially complete by the
end of the first quarter of fiscal year 2025 and the Company does not expect to incur significant additional expenses related to the
restructuring. See Note 4, “Other Financial InformationRestructuring,” of the Notes for further discussion and disclosure on our
restructuring program. 
Other Income, Net
 
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
The decrease in “Total other income, net” in the three months ended March 31, 2025, as compared to the comparable period in the
prior year, was primarily due to a decrease in short- and long-term investments.
Income Taxes
 
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%
The interim period tax benefit from income taxes is determined using an estimate of our annual effective tax rate, adjusted for discrete
items, if any, that arise during the periodEach quarter, we update our estimate of the annual effective tax rate, and if the estimated annual
effective tax rate changes, we make a cumulative adjustment in such period.  The quarterly tax provision and estimate of our annual effective
tax rate are subject to variation due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of
jurisdictions to which they relate, the applicability of special tax regimes, and changes in how we do business.
For the three months ended March 31, 2025, the recognized benefit from income taxes resulted from the tax projection based on the
full year forecasted profit and included benefits related to the U.S. federal foreign-derived intangible income (“FDII”), federal R&D tax credit,
certain permanent differences, such as stock-based compensation shortfalls, and partial release of California valuation allowance.
For the three months ended March 31, 2024, the recognized benefit from income taxes resulted from the loss for the quarter and
included benefits related to the U.S. FDII and federal R&D tax credit, partially offset by certain permanent differences, such as share-based
compensation.
The effective tax rate excluding discrete items for the three months ended March 31, 2025, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer stock-based compensation, and lower projected U.S. FDII
benefits.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 25
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Liquidity and Capital Resources
Overview
From time-to-time, management and our Board of Directors (the “Board”) review our liquidity and future cash needs and may make a
decision to (1) return capital to our shareholders through a share repurchase program or dividend payout; or (2) seek additional debt or equity
financing.  As of March 31, 2025, our principal sources of liquidity consisted of (i) unrestricted cash and cash equivalents of $49.1 million that
are primarily invested in money market funds and U.S. treasury securities; (ii) investment-grade short-term and long-term marketable debt
instruments of $57.6 million that are primarily invested in U.S. treasury securities, corporate notes and bonds, and municipal and agency
notes and bonds; and (iii) accounts receivable, net of allowances, of $32.4 million.  As of March 31, 2025, there was unrestricted cash of
$1.1 million held outside the U.S.  We invest cash not needed for current operations predominantly in investment-grade, marketable debt
instruments with the intent to make such funds available for future operating purposes, as needed.  Although these securities are available for
sale, we generally hold these securities to maturity, and therefore, do not currently see a need to trade these securities in order to support our
liquidity needs in the foreseeable future.  We believe the risk of this portfolio to us is in the ability of the underlying companies or government
agencies to cover their obligations at maturity, not in our ability to trade these securities at a profit.  Based on current projections, we believe
existing cash balances and future cash inflows from this portfolio will meet our liquidity needs for at least the next 12 months.
Credit Agreement
We entered into a credit agreement with JPMorgan Chase Bank, N.A. (“JPMC”) on December 22, 2021 (as amended, the “Credit
Agreement”).  The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of $50.0 million and
includes both a revolving loan and a letters of credit (“LCs”) component. The maximum allowable LCs under the credit line component of the
Credit Agreement is $30.0 million.  As of March 31, 2025, we were in compliance with all covenants under the Credit Agreement.
Under the Credit Agreement, as of March 31, 2025, there were no revolving loans outstanding.  In addition, as of March 31, 2025,
under the LCs component, we utilized $15.7 million of the maximum allowable credit line of $30.0 million, which included newly issued LCs,
and previously issued and unexpired stand-by letters of credits (“SBLCs”).  As of March 31, 2025, there was $15.7 million of outstanding LCs. 
These LCs had a weighted average remaining life of approximately 14 months.
See Note 6, “Lines of Credit,” of the Notes for further discussion related to the Credit Agreement.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 26
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Share Repurchase Program
The Board, from time-to-time, has authorized a share repurchase program under which we may, at our discretion, repurchase the
Company’s outstanding common stock in the open market, or in privately negotiated transactions, in compliance with applicable state and
federal securities laws.  The timing and amounts of any purchase under the share repurchase programs are based on market conditions and
other factors including price, regulatory requirements, and capital availability.  We account for stock repurchases under these programs using
the cost method.  As of March 31, 2025, we have cumulatively repurchased 11.7 million shares of the Company’s common stock at an
aggregate cost of $135.0 million under all closed share repurchase programs.  The following is a discussion of the current share repurchase
program during the three months ended March 31, 2025.  See Note 11, “Stockholders’ EquityShare Repurchase Program,” of the Notes for
further discussion related to share repurchase programs and a reconciliation of the latest share repurchase plan balance.
On February 26, 2025, we announced that the Board authorized a share repurchase program under which we may repurchase our
outstanding common stock, at the discretion of management, up to $30.0 million in aggregate cost, which includes both the share value of the
acquired common stock and the fees charged in connection with acquiring the common stock (the “February 2025 Authorization”).  We began 
repurchasing our outstanding common stock in March 2025. The February 2025 Authorization will expire in February 2026.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 27
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Cash Flows
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
Cash Flows from Operating Activities
Net cash provided by operating activities is subject to the project driven, non-cyclical nature of our business.  Operating cash flow can
fluctuate significantly from reporting period to reporting period, due to the timing of receipts of large project orders.  Operating cash flow may
be negative in one reporting period and significantly positive in the next, consequently individual reporting period results and comparisons
may not necessarily indicate a significant trend, either positive or negative. 
The higher net cash provided by operating assets and liabilities for the three months ended March 31, 2025, as compared to the prior
year, was due primarily to the following factors: 
Accounts receivable and contract assets: an increase in cash due to an increase in collections related to revenues earned late in
the fourth quarter of 2024; partially offset by
Inventories: a decrease in cash due to cash used to build finished goods inventory in the first quarter of 2025; and
Net loss: an increase in net loss after excluding the effects of non-cash adjustments.
Cash Flows from Investing Activities
Net cash provided by (used in) investing activities primarily relates to maturities and purchases of investment-grade marketable debt
instruments, such as corporate notes and bonds, and capital expenditures supporting our growth.  We believe our investments in marketable
debt instruments are structured to preserve principal and liquidity while at the same time maximizing yields without significantly increasing
risk.  The increase in net cash provided by investing activities of $17.7 million in the three months ended March 31, 2025, as compared to the
prior year, was primarily driven by less cash used for purchases of marketable debt instruments, net of cash proceeds from maturities of
marketable debt instruments, of $17.1 million and lower capital expenditures of $0.6 million.
Cash Flows from Financing Activities
Net cash used in financing activities for the three months ended March 31, 2025 was lower as compared to the cash provided by
financing activities in the prior year, due primarily to cash used for the repurchase of our common stock under the February 2025
Authorization and a decrease in cash from exercises of employee stock options granted under our equity incentive plans.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 28
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Liquidity and Capital Resource Requirements
We believe that our existing resources and cash generated from our operations will be sufficient to meet our anticipated capital
requirements for at least the next 12 months.  However, we may need to raise additional capital or incur additional indebtedness to continue
to fund our operations or to support acquisitions in the future and/or to fund investments in our latest technology arising from rapid market
adoption.  These needs could require us to seek additional equity or debt financing.  Our future capital requirements will depend on many
factors including the continuing market acceptance of our products, our rate of revenue growth, the timing of new product introductions, the
expansion of our R&D, manufacturing and S&M activities, and the timing and extent of our expansion into new geographic territories.  In
addition, we may enter into potential material investments in, or acquisitions of, complementary businesses, services or technologies in the
future which could also require us to seek additional equity or debt financing.  Should we need additional liquidity or capital funds, these funds
may not be available to us on favorable terms, or at all.
Recent Accounting Pronouncements
Refer to Note 1, “Description of Business and Significant Accounting PoliciesSignificant Accounting Policies,” of the Notes to
Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements (unaudited),” of this Quarterly Report on Form 10-Q.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 29
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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk may be found primarily in two areas, foreign currency and interest rates.
Foreign Currency Risk
Our foreign currency exposures are due to fluctuations in exchange rates for the U.S. dollar (“USD”) versus the British pound, Saudi
riyal, Emirati dirham, European euro, Chinese yuan, Indian rupee and Canadian dollar.  Changes in currency exchange rates could adversely
affect our consolidated operating results or financial position.
Our revenue contracts have been denominated in the USD.  At times, our international customers may have difficulty obtaining
the USD to pay our receivables, thus increasing collection risk and potential bad debt expense.  To the extent we expand our international
sales, a larger portion of our revenue could be denominated in foreign currencies.  As a result, our cash and operating results could be
increasingly affected by changes in exchange rates.
In addition, we pay many vendors in foreign currency and, therefore, are subject to changes in foreign currency exchange rates.  Our
international sales and service operations incur expense that is denominated in foreign currencies.  This expense could be materially affected
by currency fluctuations.  Our international sales and services operations also maintain cash balances denominated in foreign currencies.  To
decrease the inherent risk associated with translation of foreign cash balances into our reporting currency, we do not maintain excess cash
balances in foreign currencies.
We have not hedged our exposure to changes in foreign currency exchange rates because expenses in foreign currencies have been
insignificant to date and exchange rate fluctuations have had little impact on our operating results and cash flows.  In addition, we do not
have any exposure to the Russian ruble.
Interest Rate and Credit Risks
The primary objective of our investment activities is to preserve principal and liquidity while at the same time maximizing yields without
significantly increasing risk.  We invest primarily in investment-grade short-term and long-term marketable debt instruments that are subject
to counter-party credit risk.  To minimize this risk, we invest pursuant to an investment policy approved by the Board.  The policy mandates
high credit rating requirements and restricts our exposure to any single corporate issuer by imposing concentration limits.
As of March 31, 2025, our investment portfolio of $63.1 million, in investment-grade marketable debt instruments, such as U.S.
treasury securities, corporate notes and bonds, and municipal and agency notes and bonds, are classified as either cash equivalents or
short-term and/or long-term investments on our Condensed Consolidated Balance Sheets.  These investments are subject to interest rate
fluctuations and decrease in market value to the extent interest rates increase, which occurred during the three months ended March 31,
2025.  To minimize the exposure due to adverse shifts in interest rates, we maintain investments with a weighted average maturity of
approximately nine monthsAs of March 31, 2025, a hypothetical 1% increase in interest rates would have resulted in a less than
$0.3 million decrease in the fair value of our investments in marketable debt instruments as of such date.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 30
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Item 4 — Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, have evaluated
the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the
end of the period covered by this report.
Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of
March 31, 2025, our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 31
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PART II — OTHER INFORMATION
Item 1 — Legal Proceedings
We have been, and may be from time to time, involved in legal proceedings or subject to claims incident to the ordinary course of
business.  We are not presently a party to any legal proceedings that we believe are likely to have a material adverse effect on our business,
financial condition, or operating results.  Regardless of the outcome, such proceedings or claims can have an adverse impact on us because
of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be
obtained.
Item 1A — Risk Factors
Except as noted below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A, “Risk Factors,”
in the 2024 Annual Report.
Changes in U.S. policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any
resulting changes in international trade relations, such as reciprocal tariffs or trade wars, particularly with regard to China, may
have a material adverse impact on impact on our business, results of operations, or financial condition.
In January 2025, the global tariff landscape began to quickly change with the U.S. implementing new and/or increased tariffs on
various foreign countries, either generally or with respect to certain products.  Certain foreign countries, including China have, and may
continue to, change their tariff policies in response to changes in the U.S. tariff policy.
These recent tariffs and the subsequent retaliatory tariffs could increase the cost of goods for our products or reduce our ability to sell
products globally, particularly in China, which may adversely affect our operating results and financial condition.  So far, these new tariffs and
trade policies have not had a significant impact on our business operations and financial results, primarily due to our prior efforts to
accumulate and maintain inventories at favorable cost levels.  However, there is no guarantee that we can avoid the impact of tariff and
related economic effects in the future, and these trade measures and retaliations may directly impact our business by increasing trade-related
costs or affecting the demand for our products globally, and specifically in China.
Any further unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our
products and services, impact the competitive position of our products or prevent us from selling products in certain countries. If any new
tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government
takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on our business,
financial condition and results of operations.
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 — Defaults Upon Senior Securities
None.
Item 4 — Mine Safety Disclosures
Not applicable.
Item 5 — Other Information
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 32
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10b5-1 Plans
During the three months ended March 31, 2025, no director or officer (within the meaning of Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended) has adopted or terminated a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-
K).
Form Equity Incentive Plan Agreement
On January 23, 2025, the Compensation Committee of the Board adopted a new form of performance restricted stock unit (“PRSU”)
award agreement under the 2020 Equity Incentive Plan (the “2020 Plan”), to among other things, define the terms of the performance metrics
and performance period for such PRSUs.
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 33
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Item 6 — Exhibits
A list of exhibits filed or furnished with this report or incorporated herein by reference is found in the Exhibit Index below.
Exhibit
Number
Exhibit Description
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.
*Filed herewith.
**The certification furnished in Exhibit 32.1 is not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that
section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
 
Energy Recovery, Inc. | Q1'2025 Quarterly Report (Form 10-Q) | 34
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    SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
 
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)