Energy Recovery, Inc. (Nasdaq:ERII) (“Energy Recovery” or the
“Company”) today announced its financial results for the first
quarter ended March 31, 2023.
First Quarter Highlights
- Revenue of $13.4 million, and within February 2023
guidance.
- Lower gross margin of 60.9%, as compared to Q1’2022, driven
mainly by an increase in pump and hydraulic turbocharger revenue in
the original equipment manufacturer and aftermarket channels, and a
decrease PX® Pressure Exchanger® revenue in the megaproject
channel.
- Operating expenses grew 6% in the first quarter, as compared to
Q4’2022, from growing sales and marketing expenditures in support
of new businesses, and some variability in the timing of research
and development expenses.
- Loss from operations of $8.1 million primarily attributable to
lower revenue and gross margin due to expected timing of
megaproject shipments.
- Net loss of $6.3 million and adjusted EBITDA of negative $4.8
million, primarily attributed to lower revenue and gross
margin.
- Operating cash flow of $8.7 million driven by strong
collections.
Robert Mao, Chairman, President and CEO, commented on the
financial results: “As we guided in February, our desalination
revenue for 2023 will be heavily weighted to the second half of
this year due to the expected timing of megaproject shipments,
which is how the year has started. As previously indicated, we
expect our desalination business to grow between 3-7% this year. We
also continue to see increasing demand for our wastewater products
and are adding new countries outside of China and India to our
pipeline in Southeast Asia and Latin America. We expect to expand
our sales and marketing capabilities this year to successfully
address these opportunities, as we seek to double this business in
2023 and 2024.”
Mr. Mao added: “We continue to build on the momentum following
our February announcements of Epta Group’s new generation
sustainability XTE refrigeration rack product line incorporating
our PX G1300™, and our signing of an exclusive distribution
agreement for Belgium, the Netherlands and Luxembourg with Fieuw
Koeltechniiek. We recognized over $100 thousand in CO2 revenue in
the first quarter and expect to be commissioned in multiple
countries this year in North America and Europe. Importantly, we
expect our first deployment in a food manufacturing plant this
summer as well as the first use of the PX G1300 as a defense
against rising temperatures with a new installation in a Canadian
supermarket chain. It is an exciting time at Energy Recovery as the
refrigeration industry begins to take notice of our revolutionary
new product. We look forward to building a bigger footprint
throughout the year.”
Financial Highlights
Q1’2023
Q1’2022
vs. Q1’2022
(In millions, except net income
(loss) per share, percentages and basis points)
Revenue
$13.4
$32.5
down 59%
Gross margin
60.9%
70.8%
down 990 bps
Operating margin
(60.5%)
25.3%
NM
Net (loss) income
($6.3)
$7.9
down 180%
Net (loss) income per share
($0.11)
$0.14
down 179%
Effective tax rate
15.5%
5.3%
Cash provided by (used for) operations
$8.7
($1.6)
Non-GAAP Financial Highlights
Q1’2023
Q1’2022
vs. Q1’2022
(In millions, except net income
(loss) per share, percentages and basis points)
Adjusted operating margin
(43.3%)
31.0%
NM
Adjusted net (loss) income
($4.5)
$9.2
down 149%
Adjusted net (loss) income per share
($0.08)
$0.16
down 150%
Adjusted effective tax rate
13.0%
10.2%
Adjusted EBITDA
($4.8)
$11.1
Free cash flow
$8.4
($3.6)
NM
Not material
(1)
Refer to the sections “Use of Non-GAAP
Financial Measures” and “Reconciliation of Non-GAAP Financial
Measures” for definition of adjustment to GAAP presentation.
Forward-Looking Statements
Certain matters discussed in this press release and on the
conference call are “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including our belief that desalination revenue for 2023 will be
heavily weighted to the second half of this year; our expectation
that our desalination business will grow between 3-7% this year;
our expectation that we will grow our industrial wastewater sales
team; our goal to double our wastewater business in 2023 and 2024;
and our expectations for multiple PX G1300 commissions in multiple
countries this year in North America and Europe. These
forward-looking statements are based on information currently
available to us and on management’s beliefs, assumptions,
estimates, or projections and are not guarantees of future events
or results. Potential risks and uncertainties include any other
factors that may have been discussed herein regarding the risks and
uncertainties of the Company’s business, and the risks discussed
under “Risk Factors” in the Company’s Form 10-K filed with the U.S.
Securities and Exchange Commission (“SEC”) for the year ended
December 31, 2022, as well as other reports filed by the Company
with the SEC from time to time. Because such forward-looking
statements involve risks and uncertainties, the Company’s actual
results may differ materially from the predictions in these
forward-looking statements. All forward-looking statements are made
as of today, and the Company assumes no obligation to update such
statements.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures,
including adjusted operating margin, adjusted net (loss) income,
adjusted net (loss) income per share, adjusted effective tax rate,
adjusted EBITDA and free cash flow. Generally, a non-GAAP financial
measure is a numerical measure of a company’s performance,
financial position, or cash flows that either exclude or include
amounts that are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance
with generally accepted accounting principles in the United States
of America, or GAAP. These non-GAAP financial measures do not
reflect a comprehensive system of accounting, differ from GAAP
measures with the same captions, and may differ from non-GAAP
financial measures with the same or similar captions that are used
by other companies. As such, these non-GAAP measures should be
considered as a supplement to, and not as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
The Company uses these non-GAAP financial measures to analyze its
operating performance and future prospects, develop internal
budgets and financial goals, and to facilitate period-to-period
comparisons. The Company believes these non-GAAP financial measures
reflect an additional way of viewing aspects of its operations
that, when viewed with its GAAP results, provide a more complete
understanding of factors and trends affecting its business.
Notes to the First Quarter Financial Results
- Adjusted operating margin is a non-GAAP financial measure that
the Company defines as (loss) income from operations which excludes
i) share-based compensation; and ii) non-core operational costs,
such as VorTeq-related severance costs and accelerated
depreciation, and litigation charges, divided by revenues.
- Adjusted net (loss) income is a non-GAAP financial measure that
the Company defines as net income which excludes i) share-based
compensation; ii) non-core operational costs, such as
VorTeq-related severance costs and accelerated depreciation, and
litigation charges; and iii) the applicable tax effect of the
excluded items including the share-based compensation discrete tax
item.
- Adjusted net (loss) income per share is a non-GAAP financial
measure that the Company defines as net (loss) income, which
excludes i) share-based compensation; and ii) non-core operational
costs, such as VorTeq-related severance costs and accelerated
depreciation, and litigation charges; and iii) the applicable tax
effect of the excluded items including the share-based compensation
discrete tax item, divided by basic shares outstanding.
- Adjusted effective tax rate reflects adjustments for
share-based compensation discrete tax item, share-based
compensation, VorTeq-related severance costs and accelerated
depreciation, and litigation charges.
- Adjusted EBITDA is a non-GAAP financial measure that the
Company defines as net (loss) income which excludes i) depreciation
and amortization; ii) share-based compensation; iii) non-core
operational costs, such as VorTeq-related severance costs, and
litigation charges; iv) other income, net, such as interest income
and other non-operating income, net; and v) (benefit from)
provision for income taxes.
- Free cash flow is a non-GAAP financial measure that the Company
defines as net cash provided by (used in) operating activities less
capital expenditures.
Conference Call to Discuss First Quarter 2023 Financial
Results
LIVE CONFERENCE CALL: Wednesday,
May 3, 2023, 2:00 PM PT / 5:00 PM ET Listen-only, US / Canada
Toll-Free: +1 (877) 709-8150 Listen-only, Local / International
Toll: +1 (201) 689-8354
CONFERENCE CALL REPLAY: Expiration:
Friday, June 2, 2023 US / Canada Toll-Free: +1 (877) 660-6853 Local
/ International Toll: +1 (201) 612-7415 Access code: 13737005
Investors may access the live call and the replay (approximately
three hours after the live call concludes) over the internet at:
ir.energyrecovery.com/websites/energyrecover/English/2200/calendar.html
Disclosure Information
Energy Recovery uses the investor relations section on its
website as means of complying with its disclosure obligations under
Regulation FD. Accordingly, investors should monitor Energy
Recovery’s investor relations website in addition to following
Energy Recovery’s press releases, SEC filings, and public
conference calls and webcasts.
About Energy Recovery
Energy Recovery, Inc., creates technologies that solve complex
challenges for commercial and industrial fluid-flow markets
worldwide. Building on an innovative pressure exchanger technology
platform, they design and manufacture solutions that make
commercial and industrial processes more efficient and sustainable.
What began as a game-changing invention for desalination has grown
into a global business accelerating the environmental
sustainability of customers’ operations in multiple industries.
Headquartered in the San Francisco Bay Area, Energy Recovery has
manufacturing and research and development facilities across
California and Texas with sales and on-site technical support
available globally. To learn more, visit
https://energyrecovery.com/.
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31,
2023
December 31,
2022
(In thousands)
ASSETS
Cash, cash equivalents and investments
$
101,689
$
92,891
Accounts receivable and contract
assets
12,711
35,782
Inventories, net
33,119
28,366
Prepaid expenses and other assets
3,442
3,886
Property, equipment and operating
leases
32,416
32,695
Goodwill
12,790
12,790
Deferred tax assets and other assets
11,800
10,629
TOTAL ASSETS
$
207,967
$
217,039
LIABILITIES AND STOCKHOLDERS’
EQUITY
Liabilities
Accounts payable and accrued expenses
$
10,144
$
15,507
Contract liabilities and other
liabilities, non-current
1,705
1,316
Lease liabilities
14,615
14,878
Total liabilities
26,464
31,701
Stockholders’ equity
181,503
185,338
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
207,967
$
217,039
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands, except per share
data)
Revenue
$
13,401
$
32,546
Cost of revenue
5,246
9,498
Gross profit
8,155
23,048
Operating expenses
General and administrative
7,066
6,551
Sales and marketing
4,894
3,364
Research and development
4,306
4,911
Total operating expenses
16,266
14,826
(Loss) income from operations
(8,111
)
8,222
Other income, net
656
117
(Loss) income before income
taxes
(7,455
)
8,339
(Benefit from) provision for income
taxes
(1,159
)
445
Net (loss) income
$
(6,296
)
$
7,894
Net (loss) income per share
Basic
$
(0.11
)
$
0.14
Diluted
$
(0.11
)
$
0.14
Number of shares used in per share
calculations
Basic
56,228
56,783
Diluted
56,228
58,181
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March
31,
2023
2022
(In thousands)
Cash flows from operating
activities:
Net (loss) income
$
(6,296
)
$
7,894
Non-cash adjustments
2,539
3,964
Net cash provided by (used in) operating
assets and liabilities
12,414
(13,460
)
Net cash provided by (used in)
operating activities
8,657
(1,602
)
Cash flows from investing
activities:
Net investment in marketable
securities
1,364
(18,956
)
Capital expenditures and proceeds from
sales of fixed assets
(197
)
(1,976
)
Net cash provided by (used in)
investing activities
1,167
(20,932
)
Cash flows from financing
activities:
Net proceeds from issuance of common
stock
165
763
Repurchase of common stock
—
(8,056
)
Net cash provided by (used in)
financing activities
165
(7,293
)
Effect of exchange rate differences
8
(11
)
Net change in cash, cash equivalents
and restricted cash
$
9,997
$
(29,838
)
Cash, cash equivalents and restricted
cash, end of period
$
66,455
$
44,623
ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL
INFORMATION
(Unaudited)
Channel Revenue
Three Months Ended March
31,
2023
2022
vs. 2022
(In thousands, except
percentages)
Original equipment manufacturer
$ 6,836
$ 4,671
up 46%
Aftermarket
3,322
4,035
down 18%
Megaproject
3,243
23,840
down 86%
Total revenue
$ 13,401
$ 32,546
down 59%
Segment Activity
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Water
Emerging Technologies
Corporate
Total
Water
Emerging Technologies
Corporate
Total
(In thousands)
Revenue
$
13,296
$
105
$
—
$
13,401
$
32,516
$
30
$
—
$
32,546
Cost of revenue
5,101
145
—
5,246
9,480
18
—
9,498
Gross profit (loss)
8,195
(40
)
—
8,155
23,036
12
—
23,048
Operating expenses
General and administrative
1,938
968
4,160
7,066
1,464
908
4,179
6,551
Sales and marketing
3,175
1,170
549
4,894
2,301
527
536
3,364
Research and development
1,180
3,126
—
4,306
800
4,111
—
4,911
Total operating expenses
6,293
5,264
4,709
16,266
4,565
5,546
4,715
14,826
Operating income (loss)
$
1,902
$
(5,304
)
$
(4,709
)
$
(8,111
)
$
18,471
$
(5,534
)
$
(4,715
)
$
8,222
Share-based Compensation
Three Months Ended March
31,
2023
2022
(In thousands)
Stock-based compensation expense
charged to:
Cost of revenue
$
249
$
146
General and administrative
960
968
Sales and marketing
698
433
Research and development
397
335
Total stock-based compensation
expense
$
2,304
$
1,882
ENERGY RECOVERY, INC. RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES (1) (Unaudited)
This press release includes certain non-GAAP financial
information because we plan and manage our business using such
information. The following table reconciles the GAAP financial
information to the non-GAAP financial information.
Quarter-to-Date
Q1'2023
Q1'2022
(In millions, except shares, per
share and percentages)
Operating margin
(60.5
%)
25.3
%
Share-based compensation
17.2
%
5.8
%
Adjusted operating margin
(43.3
%)
31.0
%
Net (loss) income
$
(6.3
)
$
7.9
Share-based compensation (2)
2.3
1.9
Share-based compensation discrete tax
item
(0.5
)
(0.6
)
Adjusted net (loss) income
$
(4.5
)
$
9.2
Net (loss) income per share
$
(0.11
)
$
0.14
Adjustments to net (loss) income per share
(3)
0.03
0.02
Adjusted net (loss) income per
share
$
(0.08
)
$
0.16
Effective tax rate
15.5
%
5.3
%
Adjustments to effective tax rate (3)
(2.5
%)
4.9
%
Adjusted effective tax rate
13.0
%
10.2
%
Net (loss) income
$
(6.3
)
$
7.9
Share-based compensation
2.3
1.9
Depreciation and amortization
1.0
1.0
Other income, net
(0.7
)
(0.1
)
(Benefit from) provision for income
taxes
(1.2
)
0.4
Adjusted EBITDA
$
(4.8
)
$
11.1
Free cash flow
Net cash provided by (used in) operating
activities
$
8.7
$
(1.6
)
Capital expenditures
(0.3
)
(2.0
)
Free cash flow
$
8.4
$
(3.6
)
(1)
Amounts may not total due to rounding.
(2)
Amount presented are net of tax.
(3)
Refer to the sections “Use of Non-GAAP
Financial Measures” for description of items included in
adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005808/en/
Investor Relations ir@energyrecovery.com +1 (346) 382-6927
Energy Recovery (NASDAQ:ERII)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Energy Recovery (NASDAQ:ERII)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024