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Energy Recovery, Inc. (ERII) SEC Filing 8-K Material Event for the period ending Thursday, August 2, 2018

Energy Recovery, Inc.

CIK: 1421517 Ticker: ERII


q22018earningsrelease_image1.jpg
Energy Recovery Reports Second Quarter 2018 Financial Results

SAN LEANDRO, Calif., August 2, 2018 - Energy Recovery Inc. (NASDAQ: ERII) (“Energy Recovery” or the “Company”), the leader in pressure energy technology for industrial fluid flows, today announced its financial results for the second quarter ended on June 30, 2018.

Second Quarter Summary:
Total revenue of $20.8 million, an increase of 49% year-over-year
Product gross margin of 66%
Total gross margin(1) of 71%
Net Income of $15.7 million, or $0.28 per diluted share

Year-to-Date Summary:
Total revenue of $34.6 million, an increase of 22% year-over-year
Product gross margin of 67%
Total gross margin(1) of 73%
Net Income of $15.0 million, or $0.27 per diluted share

President and CEO Chris Gannon remarked, “Energy Recovery posted another strong quarter with 49% year-over-year growth in total revenue, which was driven by 75% growth in our core Water business. In addition, 2018 is off to a great start, with Water revenue up 38% for the first half of 2018, as compared to the first half of 2017. The Water market remains robust, instilling further confidence in the strength of our business through the second half of 2018, and continuing into 2019. This is further supported by our recent awards and project activity in key regions such as the Middle East, North Africa and Asia. Overall, the combination of our industry-leading PX® Pressure Exchanger® technology and strong sales and distribution channels have allowed us to capture significant market share in both Mega Projects and OEM awards globally.”

Mr. Gannon continued, “We continue to make progress toward full-scale commercialization of our VorTeq™, the ultimate objective. We continue to amass run-time with the system at scale and are beginning to focus on the reliability & transportability of the system. With each hour of full-scale run-time our transformative and disruptive VorTeq technology advances closer to commercialization.”

Mr. Gannon concluded, “We are proud of the company’s financial performance this first half of the year and are excited about the opportunities in front of us. We remain fully engaged on the critical goals ahead and will continue to execute to drive growth in our Water business and bring our VorTeq and MTeq™ technologies to full commercialization.”

Revenues
For the second quarter ended June 30, 2018, the Company generated total revenue of $20.8 million. Total revenue for the quarter increased by $6.9 million, or 49%, from $13.9 million in the second quarter ended June 30, 2017. Of the $6.9 million increase in total revenue, $7.4 million was attributable to higher Water segment revenue, offset by $0.5 million decrease in Oil & Gas segment revenue.

The Water segment generated total product revenue of $17.1 million for the second quarter ended June 30, 2018, compared to $9.8 million for the second quarter ended June 30, 2017, an increase of $7.3 million, or 75%. This increase was due to higher Mega Project Development (“MPD”) and Aftermarket (“AM”) shipments.


1




The Oil & Gas segment generated total revenue of $3.6 million for the second quarter ended June 30, 2018, compared to $4.1 million for the second quarter ended June 30, 2017, a decrease of $0.5 million or (12%). This decrease was due to lower cost-to-total cost (previously known as percentage of completion) revenue recognition associated with the sale of multiple IsoBoost systems, offset by an increase in license and development revenue. The increase in license and development revenue was primarily due to higher costs incurred according to input measures, based on changes required due to the adoption of the new revenue recognition standard in the first quarter of 2018.

Gross Margin
For the second quarter ended June 30, 2018, product gross margin was 65.7%. Product gross margin decreased by 140 basis points from 67.1% in the second quarter ended June 30, 2017. This decrease was largely driven by unfavorable price and product mix. Including license and development revenue, total gross margin(1) was 71.2% for the second quarter ended June 30, 2018. Total gross margin(1) decreased by 310 basis points from 74.3% in the second quarter ended June 30, 2017.

The Water segment generated product gross margin of 67.0% for the second quarter ended June 30, 2018. Water segment product gross margin decreased by 530 basis points, compared to 72.3% in the second quarter ended June 30, 2017. This decrease was largely driven by unfavorable price and product mix.

The Oil & Gas segment generated product gross margin of (15.9%) for the second quarter ended June 30, 2018, compared to 21.2% in the second quarter ended June 30, 2017. This decrease was attributable to higher project costs. Including license and development revenue, the Oil & Gas segment total gross margin(1) for the second quarter ended June 30, 2018 was 90.8%.

Operating Expenses
For the second quarter ended June 30, 2018, operating expenses were $10.5 million, an increase of $1.2 million from $9.3 million for the second quarter ended June 30, 2017. This increase in operating expenses was due to increases in Water segment, O&G segment and Corporate expenses.

The Water segment operating expenses for the second quarter ended June 30, 2018 were $2.4 million, $0.5 million higher than the second quarter ended June 30, 2017.

The Oil & Gas segment operating expenses for the second quarter ended June 30, 2018 were $4.1 million, $0.3 million higher than the second quarter ended June 30, 2017. This increase was driven by the Company’s continued investment in research and development activities.

The Corporate operating expenses for the second quarter ended June 30, 2018 were $4.1 million, $0.4 million higher than the second quarter ended June 30, 2017. This increase was driven by higher tax planning expenses and non-recurring expenses related to residual recruiting fees associated with the Company’s CEO transition in the first quarter of 2018.

Bottom Line Summary
To summarize the Company’s financial performance, on a quarterly basis, the Company reported a net income of $15.7 million, or $0.28 per diluted share for the second quarter ended June 30, 2018, compared to a net income of $0.9 million, or $0.02 per diluted share for the second quarter ended June 30, 2017.  This increase was driven by a one-time tax benefit of $11.9 million, which is related to simplifying the Company’s international tax structure in Ireland in light of the 2017 U.S. Tax Cuts and Jobs Act. On an adjusted basis and excluding the tax benefit, the Company reported an adjusted net income(1) of $4.0 million or $0.07 per diluted share for the second quarter ended June 30, 2018.


2




Cash Flow Highlights
The Company finished the second quarter ended June 30, 2018 with cash and cash equivalents of $16.4 million, restricted cash of $0.9 million, and short-term investments of $72.2 million, all of which represent a combined total of $89.5 million. As of June 30, 2018, 1,193,102 shares of the Company’s common stock were repurchased for $10.0 million under the stock repurchase program authorized by the Company’s Board of Directors on March 7, 2018.

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 the Company’s belief that the Company’s Water business will remain robust throughout the balance of 2018 and into 2019 and the Company’s belief that the Company will be able to bring its VorTeq and MTeq technologies to full commercialization. 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 the Company’s ability to achieve the milestones under the VorTeq license agreement, 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, 2017 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 total gross margin. 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.

(1) 
“Total gross margin” and “Adjusted net income” are non-GAAP financial measures. Please refer to the discussion under headings “Use of Non-GAAP Financial Measures” and “Reconciliations of Non-GAAP Financial Measures.”

Conference Call to Discuss second Quarter 2018 Financial Results
LIVE CONFERENCE CALL:
Thursday, August 2, 2018,2:00 PM PDT / 5:00 PM EDT
Listen-only, US / Canada Toll-free: +1 877-709-8150
Listen-only, Local / International Toll: +1 201-689-8354
Access code: 13681223
CONFERENCE CALL REPLAY:
Expiration: Sunday, September 2, 2018
US / Canada Toll-free: +1 877-660-6853
Local / International Toll: +1 201-612-7415
Access code: 13681223


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Investors may also access the live call or the replay over the internet at ir.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.

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 Inc.
Energy Recovery, Inc. (ERII) is an energy solutions provider to industrial fluid flow markets worldwide. Energy Recovery solutions recycle and convert wasted pressure energy into a usable asset and preserve pumps that are subject to hostile processing environments. With award-winning technology, Energy Recovery simplifies complex industrial systems while improving productivity, profitability, and efficiency within the oil & gas, chemical processing, and water industries. Energy Recovery products save clients more than $1.8 billion (USD) annually. Headquartered in the Bay Area, Energy Recovery has offices in Houston, Ireland, Shanghai, and Dubai. For more information about the Company, please visit www.energyrecovery.com.

Contact
Manuel Mondragon
mmondragon@energyrecovery.com
(510) 541-6824


4





ENERGY RECOVERY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data and par value)
(Unaudited)
 
June 30,
2018
 
December 31,
2017*
 
(In thousands, except share data and par value)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
16,378

 
 
$
27,780

 
Restricted cash
808
 
 
 
2,664
 
 
Short-term investments
72,207
 
 
 
70,020
 
 
Accounts receivable, net of allowance for doubtful accounts of $420 and $103 at June 30, 2018 and December 31, 2017, respectively
11,304
 
 
 
12,465
 
 
Contract assets
5,984
 
 
 
6,278
 
 
Inventories
6,375
 
 
 
5,514
 
 
Income Tax Receivable
145
 
 
 
 
 
Prepaid expenses and other current assets
1,720
 
 
 
1,342
 
 
Total current assets
114,921
 
 
 
126,063
 
 
Restricted cash, non-current
86
 
 
 
182
 
 
Contract assets, non-current
108
 
 
 
 
 
Deferred tax assets, non-current
19,444
 
 
 
7,933
 
 
Property and equipment, net
12,988
 
 
 
13,393
 
 
Operating lease, right of use asset
12,669
 
 
 
2,843
 
 
Goodwill
12,790
 
 
 
12,790
 
 
Other intangible assets, net
954
 
 
 
1,269
 
 
Other assets, non-current
285
 
 
 
12
 
 
Total assets
$
174,245

 
 
$
164,485

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,932

 
 
$
4,091

 
Accrued expenses and other current liabilities
5,157
 
 
 
7,948
 
 
Lease liabilities
336
 
 
 
1,603
 
 
Income taxes payable
 
 
 
432
 
 
Accrued warranty reserve
389
 
 
 
366
 
 
Contract liabilities
17,651
 
 
 
15,909
 
 
Current portion of long-term debt
12
 
 
 
11
 
 
Total current liabilities
25,477
 
 
 
30,360
 
 
Long-term debt, less current portion
10
 
 
 
16
 
 
Lease liabilities, non-current
13,033
 
 
 
1,698
 
 
Contract liabilities, non-current
33,124
 
 
 
40,517
 
 
Other non-current liabilities
240
 
 
 
 
 
Total liabilities
71,884
 
 
 
72,591
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at June 30, 2018 and December 31, 2017
 
 
 
 
 
Common stock, $0.001 par value; 200,000,000 shares authorized; 58,950,907 shares issued and 53,494,972 shares outstanding at June 30, 2018 and 58,168,433 shares issued and 53,905,600 shares outstanding at December 31, 2017
59
 
 
 
58
 
 
Additional paid-in capital
154,524
 
 
 
149,006
 
 
Accumulated comprehensive loss
(194
)
 
 
(125
)
 
Treasury stock, at cost, 5,455,935 shares repurchased at June 30, 2018 and 4,262,833 shares repurchased at December 31, 2017
(30,486
)
 
 
(20,486
)
 
Accumulated deficit
(21,542
)
 
 
(36,559
)
 
Total stockholders’ equity
102,361
 
 
 
91,894
 
 
Total liabilities and stockholders’ equity
$
174,245

 
 
$
164,485

 
*Prior-period information has been retrospectively adjusted due to our adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and ASU No. 2016-02, Leases (Topic 842) on January 1, 2018.


5




ENERGY RECOVERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017*
 
2018
 
2017*
 
(In thousands, except per share data)
Product revenue
$
17,406

 
 
$
10,864

 
 
$
28,464

 
 
$
23,109

 
Product cost of revenue
5,976
 
 
 
3,572
 
 
 
9,290
 
 
 
8,184
 
 
Product gross profit
11,430
 
 
 
7,292
 
 
 
19,174
 
 
 
14,925
 
 
 
 
 
 
 
 
 
 
License and development revenue
3,358
 
 
 
3,050
 
 
 
6,107
 
 
 
5,298
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
General and administrative
4,927
 
 
 
3,927
 
 
 
10,764
 
 
 
8,335
 
 
Sales and marketing
1,858
 
 
 
2,174
 
 
 
3,770
 
 
 
4,627
 
 
Research and development
3,605
 
 
 
3,077
 
 
 
7,522
 
 
 
5,586
 
 
Amortization of intangible assets
158
 
 
 
158
 
 
 
316
 
 
 
316
 
 
Total operating expenses
10,548
 
 
 
9,336
 
 
 
22,372
 
 
 
18,864
 
 
Income from operations
4,240
 
 
 
1,006
 
 
 
2,909
 
 
 
1,359
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest income
373
 
 
 
198
 
 
 
674
 
 
 
369
 
 
Interest expense
(1
)
 
 
 
 
 
(1
)
 
 
(1
)
 
Other non-operating (expense) income, net
9
 
 
 
(87
)
 
 
(44
)
 
 
(140
)
 
Total other income, net
381
 
 
 
111
 
 
 
629
 
 
 
228
 
 
Income before income taxes
4,621
 
 
 
1,117
 
 
 
3,538
 
 
 
1,587
 
 
(Benefit from) provision for income taxes
(11,122)
 
 
 
188
 
 
 
(11,479)
 
 
 
236
 
 
Net income
$
15,743

 
 
$
929

 
 
$
15,017

 
 
$
1,351

 
 
 
 
 
 
 
 
 
Income per share:
 
 
 
 
 
 
 
Basic
$
0.29

 
 
$
0.02

 
 
$
0.28

 
 
$
0.03

 
Diluted
$
0.28

 
 
$
0.02

 
 
$
0.27

 
 
$
0.02

 
 
 
 
 
 
 
 
 
Number of shares used in per share calculations:
 
 
 
 
 
 
 
Basic
53,747
 
 
 
53,748
 
 
 
53,747
 
 
 
53,786
 
 
Diluted
55,406
 
 
 
55,565
 
 
 
55,437
 
 
 
55,804
 
 
*Prior-period information has been retrospectively adjusted due to our adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) on January 1, 2018.



6




ENERGY RECOVERY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2018
 
2017*
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net income
$
15,017

 
 
$
1,351

 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Stock-based compensation
3,184
 
 
 
2,120
 
 
Depreciation and amortization
2,040
 
 
 
1,820
 
 
Amortization of premiums on investments
267
 
 
 
230
 
 
Provision for warranty claims
135
 
 
 
91
 
 
Reversal of accruals related to expired warranties
(84
)
 
 
(123
)
 
Unrealized (gain) loss on foreign currency translation
(51
)
 
 
16
 
 
Provision for doubtful accounts
328
 
 
 
10
 
 
Adjustments for excess or obsolete inventory
17
 
 
 
(119
)
 
Deferred income taxes
(11,512
)
 
 
(233
)
 
Loss on disposal of fixed assets
22
 
 
 
 
 
Other non-cash adjustments
2
 
 
 
(93
)
 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
833
 
 
 
(536
)
 
Contract assets
186
 
 
 
(2,223
)
 
Inventories
(907
)
 
 
(1,657
)
 
Prepaid and other assets
(10,477
)
 
 
(522
)
 
Accounts payable
(1,976
)
 
 
1,324
 
 
Accrued expenses and other liabilities
7,532
 
 
 
(3,099
)
 
Income taxes
(577
)
 
 
412
 
 
Contract liabilities
(5,649
)
 
 
(4,753
)
 
Net cash used in operating activities
(1,670
)
 
 
(5,984
)
 
Cash Flows From Investing Activities:
 
 
 
Maturities of marketable securities
40,638
 
 
 
12,505
 
 
Purchases of marketable securities
(43,117
)
 
 
(31,146
)
 
Capital expenditures
(1,536
)
 
 
(3,777
)
 
Net cash used in investing activities
(4,015
)
 
 
(22,418
)
 
Cash Flows From Financing Activities:
 
 
 
Net proceeds from issuance of common stock
2,390
 
 
 
3,682
 
 
Tax payment for employee shares withheld
(76
)
 
 
(195
)
 
Repayment of long-term debt
(5
)
 
 
(5
)
 
Repurchase of common stock
(10,000
)
 
 
(4,276
)
 
Net cash used in financing activities
(7,691
)
 
 
(794
)
 
Effect of exchange rate differences on cash and cash equivalents
22
 
 
 
(15
)
 
Net change in cash, cash equivalents and restricted cash
(13,354
)
 
 
(29,211
)
 
Cash, cash equivalents and restricted cash, beginning of year
30,626
 
 
 
65,748
 
 
Cash, cash equivalents and restricted cash, end of period
$
17,272

 
 
$
36,537

 
*Prior-period information has been retrospectively adjusted due to our adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) on January 1, 2018.




7




ENERGY RECOVERY, INC.
FINANCIAL INFORMATION BY SEGMENT
(In thousands)
(Unaudited)
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
 
 
Water
 
Oil & Gas
 
Total
 
Water
 
Oil & Gas
 
Total
 
Product revenue
$
17,116
 
 
 
$
290
 
 
 
$
17,406
 
 
$
28,164
 
 
 
$
300
 
 
 
$
28,464
 
 
Product cost of revenue
5,640
 
 
 
336
 
 
 
5,976
 
 
8,868
 
 
 
422
 
 
 
9,290
 
 
Product gross profit
11,476
 
 
 
(46
)
 
 
11,430
 
 
19,296
 
 
 
(122
)
 
 
19,174
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
License and development revenue
 
 
 
3,358
 
 
 
3,358
 
 
 
 
 
6,107
 
 
 
6,107
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
666
 
 
 
371
 
 
 
1,037
 
 
971
 
 
 
1,022
 
 
 
1,993
 
 
Sales and marketing
1,363
 
 
 
318
 
 
 
1,681
 
 
2,808
 
 
 
662
 
 
 
3,470
 
 
Research and development
230
 
 
 
3,375
 
 
 
3,605
 
 
474
 
 
 
7,040
 
 
 
7,514
 
 
Amortization of intangibles
158
 
 
 
 
 
 
158
 
 
316
 
 
 
 
 
 
316
 
 
Operating expenses
2,417
 
 
 
4,064
 
 
 
6,481
 
 
4,569
 
 
 
8,724
 
 
 
13,293
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
9,059
 
 
 
$
(752
)
 
 
8,307
 
 
$
14,727
 
 
 
$
(2,739
)
 
 
11,988
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Corporate operating expenses
 
 
 
 
4,066
 
 
 
 
 
 
9,078
 
 
Consolidated operating income
 
 
 
 
4,241
 
 
 
 
 
 
2,910
 
 
Non-operating income
 
 
 
 
380
 
 
 
 
 
 
628
 
 
Income before income taxes
 
 
 
 
$
4,621
 
 
 
 
 
 
$
3,538
 
 
 
Three Months Ended June 30, 2017*
 
Six Months Ended June 30, 2017*
 
Water
 
Oil & Gas
 
Total
 
Water
 
Oil & Gas
 
Total
Product revenue
$
9,764
 
 
 
$
1,100
 
 
 
$
10,864
 
 
$
20,480
 
 
 
$
2,629
 
 
 
$
23,109
 
Product cost of revenue
2,705
 
 
 
867
 
 
 
3,572
 
 
6,229
 
 
 
1,955
 
 
 
8,184
 
Product gross profit
7,059
 
 
 
233
 
 
 
7,292
 
 
14,251
 
 
 
674
 
 
 
14,925
 
 
 
 
 
 
 
 
 
 
 
 
 
License and development revenue
 
 
 
3,050
 
 
 
3,050
 
 
 
 
 
5,298
 
 
 
5,298
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
General and administrative
313
 
 
 
375
 
 
 
688
 
 
631
 
 
 
724
 
 
 
1,355
 
Sales and marketing
1,244
 
 
 
563
 
 
 
1,807
 
 
2,743
 
 
 
1,204
 
 
 
3,947
 
Research and development
232
 
 
 
2,819
 
 
 
3,051
 
 
494
 
 
 
5,065
 
 
 
5,559
 
Amortization of intangibles
158
 
 
 
 
 
 
158
 
 
316
 
 
 
 
 
 
316
 
Operating expenses
1,947
 
 
 
3,757
 
 
 
5,704
 
 
4,184
 
 
 
6,993
 
 
 
11,177
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
5,112
 
 
 
$
(474
)
 
 
4,638
 
 
$
10,067
 
 
 
$
(1,021
)
 
 
9,046
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Corporate operating expenses
 
 
 
 
3,632
 
 
 
 
 
 
7,687
 
Consolidated operating income
 
 
 
 
1,006
 
 
 
 
 
 
1,359
 
Non-operating income
 
 
 
 
111
 
 
 
 
 
 
228
 
Income before income taxes
 
 
 
 
$
1,117
 
 
 
 
 
 
$
1,587
 
*Prior-period information has been retrospectively adjusted due to our adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) on January 1, 2018.


8




ENERGY RECOVERY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

This press release includes non-GAAP financial information because we plan and manage our business using such information. Our non-GAAP Total Gross Margin is determined by adding back the license and development revenue associated with the amortization of the VorTeq exclusivity fee. Our non-GAAP Adjusted Net Income or Loss is determined by adding back non-recurring operating and tax expenses/(benefits).

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017*
 
2018
 
2017*
Product revenue
$
17,406

 
 
$
10,864

 
 
$
28,464

 
 
$
23,109

 
License and development revenue
3,358
 
 
 
3,050
 
 
 
6,107
 
 
 
5,298
 
 
Total revenue
$
20,764

 
 
$
13,914

 
 
$
34,571

 
 
$
28,407

 
 
 
 
 
 
 
 
 
Product gross profit
$
11,430

 
 
$
7,292

 
 
$
19,174

 
 
$
14,925

 
License and development revenue
3,358
 
 
 
3,050
 
 
 
6,107
 
 
 
5,298
 
 
Total gross profit (non-GAAP)
$
14,788

 
 
$
10,342

 
 
$
25,281

 
 
$
20,223

 
 
 
 
 
 
 
 
 
Product gross margin
65.7
 
%
 
67.1
 
%
 
67.4
 
%
 
64.6
 
%
Total gross margin (non-GAAP)
71.2
 
%
 
74.3
 
%
 
73.1
 
%
 
71.2
 
%
 
 
 
 
 
 
 
 
Net income
$
15,743

 
 
$
929

 
 
$
15,017

 
 
$
1,351

 
Reversal of non-recurring expense (benefit) (non-GAAP)
(11,774
)
 
 
 
 
 
(10,763
)
 
 
 
 
Adjusted net income (non-GAAP)
$
3,969

 
 
$
929

 
 
$
4,254

 
 
$
1,351

 
 
 
 
 
 
 
 
 
Income per share:
 
 
 
 
 
 
 
Diluted
$
0.28

 
 
$
0.02

 
 
$
0.27

 
 
$
0.02

 
Diluted (non-GAAP)
$
0.07

 
 
$
0.02

 
 
$
0.08

 
 
$
0.02

 
 
 
 
 
 
 
 
 
Number of diluted shares used in per share calculations
 
 
 
 
 
 
 
 
 
 
 
Diluted shares
55,406
 
 
 
55,565
 
 
 
55,437
 
 
 
55,804
 
 
*Prior-period information has been retrospectively adjusted due to our adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) on January 1, 2018.

9

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Energy Recovery, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2018 10-K Annual Report includes:

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  • Peers / Competitors

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Energy Recovery, Inc. provided additional information to their SEC Filing as exhibits

Ticker: ERII
CIK: 1421517
Form Type: 8-K Corporate News
Accession Number: 0001421517-18-000135
Submitted to the SEC: Thu Aug 02 2018 4:28:19 PM EST
Accepted by the SEC: Thu Aug 02 2018
Period: Thursday, August 2, 2018
Industry: Special Industry Machinery
Events:
  1. Earnings Release
  2. Financial Exhibit

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