Energy Recovery
Energy Recovery Reports Third Quarter 2019 Financial Results
SAN LEANDRO, CA / ACCESSWIRE / October 31, 2019 / 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 third quarter ended on September 30, 2019. Third Quarter Summary:
Year-to-Date Summary:
President and CEO Chris Gannon remarked, "Energy Recovery's track record of strong performance continued in the third quarter. The tremendous performance of our Water business demonstrates that the surge of desalination growth we have anticipated is here. As the size and pace at which projects are being awarded increases, our proactive investments in Water, including an expansion of our manufacturing capacity, are positioning us to capitalize on this historic growth. In the third quarter, we further strengthened our backlog and pipeline for the remainder of 2019, 2020, and 2021, a clear sign that equipment procurement is taking place earlier in the desalination project development cycle." Mr. Gannon added, "In our Oil & Gas business, we are gaining insight and achieving advancements with our VorTeq technology. We are principally focused on accumulating run-time on and identifying failure modes of the VorTeq system as we continue to improve the reliability and repeatability of our technology. The VorTeq is an entirely new, potentially game-changing, technology to be deployed in a mature and vastly competitive industry, and it must work flawlessly once out in the field." Mr. Gannon concluded, "As we near the end of 2019, Energy Recovery remains focused on our near-term strategic objectives – growth and reinvestment in Water and advancement towards VorTeq commercialization. I am proud of the work our team is doing in both areas and believe our strong third quarter results reflect our focus." Revenues For the third quarter ended September 30, 2019, the Company generated total revenue of $24.9 million, an increase of $2.6 million, or 12%, compared to $22.2 million in the third quarter ended September 30, 2018. The Water segment generated total product revenue of $21.8 million for the third quarter ended September 30, 2019, an increase of $3.3 million, or 18%, compared to $18.5 million in the third quarter ended September 30, 2018. This increase was due primarily to higher shipments across all channels, including Aftermarket ("AM"), Mega-Project Development ("MPD") and Original Equipment Manufacturer ("OEM"). The Oil & Gas segment generated total revenue of $3.1 million for the third quarter ended September 30, 2019, a decrease of $0.7 million, or (18)%, compared to $3.8 million in the third quarter ended September 30, 2018. The decrease in license and development revenue, which is calculated as a percentage of Cost to Total Cost, was due primarily to an increase in total estimated project costs. There was no product revenue recognized for the Oil & Gas segment for the quarter ended September 30, 2019. Gross Margin For the third quarter ended September 30, 2019, product gross margin was 75.1%, an increase of 210 basis points from 73.0% in the third quarter ended September 30, 2018. Including license and development revenue, total gross margin(1) was 78.2%, an increase of 80 basis points from 77.4% in the third quarter ended September 30, 2018. The Water segment generated product gross margin of 75.1% for the third quarter ended September 30, 2019, an increase of 140 basis points, compared to 73.7% in the third quarter ended September 30, 2018. This increase was due primarily to higher volume of products sold and favorable price and product mix. The Oil & Gas segment generated no product gross margin in the third quarter ended September 30, 2019, compared to (50.0)% for the third quarter ended September 30, 2018. This was due to no Oil & Gas product revenue recognized in the third quarter ended September 30, 2019. Operating Expenses For the third quarter ended September 30, 2019, operating expenses were $14.9 million, an increase of $3.3 million, or 28%, compared to $11.6 million for the third quarter ended September 30, 2018. The Water segment operating expenses for the third quarter ended September 30, 2019 were $3.3 million, an increase of $0.6 million, or 25%, compared to $2.6 million for the third quarter ended September 30, 2018. This increase was due primarily to research and development investment in the Water segment, and growth in headcount and personnel-related costs. The Oil & Gas segment operating expenses for the third quarter ended September 30, 2019 were $6.2 million, an increase of $1.8 million, or 40%, compared to $4.4 million for the third quarter ended September 30, 2018. This increase was due primarily to the Company's continued investment in Oil & Gas research and development, and growth in headcount and personnel-related costs. The Corporate operating expenses for the third quarter ended September 30, 2019 were $5.4 million, an increase of $0.9 million, or 19%, compared to $4.5 million for the third quarter ended September 30, 2018. This increase was due primarily to an increase in headcount and personnel-related costs, partially offset by lower professional services costs. Bottom Line Summary To summarize the Company's financial performance, on a quarterly basis, the Company reported a net income of $5.1 million, or $0.09 per diluted share for the third quarter ended September 30, 2019, compared to a net income of $4.7 million, or $0.08 per diluted share for the third quarter ended September 30, 2018. This increase was driven by a discrete tax benefit of $1.0 million related to an increase in prior year U.S. federal research and development credits. On an adjusted basis and excluding the discrete tax benefit, the Company reported an adjusted net income(1) of $4.2 million, or $0.07 per non-GAAP diluted share for the third quarter ended September 30, 2019. Cash Flow Highlights The Company finished the third quarter ended September 30, 2019 with cash, cash equivalents, and short-term and long-term restricted cash of $29.8 million, and short-term and long-term investments of $67.5 million, a combined total of $97.3 million. 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 optimism for the long-term health of our Water business, the Company's belief that the Company will successfully commercialize the VorTeq system, and the Company's belief that our business will continue to grow over the next several years. 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, 2018 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, adjusted net income and non-GAAP earnings per share. 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," "Adjusted net income" and "Non-GAAP earnings per share" 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 Third Quarter 2019 Financial Results
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 water, oil & gas, and chemical processing industries. Energy Recovery products annually save customers $2 billion (USD) and offset more than 11.5 million metric tons of carbon dioxide. Headquartered in the Bay Area, Energy Recovery has offices in Dubai, Houston, Madrid, and Shanghai. For more information about the Company, please visit www.energyrecovery.com. Contact Investor Relations ENERGY RECOVERY, INC.
ENERGY RECOVERY, INC.
ENERGY RECOVERY, INC.
ENERGY RECOVERY, INC.
ENERGY RECOVERY, INC.
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 and non-GAAP earnings per share is determined by adding back non-recurring operating and tax expenses/(benefits). SOURCE: Energy Recovery Inc.
10/31/2019 EQS Newswire / EQS Group AG |