SAN LEANDRO, Calif.,
Nov. 1, 2017 /PRNewswire/
-- 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 of 2017 as well as the year-to-date results for
the first nine months of 2017.
Third Quarter Summary:
- Total revenue of $15.1 million,
an increase of 23% year-over-year; highest Q3 revenue in Company
history
- Product gross margin of 69.3%; highest product gross margin in
Company history
- Total gross margin(1) of 71.8%; highest total gross
margin in Company history
- Net income of $1.7 million, or
$0.03 per share
Year-to-Date Summary:
- Total revenue of $40.8 million,
an increase of 11% year-over-year; highest nine month revenue in
Company history
- Product gross margin of 66.5%; highest nine month product gross
margin in Company history
- Total gross margin(1) of 69.6%; highest nine month
total gross margin(1) in Company history
- Net income of $0.7 million, or
$0.01 per share
President and CEO Joel Gay
remarked, "In addition to posting yet again record-breaking
financial results in the quarter, the Company concluded full-scale,
private testing of the second generation VorTeq system at an
undisclosed facility, and in doing so, executed the most successful
examination of the technology to date. While we have in the
past refrained from disclosing discreet testing results, due to the
swelling anticipation as to the outcome of this process and its
materiality to the Company, we feel our shareholders deserve an
unfiltered account of what are indisputable proof points as to the
product's commercial potential.
The following serves as a synopsis of the testing
highlights:
- Achieved individual pressure exchanger flow rates of up
to 8.5 barrels per minute at 9,000 psi clean, which is to say
without proppant, all 12 pressure exchangers achieved
rate;
- Achieved duration runs of 60 barrels per minute at 9,000 psi
clean, again without proppant;
- Pumped 100,000 lbs of proppant at rates of 62 to 64 barrels per
minute, proppant concentration of up to 2.4 pounds per gallon added
and at pressures ranging from 6,800 psi to 7,200 psi; with 87,000
lbs of proppant being processed in a continuous, uninterrupted
33-minute run.
Suffice it to say that such results outperformed our
expectations as they were achieved during the first and only
private testing session which lasted approximately one week.
It should be further noted that the second generation VorTeq system
is entirely bespoke and distinct from the first generation, which
is to say we did not export a single component from Gen-I to
Gen-II. That we executed the design, manufacturing and
successful testing of a product of this size and complexity in 10
months is an achievement that stands on its own merit.
Importantly, we did not witness a single failure mode attributed to
the vibrational concerns experienced last year during the testing
of the Gen-I system."
Mr. Gay continued, "The technical challenges to executing such
an experiment are awesome, specifically simulating a well and
having to dissipate up to 20 megawatts of energy contained in a
proppant-laden fluid. To simulate the back pressure of a
well, we employed a series of progressive chokes downstream of the
VorTeq. To this end, while we were able to reach the desired
pressure of 9,000 psi without proppant, proppant testing proved
more challenging as the very minute sand was introduced to the
testing system, the progressive chokes began to rapidly erode –
much like the valves in a typical fracking pump – thereby limiting
our ability to reach higher pressures. This learning will
invariably influence how we design the testing apparatus for future
tests up to and including milestone one. In this, success by
the year-end remains our objective, yet we will employ the same
diligent approach as we have heretofore, keeping a keen eye on the
one and only objective: commercialization.
We are hopeful that this fulsome disclosure allows the discourse
to progress beyond "does the VorTeq work," to "how and when will it
be commercialized?" We have been working flat-out throughout
the year to arrive at this point and I am proud of the incredibly
talented men and women that constitute our Engineering Team, as
well the balance of the organization whose peer group-leading
performance has not gone unnoticed by
Management."
Revenues
For the third quarter of 2017, the Company generated total
revenue of $15.1 million,
representing the strongest third quarter top-line performance in
Company history, for both the Water and Oil & Gas
Segments. Revenue increased by $2.8
million, or 23%, from $12.3
million in the third quarter of 2016. Of the
$2.8 million increase in revenue,
$2.6 million was attributable to the
Water Segment and $0.2 million was
attributable to the Oil & Gas Segment.
The Water Segment generated total product revenue of
$13.2 million, compared to
$10.6 million in the third quarter of
2016. The $2.6 million, or 25%,
increase in revenue was due to higher Mega Project ("MPD") and
Original Equipment Manufacturer ("OEM") shipments during the third
quarter of 2017.
The Oil & Gas Segment generated total revenue of
$1.9 million, compared to
$1.7 million in the third quarter of
2016. The $0.2 million, or 9%,
increase in revenue was due to higher percentage-of-completion
("PoC") revenue recognition associated with the sale of multiple
IsoBoost® systems compared to the third quarter of 2016.
License and development revenue of $1.25
million was recognized in each of the third quarters of 2017
and 2016.
Gross Margin
For the third quarter of 2017, product gross margin was 69.3%,
representing the highest product gross margin in Company
history. Product gross margin increased 520 basis points from
64.0% in the third quarter of 2016. This increase was largely
driven by manufacturing efficiencies, higher MPD volume and
favorable price and product mix in the Water Segment. Including
license and development revenue, total gross margin(1)
of 71.8% for the third quarter of 2017 was the highest total gross
margin(1) in Company history. Total gross
margin(1) increased 410 basis points from 67.7% in the
third quarter of 2016.
The Water Segment generated product gross margin of 71.1%,
representing the highest Water Segment product gross margin in
Company history. Water Segment product gross margin increased
by 6.0%, compared to 65.5% in the third quarter of 2016. This
increase was largely driven by manufacturing efficiencies, higher
volume and favorable price and product mix in the third quarter of
2017.
The Oil & Gas Segment generated product gross margin of
28.2%, compared to 29.6% in the third quarter of 2016. This
decrease was attributable to PoC revenue recognition costs.
Including license and development revenue, the Oil & Gas
Segment total gross margin(1) for the third quarter of
2017 was 76.5%.
Operating Expenses
For the third quarter of 2017, operating expenses were
$9.3 million, an increase of
$0.3 million from $9.0 million in the third quarter of 2016. The
increase in operating expense was primarily due to increased
operating expense in the Oil & Gas Segment offset by slightly
lower operating expenses in the Water Segment.
The Water Segment operating expenses for the third quarter of
2017 were $2.1 million, a decrease of
$0.1 million from $2.2 million in the third quarter of 2016.
The Oil & Gas Segment operating expenses for the third
quarter of 2017 were $3.5 million, an
increase of $0.4 million from
$3.1 million in the third quarter of
2016. This increase was driven by the Company's continued
investment in research and development activities.
Finally, corporate operating expenses of $3.7 million for the third quarter of 2017 were
on par with the third quarter of 2016.
Bottom Line Summary
To summarize financial performance for the third quarter of
2017, the Company reported a net income of $1.7 million, or $0.03 per share. Comparatively, the Company
reported a net loss of $0.6 million,
or $(0.01) per share, for the third
quarter of 2016.
Cash Flow Highlights
The Company ended the quarter with unrestricted cash of
$19.2 million, current and
non-current restricted cash of $3.1
million, and short-term investments of $72.2 million, all of which represent a combined
total of $94.5 million.
During the nine months ended September
30, 2017, the Company's net cash used by operating
activities was ($2.2) million.
This includes a net income of $0.7
million and non-cash expenses of $5.6
million, the largest of which were share-based compensation
of $3.1 million and depreciation and
amortization of $2.7 million.
Unfavorably impacting cash flow from operating activities was a
reduction in deferred revenue related to the amortization of the
VorTeq License Agreement exclusivity fee of ($3.8) million, an increase in estimated earnings
in excess of billings of ($2.6)
million associated with our PoC revenue recognition, a
decrease in accrued liabilities of ($1.7)
million and an increase in inventory of ($1.5) million, partially offset by an increase
in accounts payable of $1.8
million. Cash used in investing activities was
($39.1) million driven by the net
purchases of marketable securities of ($33.6) million and capital expenditures of
($6.8) million, partially offset by a
decrease in restricted cash of $1.3
million. Cash used in financing activities was
($0.8) million, driven by common
stock repurchases of ($4.3) million
and vested restricted stock shares withheld for tax withholdings of
($0.2) million, partially offset by
the issuance of common stock related to option exercises of
$3.7 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 expected timing with respect to milestone
testing, and the Company's belief that it will commercialize the
VorTeq system. 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 our 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 our business, and
the risks discussed under "Risk Factors" in our Form 10-K filed
with the U.S. Securities and Exchange Commission ("SEC") on
March 10, 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.
Conference Call to Discuss Third Quarter 2017 Financial
Results
LIVE CONFERENCE CALL:
Thursday, November 2, 2017,
8:00 AM PDT / 11:00 AM EDT
Listen-only, US / Canada Toll-free: 888-394-8218
Listen-only, Local / International Toll: (+1) 719-325-2202
Access code: 7579235
CONFERENCE CALL REPLAY:
Expiration: Thursday, November 16,
2017
US / Canada Toll-free: 888-203-1112
Local / International Toll: (+1) 719-457-0820
Access code: 7579235
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
Brian
Uhlmer
buhlmer@energyrecovery.com
(713) 858-2284
1 "Total gross margin" is a non-GAAP financial
measures. Please refer to the discussion under headings "Use of
Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP
Financial Measures."
ENERGY RECOVERY
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands, except
share data and par value)
|
(unaudited)
|
|
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
19,245
|
|
|
$
|
61,364
|
|
Restricted
cash
|
2,908
|
|
|
2,297
|
|
Short-term
investments
|
72,241
|
|
|
39,073
|
|
Accounts receivable,
net of allowance for doubtful accounts of $96 and $130 at September
30, 2017 and December 31, 2016, respectively
|
11,929
|
|
|
11,759
|
|
Unbilled receivables,
current
|
573
|
|
|
190
|
|
Cost and estimated
earnings in excess of billings
|
4,453
|
|
|
1,825
|
|
Inventories
|
6,283
|
|
|
4,550
|
|
Prepaid expenses and
other current assets
|
1,663
|
|
|
1,311
|
|
Total current
assets
|
119,295
|
|
|
122,369
|
|
Restricted cash,
non-current
|
182
|
|
|
2,087
|
|
Deferred tax assets,
non-current
|
1,711
|
|
|
1,270
|
|
Property and
equipment, net of accumulated depreciation of $23,352 and $21,385
at September 30, 2017 and December 31, 2016,
respectively
|
13,632
|
|
|
8,643
|
|
Goodwill
|
12,790
|
|
|
12,790
|
|
Other intangible
assets, net
|
1,427
|
|
|
1,900
|
|
Other assets,
non-current
|
2
|
|
|
4
|
|
Total
assets
|
$
|
149,039
|
|
|
$
|
149,063
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
3,336
|
|
|
$
|
1,505
|
|
Accrued expenses and
other current liabilities
|
7,657
|
|
|
9,019
|
|
Income taxes
payable
|
142
|
|
|
16
|
|
Accrued warranty
reserve
|
314
|
|
|
406
|
|
Deferred
revenue
|
6,230
|
|
|
6,201
|
|
Current portion of
long-term debt
|
11
|
|
|
11
|
|
Total current
liabilities
|
17,690
|
|
|
17,158
|
|
Long-term debt, net
of current portion
|
19
|
|
|
27
|
|
Deferred tax
liabilities, non-current
|
2,428
|
|
|
2,233
|
|
Deferred revenue,
non-current
|
60,223
|
|
|
63,958
|
|
Other non-current
liabilities
|
411
|
|
|
554
|
|
Total
liabilities
|
80,771
|
|
|
83,930
|
|
Commitments and
Contingencies (Note 9)
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.001 par value; 10,000,000 shares authorized; no shares issued or
outstanding
|
—
|
|
|
—
|
|
Common stock, $0.001
par value; 200,000,000 shares authorized; 57,855,263 shares issued
and 53,592,430 shares outstanding at September 30, 2017, and
56,884,207 shares issued and 53,162,551, shares outstanding at
December 31, 2016
|
58
|
|
|
57
|
|
Additional paid-in
capital
|
146,320
|
|
|
139,676
|
|
Accumulated other
comprehensive loss
|
(77)
|
|
|
(118)
|
|
Treasury stock, at
cost, 4,262,833 repurchased at September 30, 2017 and 3,721,656
repurchased at December 31, 2016
|
(20,486)
|
|
|
(16,210)
|
|
Accumulated
deficit
|
(57,547)
|
|
|
(58,272)
|
|
Total stockholders'
equity
|
68,268
|
|
|
65,133
|
|
Total liabilities and
stockholders' equity
|
$
|
149,039
|
|
|
$
|
149,063
|
|
ENERGY RECOVERY,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Product
revenue
|
$
|
13,834
|
|
|
$
|
11,024
|
|
|
$
|
37,017
|
|
|
$
|
33,048
|
|
Product cost of
revenue
|
4,254
|
|
|
3,968
|
|
|
12,394
|
|
|
11,878
|
|
Product gross
profit
|
9,580
|
|
|
7,056
|
|
|
24,623
|
|
|
21,170
|
|
|
|
|
|
|
|
|
|
License and
development revenue
|
1,250
|
|
|
1,250
|
|
|
3,750
|
|
|
3,750
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
General and
administrative
|
4,034
|
|
|
3,971
|
|
|
12,369
|
|
|
12,847
|
|
Sales and
marketing
|
2,061
|
|
|
2,512
|
|
|
6,688
|
|
|
6,517
|
|
Research and
development
|
3,038
|
|
|
2,319
|
|
|
8,624
|
|
|
7,406
|
|
Amortization of
intangible assets
|
157
|
|
|
158
|
|
|
473
|
|
|
473
|
|
Total operating
expenses
|
9,290
|
|
|
8,960
|
|
|
28,154
|
|
|
27,243
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
1,540
|
|
|
(654)
|
|
|
219
|
|
|
(2,323)
|
|
|
|
|
|
|
|
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
Interest
expense
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
|
(2)
|
|
Other non-operating
income
|
233
|
|
|
79
|
|
|
462
|
|
|
137
|
|
Income (loss)
before income taxes
|
1,772
|
|
|
(576)
|
|
|
679
|
|
|
(2,188)
|
|
Provision for
(benefit from) income taxes
|
66
|
|
|
3
|
|
|
(46)
|
|
|
(99)
|
|
Net income
(loss)
|
$
|
1,706
|
|
|
$
|
(579)
|
|
|
$
|
725
|
|
|
$
|
(2,089)
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.01
|
|
|
$
|
(0.04)
|
|
Diluted net income
(loss) per share
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.01
|
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
|
Shares used in basic
per share calculation
|
53,580
|
|
|
52,106
|
|
|
53,717
|
|
|
52,227
|
|
Shares used in
diluted per share calculation
|
55,140
|
|
|
52,106
|
|
|
55,571
|
|
|
52,227
|
|
ENERGY RECOVERY,
INC
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
(unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2017
|
|
2016
|
Cash Flows From
Operating Activities
|
|
|
|
Net income
(loss)
|
$
|
725
|
|
|
$
|
(2,089)
|
|
Adjustments to
reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
|
|
|
Share-based
compensation
|
3,136
|
|
|
2,640
|
|
Depreciation and
amortization
|
2,704
|
|
|
2,771
|
|
Amortization of
premiums on investments
|
379
|
|
|
94
|
|
Provision for
warranty claims
|
145
|
|
|
134
|
|
Unrealized loss on
foreign currency transactions
|
69
|
|
|
65
|
|
Provision for
doubtful accounts
|
16
|
|
|
68
|
|
Change in fair value
of put options
|
—
|
|
|
33
|
|
Other non-cash
adjustments
|
(145)
|
|
|
(120)
|
|
Valuation adjustments
for excess or obsolete inventory
|
(230)
|
|
|
(175)
|
|
Reversal of accruals
related to expired warranties
|
(237)
|
|
|
(201)
|
|
Deferred income
taxes
|
(244)
|
|
|
(270)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
payable
|
1,831
|
|
|
(69)
|
|
Deferred revenue,
product
|
81
|
|
|
557
|
|
Income taxes
payable
|
126
|
|
|
135
|
|
Accounts
receivable
|
(186)
|
|
|
3,330
|
|
Prepaid and other
assets
|
(350)
|
|
|
(598)
|
|
Unbilled
receivables
|
(383)
|
|
|
971
|
|
Inventories
|
(1,503)
|
|
|
839
|
|
Accrued expenses and
other liabilities
|
(1,728)
|
|
|
(1,598)
|
|
Cost and estimated
earnings in excess of billings
|
(2,628)
|
|
|
(440)
|
|
Deferred revenue,
license and development
|
(3,750)
|
|
|
(3,750)
|
|
Net cash (used in)
provided by operating activities
|
(2,172)
|
|
|
2,327
|
|
Cash Flows From
Investing Activities
|
|
|
|
Maturities of
marketable securities
|
30,977
|
|
|
1,000
|
|
Restricted
cash
|
1,294
|
|
|
(15)
|
|
Capital
expenditures
|
(6,843)
|
|
|
(900)
|
|
Purchases of
marketable securities
|
(64,530)
|
|
|
(15,912)
|
|
Net cash used in
investing activities
|
(39,102)
|
|
|
(15,827)
|
|
Cash Flows From
Financing Activities
|
|
|
|
Net proceeds from
issuance of common stock
|
3,722
|
|
|
3,708
|
|
Repayment of
long-term debt
|
(8)
|
|
|
(7)
|
|
Tax payment for
employee shares withheld
|
(228)
|
|
|
—
|
|
Repurchase of common
stock
|
(4,276)
|
|
|
(9,375)
|
|
Net cash used in
financing activities
|
(790)
|
|
|
(5,674)
|
|
Effect of exchange
rate differences on cash and cash equivalents
|
(55)
|
|
|
(66)
|
|
Net change in cash
and cash equivalents
|
(42,119)
|
|
|
(19,240)
|
|
Cash and cash
equivalents, beginning of period
|
61,364
|
|
|
99,931
|
|
Cash and cash
equivalents, end of period
|
$
|
19,245
|
|
|
$
|
80,691
|
|
ENERGY RECOVERY,
INC.
|
FINANCIAL
INFORMATION BY SEGMENT
|
(in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
September 30, 2017
|
|
Three Months
Ended
September 30, 2016
|
|
Water
|
|
Oil
&Gas
|
|
Total
|
|
Water
|
|
Oil
&Gas
|
|
Total
|
Product
revenue
|
$
|
13,227
|
|
|
$
|
607
|
|
|
$
|
13,834
|
|
|
$
|
10,568
|
|
|
$
|
456
|
|
|
$
|
11,024
|
|
Product cost of
revenue
|
3,818
|
|
|
436
|
|
|
4,254
|
|
|
3,647
|
|
|
321
|
|
|
3,968
|
|
Product gross
profit
|
9,409
|
|
|
171
|
|
|
9,580
|
|
|
6,921
|
|
|
135
|
|
|
7,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License and
development revenue
|
—
|
|
|
1,250
|
|
|
1,250
|
|
|
—
|
|
|
1,250
|
|
|
1,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
334
|
|
|
361
|
|
|
695
|
|
|
346
|
|
|
278
|
|
|
624
|
|
Sales and
marketing
|
1,296
|
|
|
431
|
|
|
1,727
|
|
|
1,434
|
|
|
750
|
|
|
2,184
|
|
Research and
development
|
316
|
|
|
2,669
|
|
|
2,985
|
|
|
262
|
|
|
2,023
|
|
|
2,285
|
|
Amortization of
intangibles
|
157
|
|
|
—
|
|
|
157
|
|
|
158
|
|
|
—
|
|
|
158
|
|
Total operating
expenses
|
2,103
|
|
|
3,461
|
|
|
5,564
|
|
|
2,200
|
|
|
3,051
|
|
|
5,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
7,306
|
|
|
$
|
(2,040)
|
|
|
5,266
|
|
|
$
|
4,721
|
|
|
$
|
(1,666)
|
|
|
3,055
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Corporate operating
expenses
|
|
|
|
|
3,726
|
|
|
|
|
|
|
3,709
|
|
Consolidated
operating (loss) income
|
|
|
|
|
1,540
|
|
|
|
|
|
|
(654)
|
|
Non-operating
income
|
|
|
|
|
232
|
|
|
|
|
|
|
78
|
|
(Loss) income before
income taxes
|
|
|
|
|
$
|
1,772
|
|
|
|
|
|
|
$
|
(576)
|
|
|
|
|
|
|
Nine Months
Ended
September 30, 2017
|
|
Nine Months
Ended
September 30, 2016
|
|
Water
|
|
Oil
&Gas
|
|
Total
|
|
Water
|
|
Oil
&Gas
|
|
Total
|
Product
revenue
|
$
|
33,707
|
|
|
$
|
3,310
|
|
|
$
|
37,017
|
|
|
$
|
32,592
|
|
|
$
|
456
|
|
|
$
|
33,048
|
|
Product cost of
revenue
|
10,003
|
|
|
2,391
|
|
|
12,394
|
|
|
11,557
|
|
|
321
|
|
|
11,878
|
|
Product gross
profit
|
23,704
|
|
|
919
|
|
|
24,623
|
|
|
21,035
|
|
|
135
|
|
|
21,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License and
development revenue
|
—
|
|
|
3,750
|
|
|
3,750
|
|
|
—
|
|
|
3,750
|
|
|
3,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
965
|
|
|
1,085
|
|
|
2,050
|
|
|
828
|
|
|
650
|
|
|
1,478
|
|
Sales and
marketing
|
4,039
|
|
|
1,635
|
|
|
5,674
|
|
|
3,663
|
|
|
2,133
|
|
|
5,796
|
|
Research and
development
|
810
|
|
|
7,734
|
|
|
8,544
|
|
|
954
|
|
|
6,394
|
|
|
7,348
|
|
Amortization of
intangibles
|
473
|
|
|
—
|
|
|
473
|
|
|
473
|
|
|
—
|
|
|
473
|
|
Total operating
expenses
|
6,287
|
|
|
10,454
|
|
|
16,741
|
|
|
5,918
|
|
|
9,177
|
|
|
15,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
17,417
|
|
|
$
|
(5,785)
|
|
|
11,632
|
|
|
$
|
15,117
|
|
|
$
|
(5,292)
|
|
|
9,825
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Corporate operating
expenses
|
|
|
|
|
11,413
|
|
|
|
|
|
|
12,148
|
|
Consolidated
operating loss
|
|
|
|
|
219
|
|
|
|
|
|
|
(2,323)
|
|
Non-operating
income
|
|
|
|
|
460
|
|
|
|
|
|
|
135
|
|
Loss before income
taxes
|
|
|
|
|
$
|
679
|
|
|
|
|
|
|
$
|
(2,188)
|
|
ENERGY RECOVERY,
INC.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(in thousands, except
per share data)
|
|
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 Income or Loss is determined by adding
back non-recurring operating expenses
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Product
revenue
|
$
|
13,834
|
|
|
$
|
11,024
|
|
|
$
|
37,017
|
|
|
$
|
33,048
|
|
License and
development revenue
|
1,250
|
|
|
1,250
|
|
|
3,750
|
|
|
3,750
|
|
Total
revenue
|
$
|
15,084
|
|
|
$
|
12,274
|
|
|
$
|
40,767
|
|
|
$
|
36,798
|
|
|
|
|
|
|
|
|
|
Product gross
profit
|
$
|
9,580
|
|
|
$
|
7,056
|
|
|
$
|
24,623
|
|
|
$
|
21,170
|
|
License and
development gross profit
|
1,250
|
|
|
1,250
|
|
|
3,750
|
|
|
3,750
|
|
Total gross profit
(non-GAAP)
|
$
|
10,830
|
|
|
$
|
8,306
|
|
|
$
|
28,373
|
|
|
$
|
24,920
|
|
|
|
|
|
|
|
|
|
Product gross
margin
|
69.3
|
%
|
|
64.0
|
%
|
|
66.5
|
%
|
|
64.1
|
%
|
Total gross margin
(non-GAAP)
|
71.8
|
%
|
|
67.7
|
%
|
|
69.6
|
%
|
|
67.7
|
%
|
|
|
|
|
|
|
|
|
Net income /
(loss)
|
$
|
1,706
|
|
|
$
|
(579)
|
|
|
$
|
725
|
|
|
$
|
(2,089)
|
|
Non-recurring
operating expenses (non-GAAP)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,008
|
|
Adjusted net income /
(loss) (non-GAAP)
|
$
|
1,706
|
|
|
$
|
(579)
|
|
|
$
|
725
|
|
|
$
|
(1,081)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income / (loss) per share
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.01
|
|
|
$
|
(0.04)
|
|
Adjusted basic and
diluted net loss per share (non-GAAP)
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.01
|
|
|
$
|
(0.02)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
53,580
|
|
|
52,106
|
|
|
53,717
|
|
|
52,227
|
|
Weighted average
shares outstanding – diluted
|
55,140
|
|
|
52,106
|
|
|
55,571
|
|
|
52,227
|
|
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SOURCE Energy Recovery, Inc.