0001421517false00014215172025-02-262025-02-26


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 26, 2025
erilogoh4c.jpg
Energy Recovery, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware001-34112
01-0616867
(State or Other Jurisdiction of Incorporation)(Commission File Number)
(I.R.S. Employer Identification No.)

1717 Doolittle Dr., San Leandro, CA 94577
(Address of Principal Executive Offices) (Zip Code)

510-483-7370
(Registrant’s telephone number, including area code)

Not applicable
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per shareERIIThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

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. ¨




Item 2.02    Results of Operations and Financial Condition

On February 26, 2025, Energy Recovery, Inc. (the “Company”) issued an earnings press release announcing its financial results for the fourth quarter and year ended December 31, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits
Exhibit Number
Description
Press release of Energy Recovery, Inc., dated February 26, 2025, to report its financial results for the fourth quarter and year ended December 31, 2024.


SIGNATURE

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 hereunto duly authorized.


Date:    February 26, 2025
Energy Recovery, Inc.
By:/s/ William Yeung
William Yeung
Chief Legal Officer



Exhibit 99.1
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Energy Recovery Reports its Fourth Quarter 2024 Financial Results

SAN LEANDRO, Calif. - February 26, 2025 – Energy Recovery, Inc. (Nasdaq:ERII) (“Energy Recovery” or the “Company”) today announced its financial results for the fourth quarter and year ended December 31, 2024.

Fourth Quarter Highlights
•Revenue of $67.1 million, an increase of 17% as compared to Q4’2023 and resulting in full-year revenue at the midpoint of guidance.
•Gross margin of 70.2%, an increase of 110 bps, as compared to Q4’2023, due primarily to benefits from our manufacturing transformation.
•Operating expenses of $21.5 million, an increase of 13.9%, as compared to Q4’2023, due primarily to $2.5 million of restructuring costs related to our announced workforce reduction and executive transition costs.
•Income from operations of $25.6 million, an increase of 24.3%, as compared to Q4’2023, mainly due to higher revenue and higher gross margin.
•Net income of $23.5 million and adjusted EBITDA(1) of $31.3 million.
•Cash and investments of $99.9 million, which includes cash, cash equivalents, and short- and long-term investments.

In conjunction with these financial results, management has released a letter to shareholders reviewing business and financial updates from the fourth quarter and discussing our outlook for 2025. This letter is located under “Financial Info” in the “Investors” section on the Energy Recovery website (https://ir.energyrecovery.com/financial-information).

Financial Highlights
Quarter-to-DateYear to Date
Q4’2024
Q4’2023
vs. Q4’2023202420232024 vs. 2023
(In millions, except net income per share, percentages and basis points)
Revenue$67.1$57.2up 17%$144.9$128.3up 13%
Gross margin70.2%69.1%up 110 bps66.9%67.8%down 90 bps
Operating margin38.2%36.0%up 220 bps13.6%14.8%down 120 bps
Net income$23.5$19.8up 19%$23.1$21.5up 7%
Net income per share$0.41$0.34up $0.07$0.40$0.37up $0.03
Effective tax rate10.4%5.3%
Cash provided by operations$9.0$13.8$20.5$26.1


Non-GAAP Financial Highlights (1)
Quarter-to-DateYear to Date
Q4’2024
Q4’2023
vs. Q4’2023202420232024 vs. 2023
(In millions, except adjusted net income per share, percentages and basis points)
Adjusted operating margin45.2%39.9%up 530 bps26.2%21.1%up 510 bps
Adjusted net income$28.3$22.0up 29%$40.7$28.9up 41%
Adjusted net income per share$0.50$0.39up $0.11$0.71$0.51up $0.20
Adjusted EBITDA$31.3$23.9$42.0$31.2
Free cash flow$8.9$12.4$19.2$23.5
(1)Refer to the sections “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for definitions of our non-GAAP financial measures and reconciliations of GAAP to non-GAAP amounts, respectively.



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. These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. Potential risks and uncertainties include risks relating to the future demand for the Company’s products, risks relating to performance by our customers and third-party partners, risks relating to the timing of revenue, and 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, 2023, 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 income, adjusted net income per share, 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 Financial Results
•Adjusted operating margin is a non-GAAP financial measure that the Company defines as income from operations which excludes i) stock-based compensation; ii) executive transition costs, such as executive search costs, retention costs, one-time severance costs and one-time corporate growth strategy costs; and iii) restructuring charges, divided by revenues.
•Adjusted net income is a non-GAAP financial measure that the Company defines as net income which excludes i) stock-based compensation; ii) executive transition costs; iii) restructuring charges; and iv) the applicable tax effect of the excluded items including the stock-based compensation discrete tax item.
•Adjusted net income per share is a non-GAAP financial measure that the Company defines as net income, which excludes i) stock-based compensation; ii) executive transition costs; iii) restructuring charges; and iv) the applicable tax effect of the excluded items including the stock-based compensation discrete tax item, divided by basic shares outstanding.
•Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net income which excludes i) depreciation and amortization; ii) stock-based compensation; iii) executive transition costs; iv) restructuring charges; v) other income, net, such as interest income and other non-operating income (expense), net; and vi) provision for income taxes.
•Free cash flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities less capital expenditures.




Conference Call to Discuss Financial Results

LIVE CONFERENCE Q&A CALL:
Wednesday, February 26, 2025, 2:00 PM PT / 5:00 PM ET
US / Canada Toll-Free: +1 (866) 682-6100
Local / International Toll: +1 (862) 298-0702

CONFERENCE Q&A CALL REPLAY:
Available approximately three hours after conclusion of the live call.
Expiration: Tuesday, March 25, 2025
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13749222

Investors may also access the live call and the replay over the internet on the “Events” page of the Company’s website located at https://ir.energyrecovery.com/news-events/ir-calendar.


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 (Nasdaq: ERII) is a trusted global leader in energy efficiency technology. Building on the Company’s pressure exchanger technology platform, the Company designs and manufactures reliable, high-performance solutions that generate cost savings and increase energy efficiency across several industries. With a strong foundation in the desalination industry, the Company has delivered transformative solutions that optimize operations and deliver positive environmental impact to its customers worldwide for more than 30 years. Headquartered in the San Francisco Bay Area, the Company has manufacturing and research and development facilities across California with sales and on-site technical support available globally. To learn more, visit https://energyrecovery.com/.


Contact
Investor Relations
ir@energyrecovery.com



ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
2024		December 31,
2023
(In thousands)
ASSETS
Cash, cash equivalents and investments$99,851 $122,375 
Accounts receivable and contract assets66,842 47,529 
Inventories, net24,906 26,149 
Prepaid expenses and other assets3,889 3,251 
Property, equipment and operating leases25,119 30,168 
Goodwill12,790 12,790 
Deferred tax assets and other assets9,395 10,712 
TOTAL ASSETS$242,792 $252,974 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable, accrued expenses, and other liabilities, current$20,837 $18,583 
Contract liabilities and other liabilities, non-current628 1,304 
Lease liabilities11,317 13,279 
Total liabilities32,782 33,166 
Stockholders’ equity210,010 219,808 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$242,792 $252,974 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended December 31,Years Ended December 31,
 2024202320242023
 (In thousands, except per share data)
Revenue$67,075 $57,189 $144,948 $128,349 
Cost of revenue19,955 17,690 48,015 41,270 
Gross profit47,120 39,499 96,933 87,079 
Operating expenses
General and administrative8,303 7,160 33,074 28,864 
Sales and marketing6,754 6,767 25,423 22,164 
Research and development3,972 4,958 16,236 17,001 
Restructuring charges2,476 — 2,476 — 
Total operating expenses21,505 18,885 77,209 68,029 
Income from operations25,615 20,614 19,724 19,050 
Other income, net1,240 1,298 6,011 3,655 
Income before income taxes26,855 21,912 25,735 22,705 
Provision for income taxes3,384 2,107 2,685 1,201 
Net income$23,471 $19,805 $23,050 $21,504 
Net income per share
Basic$ 0.41 $ 0.35 $ 0.40 $ 0.38 
Diluted$ 0.41 $ 0.34 $ 0.40 $ 0.37 
Number of shares used in per share calculations
Basic56,629 56,735 57,213 56,444 
Diluted57,236 57,671 57,822 57,740 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Years Ended December 31,
20242023
(In thousands)
Cash flows from operating activities:
Net income$23,050 $21,504 
Non-cash adjustments16,214 13,889 
Net cash used in operating assets and liabilities(18,742)(9,339)
Net cash provided by operating activities20,522 26,054 
Cash flows from investing activities:
Net investment in marketable securities(14,489)(16,634)
Capital expenditures(1,298)(2,567)
Proceeds from sales of fixed assets133 87 
Net cash used in investing activities(15,654)(19,114)
Cash flows from financing activities:
Net proceeds from issuance of common stock7,100 4,794 
Repurchase of common stock(50,384)— 
Net cash (used in) provided by financing activities(43,284)4,794 
Effect of exchange rate differences(52)33 
Net change in cash, cash equivalents and restricted cash$(38,468)$11,767 
Cash, cash equivalents and restricted cash, end of year$29,757 $68,225 



ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)

Channel Revenue
Three Months Ended December 31,Years Ended December 31,
20242023vs. 202320242023vs. 2023
(In thousands, except percentages)
Megaproject$46,475$41,382up 12%$95,399$83,665up 14%
Original equipment manufacturer16,3159,150up 78%31,52525,995up 21%
Aftermarket4,2856,657down 36%18,02418,689down 4%
Total revenue$67,075$57,189up 17%$144,948$128,349up 13%
Segment Activity
Three Months Ended December 31,
20242023
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Revenue$66,959 $116 $— $67,075 $57,103 $86 $— $57,189 
Cost of revenue19,756 199 — 19,955 17,154 536 — 17,690 
Gross profit (loss)47,203 (83)— 47,120 39,949 (450)— 39,499 
Operating expenses
General and administrative2,490 913 4,900 8,303 1,914 951 4,295 7,160 
Sales and marketing4,324 1,856 574 6,754 4,124 1,882 761 6,767 
Research and development1,205 2,767 — 3,972 1,130 3,828 — 4,958 
Restructuring charges1,147 832 497 2,476 — — — — 
Total operating expenses9,166 6,368 5,971 21,505 7,168 6,661 5,056 18,885 
Operating income (loss)$38,037 $(6,451)$(5,971)25,615 $32,781 $(7,111)$(5,056)20,614 
Other income, net1,240 1,298 
Income before income taxes$26,855 $21,912 

Years Ended December 31,
20242023
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Revenue$144,310 $638 $— $144,948 $127,725 $624 $— $128,349 
Cost of revenue47,389 626 — 48,015 40,290 980 — 41,270 
Gross profit (loss)96,921 12 — 96,933 87,435 (356)— 87,079 
Operating expenses
General and administrative8,127 3,821 21,126 33,074 7,751 3,927 17,186 28,864 
Sales and marketing15,683 7,340 2,400 25,423 13,691 6,053 2,420 22,164 
Research and development4,523 11,713 — 16,236 4,251 12,750 — 17,001 
Restructuring charges1,147 832 497 2,476 — — — — 
Total operating expenses29,480 23,706 24,023 77,209 25,693 22,730 19,606 68,029 
Operating income (loss)$67,441 $(23,694)$(24,023)19,724 $61,742 $(23,086)$(19,606)19,050 
Other income, net6,011 3,655 
Income before income taxes$25,735 $22,705 

Stock-based Compensation
 Three Months Ended December 31,Years Ended December 31,
 2024202320242023
(In thousands)
Stock-based compensation expense charged to:
Cost of revenue$96 $164 $1,076 $719 
General and administrative641 1,033 4,013 3,661 
Sales and marketing722 649 3,489 2,333 
Research and development351 381 1,744 1,325 
Total stock-based compensation expense$1,810 $2,227 $10,322 $8,038 



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-DateYear to Date
Q4'2024Q4'202320242023
(In millions, except shares, per share and percentages)
Operating margin
38.2 %36.0 %13.6 %14.8 %
Stock-based compensation2.7 3.9 7.1 6.3 
Executive transition costs0.7 — 3.7 — 
Restructuring charges3.7 — 1.7 — 
Adjusted operating margin
45.2 %39.9 %26.2 %21.1 %
Net income
$23.5 $19.8 $23.1 $21.5 
Stock-based compensation
1.8 2.2 10.3 8.0 
Executive transition costs (2)
0.4 — 4.8 — 
Restructuring charges (2)
2.2 — 2.2 — 
Stock-based compensation discrete tax item0.4 — 0.3 (0.7)
Adjusted net income
$28.3 $22.0 $40.7 $28.9 
Net income per share
$0.41 $0.34 $0.40 $0.37 
Adjustments to net income per share (3)
0.09 0.05 0.31 0.14 
Adjusted net income per share
$0.50 $0.39 $0.71 $0.51 
Net income
$23.5 $19.8 $23.1 $21.5 
Stock-based compensation1.8 2.2 10.3 8.0 
Depreciation and amortization1.0 1.0 4.0 4.1 
Executive transition costs0.4 — 5.4 — 
Restructuring charges2.5 — 2.5 — 
Other income, net
(1.2)(1.3)(6.0)(3.7)
Provision for income taxes3.4 2.1 2.7 1.2 
Adjusted EBITDA
$31.3 $23.9 $42.0 $31.2 
Free cash flow
Net cash provided by operating activities$9.0 $13.8 $20.5 $26.1 
Capital expenditures(0.1)(1.4)(1.3)(2.6)
Free cash flow$8.9 $12.4 $19.2 $23.5 
(1)Amounts may not total due to rounding.
(2)Amounts presented are net of tax.
(3)Refer to the sections “Use of Non-GAAP Financial Measures” for description of items included in adjustments.


v3.25.0.1
Cover Page
Feb. 26, 2025
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 26, 2025
Entity Registrant Name Energy Recovery, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-34112
Entity Tax Identification Number 01-0616867
Entity Address, Address Line One 1717 Doolittle Dr.
Entity Address, City or Town San Leandro
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94577
City Area Code 510
Local Phone Number 483-7370
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 par value per share
Trading Symbol ERII
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001421517
Amendment Flag false
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