Energy Recovery

  • WKN: A0NJUL
  • ISIN: US29270J1007
  • Land: Vereinigte Staaten von Amerika

Nachricht vom 30.07.2020 | 22:02

Energy Recovery Reports Second Quarter Financial Results


San Leandro, 07/30/2020 / 16:02, EST/EDT - EQS Newswire - Energy Recovery


SAN LEANDRO, CA / ACCESSWIRE / July 30, 2020 / Energy Recovery Inc. (NASDAQ:ERII) ("Energy Recovery," "we," "our," or the "Company"), a leader in pressure energy technology for industrial fluid flows, today announced its financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Highlights:

  • Product revenue of $19.3 million, flat year-over-year and a sign of stability of the desalination industry in a period of global uncertainty
  • License and development revenue of $24.4 million related to the termination of the license agreement between the Company and Schlumberger Technology Corporation ("Schlumberger")
  • Product gross margin of 66.0%, a decrease of 550 basis points year-over-year, of which 370 basis points are due to COVID-19 temporary reductions in manufacturing
  • Net income of $16.9 million, or diluted earnings per share of $0.30, an increase of $0.23 year-over-year, including $17.2 million, net of tax related to the termination of the license agreement between the Company and Schlumberger and the impairment of related long-lived assets.

Year-to-Date 2020 Highlights:

  • Product revenue of $38.3 million, an increase of 8% year-over-year
  • License and development revenue of $26.9 million of which $24.4 million is related to the termination of the license agreement between the Company and Schlumberger
  • Product gross margin of 68.0%, a decrease of 250 basis points year-over-year
  • Net income of $17.5 million, or diluted earnings per share of $0.31, an increase of $0.20 year-over-year, including $17.2 million, net of tax related to the termination of the license agreement between the Company and Schlumberger and the impairment of related long-lived assets.

"Our performance this quarter demonstrates the resiliency of our business and the capabilities of our team to adapt to unprecedented global circumstances. Despite these challenges, the continued growth of mega SWRO projects and conversion of thermal desalination facilities to SWRO is driving increased demand for our technology and concurrent growth in our revenue," said Bob Mao, Chairman of the Board, President and CEO of Energy Recovery.

Mr. Mao continued, "I am pleased with these results and continue to expect 20 to 25 percent year-over-year annual growth in our water segment. In addition, we remain focused on generating near-term shareholder value from our VorTeq technology. We are in a good place following our simulated frac test with Liberty Oilfield Services in June 2020, and we are approaching the challenges that remain, including completing two to three live well beta tests, in a disciplined manner. As with any R&D initiative, we will not hesitate to shelve or stop spending on efforts that do not meet the technical readiness, profit and ROI objectives that we have set."

COVID-19 Pandemic

In early April 2020, following the Company's decision to temporarily suspend manufacturing activities at its San Leandro headquarters the last two weeks of March, the Company commenced limited manufacturing in accordance with federal, state and local regulations and guidance with enhanced safety measures in place, including staggered shifts to ensure social distancing between workers, personal safety equipment for each worker, including masks and gloves, cleanings and disinfections between and during shifts, and starting in July weekly testing of employees working on site. The Company resumed full production in May 2020 with enhanced safety measures remaining in place to contain the spread of COVID-19 and to first of all ensure the health and safety of its employees, as well as to protect Energy Recovery's business in the future.

While any effect of the pandemic has had only a limited effect on the Company's financials to date, the Company's gross margin for the first half of 2020 was negatively affected due to reduced production output while the plant was underutilized. Based on the Company's current rate of production, the Company believes that it will be able to fulfill our existing delivery obligations in fiscal year 2020 and beyond.

Second Quarter 2020

Revenues

For the second quarter ended June 30, 2020, the Company generated total revenue of $43.6 million, an increase of $20.8 million, or 91%, compared to $22.8 million in the second quarter ended June 30, 2019.

The Water segment generated total product revenue of $19.3 million for the second quarter ended June 30, 2020, compared to $19.2 million for the second quarter ended June 30, 2019. This increase was due primarily to higher Mega-Project Development ("MPD") and Aftermarket ("AM") shipments offset by lower Original Equipment Manufacturer ("OEM") shipments. We view this stability in the water segment as a real sign of strength as Energy Recovery, and the overall desalination industry, finds its way through this pandemic. MPD has been largely unaffected by global events and continues to be the driver of growth in the desalination industry, and for Energy Recovery.

The Oil & Gas ("O&G") segment generated total revenue of $24.4 million for the second quarter ended June 30, 2020, an increase of $20.8 million, or 582%, compared to $3.6 million for the second quarter ended June 30, 2019. During the three months ended June 30, 2020, the Company and Schlumberger entered into an agreement to terminate the VorTeq License Agreement effective June 1, 2020. As there were no future performance obligations to be recognized under the VorTeq License Agreement, the Company recognized in full the remaining deferred revenue balance of $24.4 million during the quarter. There will be no license and development revenue recognized in future quarters in relation to the VorTeq License Agreement. As a result of the termination of the VorTeq License Agreement, the Company is now free to market the VorTeq™ technology to all companies in the broader pressure pumping market.

Product Gross Margin

For the second quarter ended June 30, 2020, product gross margin was 66.0%, a decrease of 550 basis points from 71.5% in the second quarter ended June 30, 2019. This decrease was due primarily to an increase of $0.7 million, or 370 basis points, in cost of product revenue related to the reduced utilization of the Company's manufacturing facilities during the second quarter prior to the Company's return to full manufacturing in May 2020, as well as the increased overhead costs of the Company's Tracy, California facility. Based on current production levels, the Company does not at this time expect to continue to experience decreases in the product gross margin due to the pandemic.

Operating Expenses

For the second quarter ended June 30, 2020, operating expenses were $15.8 million, an increase of $2.5 million, or 19%, compared to $13.3 million for the second quarter ended June 30, 2019. This increase was due primarily to $2.3 million in impairment expenses of certain long-lived assets that were directly related to the VorTeq License Agreement, continued investment in research and development including O&G testing activities, offset by lower personnel-related costs and travel expenses.

COVID-19 did not have a material effect on operating expenditures during the three months ended June 30, 2020.

Bottom Line Summary

To summarize the Company's financial performance, on a quarterly basis, the Company reported a net income of $16.9 million, or $0.30 per diluted share for the second quarter ended June 30, 2020, compared to a net income of $3.7 million, or $0.07 per diluted share for the second quarter ended June 30, 2019.

Cash Flow Highlights

The Company finished the second quarter ended June 30, 2020 with cash and cash equivalents of $63.0 million, and short-term and long-term investments of $33.9 million, which represents a combined total of $96.9 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 belief that there will be increased demand for our technology resulting in growth in our revenue; the Company will be able to generate near-term shareholder value from our VorTeq technology; the Company will be able to monetize the VorTeq technology; the Company we will be able to fulfill our existing delivery obligations in fiscal year 2020 and beyond; and at this time, we will not continue to experience decreases in the product gross margin due to the COVID-19 pandemic. 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, 2019 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.

Conference Call to Discuss Second Quarter 2020 Financial Results

LIVE CONFERENCE CALL:
Thursday, July 30, 2020, 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: 13704670

CONFERENCE CALL REPLAY:
Expiration: Sunday, August 30, 2020
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13704670

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.

For more than 20 years, Energy Recovery, Inc. (NASDAQ: ERII) has created technologies that solve complex challenges in industrial fluid-flow markets. We design and manufacture solutions that reduce waste, improve operational efficiencies, and lower the production costs of clean water and oil and gas. What began as a game-changing invention for water desalination has grown into a global business delivering solutions that enable more affordable access to these critical resources. Headquartered in the San Francisco Bay Area, Energy Recovery has manufacturing, research and development facilities across California and Texas. In addition, our worldwide sales and technical service organization provides on-site support for our line of water solutions. For more information, please visit www.energyrecovery.com.

Contact

Investor Relations
ir@energyrecovery.com
(281) 962-8105

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

             
 
  June 30,
2020
    December 31,
2019
 
 
  (In thousands)  
ASSETS
           
Current assets:
           
Cash and cash equivalents
  62,970     26,387  
Short-term investments
    28,409       58,736  
Accounts receivable, net
    12,816       12,979  
Inventories, net
    9,915       10,317  
Prepaid expenses and other current assets
    4,987       4,548  
Total current assets
    119,097       112,967  
Long-term investments
    5,510       15,419  
Deferred tax assets, non-current
    12,231       16,897  
Property and equipment, net
    18,838       18,843  
Operating lease, right of use asset
    16,810       11,195  
Goodwill
    12,790       12,790  
Other intangible assets, net
    57       65  
Other assets, non-current
    639       598  
Total assets
  185,972     188,774  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable
  1,860     1,192  
Accrued expenses and other current liabilities
    6,771       9,869  
Lease liabilities
    1,196       1,023  
Contract liabilities
    980       15,746  
Total current liabilities
    10,807       27,830  
Lease liabilities, non-current
    17,155       11,533  
Contract liabilities, non-current
    97       13,120  
Other non-current liabilities
    496       278  
Total liabilities
    28,555       52,761  
Commitments and contingencies (Note 8)
               
Stockholders' equity:
               
Common stock
    61       61  
Additional paid-in capital
    173,729       170,028  
Accumulated other comprehensive income (loss)
    119       (37 )
Treasury stock
    (30,486 )     (30,486 )
Accumulated earnings (deficit)
    13,994       (3,553 )
Total stockholders' equity
    157,417       136,013  
Total liabilities and stockholders' equity
  185,972     188,774  
                 

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

             
 
  Three Months Ended June 30,     Six Months Ended June 30,  
 
  2020     2019     2020     2019  
 
  (In thousands, except per share data)  
Product revenue
  19,256     19,226     38,257     35,298  
Product cost of revenue
    6,549       5,483       12,233       10,418  
Product gross profit
    12,707       13,743       26,024       24,880  
 
                               
License and development revenue
    24,352       3,570       26,895       7,293  
 
                               
Operating expenses:
                               
General and administrative
    5,599       5,500       12,480       11,079  
Sales and marketing
    1,497       2,181       3,635       4,343  
Research and development
    6,352       5,480       13,061       9,734  
Amortization of intangible assets
    4       157       8       313  
Impairment of long-lived assets
    2,332       -       2,332       -  
Total operating expenses
    15,784       13,318       31,516       25,469  
Income from operations
    21,275       3,995       21,403       6,704  
 
                               
Other income (expense):
                               
Interest income
    255       528       675       1,051  
Other non-operating expense, net
    (18 )     (48 )     (30 )     (72 )
Total other income, net
    237       480       645       979  
Income before income taxes
    21,512       4,475       22,048       7,683  
Provision for income taxes
    4,586       756       4,501       1,310  
Net income
  16,926     3,719     17,547     6,373  
 
                               
Earnings per share:
                               
Basic
  0.30     0.07     0.32     0.12  
Diluted
  0.30     0.07     0.31     0.11  
 
                               
Number of shares used in per share calculations:
                               
Basic
    55,614       54,681       55,513       54,400  
Diluted
    56,371       56,110       56,438       55,764  
                                 

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

       
 
  Six Months Ended June 30,  
 
  2020     2019  
 
  (In thousands)  
Cash flows from operating activities:
           
Net income
  17,547     6,373  
Adjustments to reconcile net income to cash (used in) provided by operating activities
               
Stock-based compensation
    2,595       3,071  
Depreciation and amortization
    2,751       1,952  
Amortization (accretion) of premiums and discounts on investments
    215       (30 )
Deferred income taxes
    4,666       1,285  
Provision for warranty claims
    173       242  
Impairment of long-lived assets
    2,332       -  
Other non-cash adjustments
    55       259  
Changes in operating assets and liabilities:
               
Accounts receivable, net
    101       (4,986 )
Contract assets
    (198 )     2,147  
Inventories, net
    260       (725 )
Prepaid and other assets
    (278 )     1,026  
Accounts payable
    1,285       14  
Accrued expenses and other liabilities
    (4,012 )     (2,942 )
Income taxes
    3       47  
Contract liabilities
    (27,789 )     (7,730 )
Net cash (used in) provided by operating activities
    (294 )     3  
Cash flows from investing activities:
               
Sales of marketable securities
    9,767       -  
Maturities of marketable securities
    43,286       47,993  
Purchases of marketable securities
    (12,855 )     (46,549 )
Capital expenditures
    (4,410 )     (4,685 )
Net cash provided by (used in) investing activities
    35,788       (3,241 )
Cash flows from financing activities:
               
Net proceeds from issuance of common stock
    1,128       4,581  
Tax payment for employee shares withheld
    (23 )     (62 )
Net cash provided by financing activities
    1,105       4,519  
Effect of exchange rate differences on cash and cash equivalents
    (15 )     -  
Net change in cash, cash equivalents and restricted cash
    36,584       1,281  
Cash, cash equivalents and restricted cash, beginning of year
    26,488       22,138  
Cash, cash equivalents and restricted cash, end of period
  63,072     23,419  
                 

ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

             
 
  Three Months Ended June 30, 2020     Three Months Ended June 30, 2019  
 
  Water     Oil & Gas     Corporate     Total     Water     Oil & Gas     Corporate     Total  
 
  (In thousands)  
Product revenue
  19,256     -     -     19,256     19,226     -     -     19,226  
Product cost of revenue
    6,549       -       -       6,549       5,483       -       -       5,483  
Product gross profit
    12,707       -       -       12,707       13,743       -       -       13,743  
 
                                                               
License and development revenue
    -       24,352       -       24,352       -       3,570       -       3,570  
 
                                                               
Operating expenses
                                                               
General and administrative
    456       421       4,722       5,599       563       412       4,525       5,500  
Sales and marketing
    1,124       18       355       1,497       1,559       319       303       2,181  
Research and development
    960       4,517       875       6,352       1,103       4,305       72       5,480  
Amortization of intangible assets
    4       -       -       4       157       -       -       157  
Impairment of long-lived assets
    -       2,332       -       2,332       -       -       -       -  
Total operating expenses
    2,544       7,288       5,952       15,784       3,382       5,036       4,900       13,318  
 
                                                               
Operating income (loss)
  10,163     17,064     (5,952 )     21,275     10,361     (1,466 )   (4,900 )     3,995  
Other income, net
                            237                               480  
Income before income taxes
                          21,512                             4,475  
                                                                 
                                                                 
 
  Six Months Ended June 30, 2020     Six Months Ended June 30, 2019  
 
  Water     Oil & Gas     Corporate     Total     Water     Oil & Gas     Corporate     Total  
 
  (In thousands)  
Product revenue
  38,257     -     -     38,257     35,194     104     -     35,298  
Product cost of revenue
    12,233       -       -       12,233       10,230       188       -       10,418  
Product gross profit (loss)
    26,024       -       -       26,024       24,964       (84 )     -       24,880  
 
                                                               
License and development revenue
    -       26,895       -       26,895       -       7,293       -       7,293  
 
                                                               
Operating expenses
                                                               
General and administrative
    861       1,162       10,457       12,480       1,097       776       9,206       11,079  
Sales and marketing
    2,800       76       759       3,635       3,208       582       553       4,343  
Research and development
    1,862       9,764       1,435       13,061       1,908       7,668       158       9,734  
Amortization of intangible assets
    8       -       -       8       313       -       -       313  
Impairment of long-lived assets
    -       2,332       -       2,332       -       -       -       -  
Total operating expenses
    5,531       13,334       12,651       31,516       6,526       9,026       9,917       25,469  
 
                                                               
Operating income (loss)
  20,493     13,561     (12,651 )     21,403     18,438     (1,817 )   (9,917 )     6,704  
Other income, net
                            645                               979  
Income before income taxes
                          22,048                             7,683  
                                                                 

SOURCE: Energy Recovery Inc.



07/30/2020 EQS Newswire / EQS Group AG



show this

GBC-Fokusbox

Solutiance: Hohe Wachstumsdynamik durch den Ausbau des Plattformgeschäfts erwartet

Im ersten Halbjahr 2020 konnte Solutiance den eingeschlagenen Wachstumskurs fortsetzen und im Rahmen dessen die Gesamtleistung (Umsatz zzgl. Bestandsveränderungen) um rund 75 % auf 0,66 Mio. € (1. HJ 2019: 0,38 Mio. €) erhöhen. Das Unternehmen erwartet für das Gesamtjahr durch den weiteren Ausbau der softwarebasierten Dienstleistungen einen Umsatzsprung im Vergleich zum Vorjahr auf rund 3 Mio. €. Bei einem von uns ermittelten Kursziel von 4,85 € vergeben wir das Rating KAUFEN.

Aktuelle Research-Studie

Aroundtown SA

Original-Research: Aroundtown SA (von First Berlin Equity Research GmbH): BUY

22. September 2020