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:

Total revenue of $24.9 million, an increase of 12% year-over-year
Product gross margin of 75.1%, an increase of 210 basis points year-over-year
Total gross margin(1) of 78.2%, an increase of 80 basis points year-over-year
Net income of $5.1 million with a diluted earnings per share of $0.09, an increase of $0.01 year-over-year
Adjusted net income(1) of $4.2 million with a non-GAAP diluted earnings per share(1) of $0.07, a decrease of $0.01 year-over-year

Year-to-Date Summary:

Total revenue of $67.4 million, an increase of 19% year-over-year
Product gross margin of 72.2%, an increase of 260 basis points year-over-year
Total gross margin(1) of 76.5%, an increase of 170 basis points year-over-year
Net income of $11.5 million with a diluted earnings per share of $0.21, a decrease of $0.15 year-over-year
Adjusted net income(1) of $10.6 million with a non-GAAP diluted earnings per share(1) of $0.19, an increase of $0.03 year-over-year

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

LIVE CONFERENCE CALL:

Thursday, October 31, 2019, 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: 13694261

CONFERENCE CALL REPLAY:

Expiration: Saturday, November 30, 2019
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13694261

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 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
ir@energyrecovery.com
(281) 962-8105

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
September 30,
2019
 
 
December 31,
2018
 

 
(In thousands, except share data and par value)
 

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

 
$
29,696
 
 
$
22,052
 

Short-term investments

 
 
59,905
 
 
 
73,338
 

Accounts receivable, net of allowance for doubtful accounts of $377 and $396 at September 30, 2019 and December 31, 2018, respectively

 
 
20,848
 
 
 
10,212
 

Contract assets

 
 
1,090
 
 
 
4,083
 

Inventories, net

 
 
8,977
 
 
 
7,138
 

Prepaid expenses and other current assets

 
 
3,148
 
 
 
2,825
 

Total current assets

 
 
123,664
 
 
 
119,648
 

Long-term investments

 
 
7,549
 
 
 
1,269
 

Deferred tax assets, non-current

 
 
17,120
 
 
 
18,318
 

Property and equipment, net

 
 
17,442
 
 
 
14,619
 

Operating lease, right of use asset

 
 
11,449
 
 
 
12,189
 

Goodwill

 
 
12,790
 
 
 
12,790
 

Other intangible assets, net

 
 
171
 
 
 
640
 

Other assets, non-current

 
 
402
 
 
 
368
 

Total assets

 
$
190,587
 
 
$
179,841
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

 
$
1,559
 
 
$
1,439
 

Accrued expenses and other current liabilities

 
 
8,519
 
 
 
8,497
 

Lease liabilities

 
 
1,019
 
 
 
926
 

Contract liabilities

 
 
17,507
 
 
 
16,270
 

Total current liabilities

 
 
28,604
 
 
 
27,132
 

Lease liabilities, non-current

 
 
11,777
 
 
 
12,556
 

Contract liabilities, non-current

 
 
15,175
 
 
 
26,539
 

Other non-current liabilities

 
 
277
 
 
 
236
 

Total liabilities

 
 
55,833
 
 
 
66,463
 

Stockholders' equity:

Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at September 30, 2019 and December 31, 2018

 
 
–
 
 
 
–
 

Common stock, $0.001 par value; 200,000,000 shares authorized; 60,569,655 shares issued and 55,113,720 shares outstanding at September 30, 2019 and 59,396,020 shares issued and 53,940,085 shares outstanding at December 31, 2018

 
 
60
 
 
 
59
 

Additional paid-in capital

 
 
168,150
 
 
 
158,404
 

Accumulated other comprehensive loss

 
 
(26
)
 
 
(133
)

Treasury stock, at cost, 5,455,935 shares repurchased at September 30, 2019 and December 31, 2018

 
 
(30,486
)
 
 
(30,486
)

Accumulated deficit

 
 
(2,944
)
 
 
(14,466
)

Total stockholders' equity

 
 
134,754
 
 
 
113,378
 

Total liabilities and stockholders' equity

 
$
190,587
 
 
$
179,841
 

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

 
(In thousands, except per share data)
 

Product revenue

 
$
21,752
 
 
$
18,578
 
 
$
57,050
 
 
$
47,042
 

Product cost of revenue

 
 
5,425
 
 
 
5,022
 
 
 
15,843
 
 
 
14,312
 

Product gross profit

 
 
16,327
 
 
 
13,556
 
 
 
41,207
 
 
 
32,730
 

License and development revenue

 
 
3,098
 
 
 
3,661
 
 
 
10,391
 
 
 
9,768
 

Operating expenses:

General and administrative

 
 
5,711
 
 
 
5,266
 
 
 
16,790
 
 
 
16,030
 

Sales and marketing

 
 
2,367
 
 
 
1,873
 
 
 
6,710
 
 
 
5,643
 

Research and development

 
 
6,620
 
 
 
4,270
 
 
 
16,354
 
 
 
11,792
 

Amortization of intangible assets

 
 
156
 
 
 
158
 
 
 
469
 
 
 
474
 

Total operating expenses

 
 
14,854
 
 
 
11,567
 
 
 
40,323
 
 
 
33,939
 

Income from operations

 
 
4,571
 
 
 
5,650
 
 
 
11,275
 
 
 
8,559
 

Other income (expense):

Interest income

 
 
500
 
 
 
369
 
 
 
1,551
 
 
 
1,043
 

Interest expense

 
 
–
 
 
 
–
 
 
 
–
 
 
 
(1
)

Other non-operating expense, net

 
 
(5
)
 
 
(22
)
 
 
(77
)
 
 
(66
)

Total other income, net

 
 
495
 
 
 
347
 
 
 
1,474
 
 
 
976
 

Income before income taxes

 
 
5,066
 
 
 
5,997
 
 
 
12,749
 
 
 
9,535
 

Provision for (benefit from) income taxes

 
 
(83
)
 
 
1,339
 
 
 
1,227
 
 
 
(10,140
)

Net income

 
$
5,149
 
 
$
4,658
 
 
$
11,522
 
 
$
19,675
 

Earnings per share:

Basic

 
$
0.09
 
 
$
0.09
 
 
$
0.21
 
 
$
0.37
 

Diluted

 
$
0.09
 
 
$
0.08
 
 
$
0.21
 
 
$
0.36
 

Number of shares used in per share calculations:

Basic

 
 
54,975
 
 
 
53,665
 
 
 
54,594
 
 
 
53,719
 

Diluted

 
 
56,384
 
 
 
55,295
 
 
 
55,971
 
 
 
55,382
 

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 

Cash flows from operating activities:

 
(In thousands)
 

Net income

 
$
11,522
 
 
$
19,675
 

Adjustments to reconcile net income to cash provided by operating activities

Stock-based compensation

 
 
4,425
 
 
 
4,226
 

Depreciation and amortization

 
 
3,440
 
 
 
2,898
 

(Accretion) amortization of premiums and discounts on investments

 
 
(37
)
 
 
380
 

Provision for warranty claims

 
 
339
 
 
 
213
 

Unrealized gain on foreign currency translation

 
 
(18
)
 
 
–
 

Realized gain on sale of investments

 
 
(5
)
 
 
–
 

Reversal of accruals related to expired warranties

 
 
(131
)
 
 
(171
)

Provision for doubtful accounts

 
 
(19
)
 
 
336
 

Adjustments for excess or obsolete inventory

 
 
(7
)
 
 
132
 

Deferred income taxes

 
 
1,198
 
 
 
(10,150
)

Loss on disposal of fixed assets

 
 
377
 
 
 
58
 

Changes in operating assets and liabilities:

Accounts receivable, net

 
 
(10,617
)
 
 
4,463
 

Contract assets, costs and estimated earnings in excess of billings

 
 
2,993
 
 
 
2,934
 

Inventories, net

 
 
(1,885
)
 
 
(894
)

Prepaid and other assets

 
 
383
 
 
 
(445
)

Accounts payable

 
 
(94
)
 
 
(2,198
)

Accrued expenses and other liabilities

 
 
(1,264
)
 
 
(1,270
)

Income taxes

 
 
30
 
 
 
(638
)

Contract liabilities, cost in excess of billings

 
 
(10,127
)
 
 
(9,800
)

Net cash provided by operating activities

 
 
503
 
 
 
9,749
 

Cash flows from investing activities:

Sales of marketable securities

 
 
3,535
 
 
 
–
 

Maturities of marketable securities

 
 
70,040
 
 
 
62,213
 

Purchases of marketable securities

 
 
(66,253
)
 
 
(60,334
)

Capital expenditures

 
 
(5,501
)
 
 
(2,029
)

Net cash provided by (used in) investing activities

 
 
1,821
 
 
 
(150
)

Cash flows from financing activities:

Net proceeds from issuance of common stock

 
 
5,424
 
 
 
3,873
 

Tax payment for employee shares withheld

 
 
(89
)
 
 
(115
)

Repayment of long-term debt

 
 
–
 
 
 
(8
)

Repurchase of common stock

 
 
–
 
 
 
(10,000
)

Net cash provided by (used in) financing activities

 
 
5,335
 
 
 
(6,250
)

Effect of exchange rate differences on cash and cash equivalents

 
 
–
 
 
 
14
 

Net change in cash, cash equivalents and restricted cash

 
 
7,659
 
 
 
3,363
 

Cash, cash equivalents and restricted cash, beginning of year

 
 
22,138
 
 
 
30,626
 

Cash, cash equivalents and restricted cash, end of period

 
$
29,797
 
 
$
33,989
 

ENERGY RECOVERY, INC.
FINANCIAL INFORMATION BY SEGMENT
(Unaudited)

 
Three Months Ended September 30, 2019
 
 
Nine Months Ended September 30, 2019
 

 
Water
 
 
Oil & Gas
 
 
Total
 
 
Water
 
 
Oil & Gas
 
 
Total
 

 
(In thousands)
 

Product revenue

 
$
21,752
 
 
$
–
 
 
$
21,752
 
 
$
56,946
 
 
$
104
 
 
$
57,050
 

Product cost of revenue

 
 
5,425
 
 
 
–
 
 
 
5,425
 
 
 
15,655
 
 
 
188
 
 
 
15,843
 

Product gross profit (loss)

 
 
16,327
 
 
 
–
 
 
 
16,327
 
 
 
41,291
 
 
 
(84
)
 
 
41,207
 

License and development revenue

 
 
–
 
 
 
3,098
 
 
 
3,098
 
 
 
–
 
 
 
10,391
 
 
 
10,391
 

Operating expenses

General and administrative

 
 
359
 
 
 
431
 
 
 
790
 
 
 
1,456
 
 
 
1,207
 
 
 
2,663
 

Sales and marketing

 
 
1,850
 
 
 
92
 
 
 
1,942
 
 
 
5,058
 
 
 
674
 
 
 
5,732
 

Research and development

 
 
886
 
 
 
5,667
 
 
 
6,553
 
 
 
2,794
 
 
 
13,335
 
 
 
16,129
 

Amortization of intangibles

 
 
156
 
 
 
–
 
 
 
156
 
 
 
469
 
 
 
–
 
 
 
469
 

Total operating expenses

 
 
3,251
 
 
 
6,190
 
 
 
9,441
 
 
 
9,777
 
 
 
15,216
 
 
 
24,993
 

Operating income (loss)

 
$
13,076
 
 
$
(3,092
)
 
 
9,984
 
 
$
31,514
 
 
$
(4,909
)
 
 
26,605
 

Less: Corporate operating expenses
 
 
 
 
 
 
 
 
 
 
5,413
 
 
 
 
 
 
 
 
 
 
 
15,330
 

Income from operations
 
 
 
 
 
 
 
 
 
 
4,571
 
 
 
 
 
 
 
 
 
 
 
11,275
 

Other income
 
 
 
 
 
 
 
 
 
 
495
 
 
 
 
 
 
 
 
 
 
 
1,474
 

Income before income taxes
 
 
 
 
 
 
 
 
 
$
5,066
 
 
 
 
 
 
 
 
 
 
$
12,749
 

 
Three Months Ended September 30, 2018
 
 
Nine Months Ended September 30, 2018
 

 
Water
 
 
Oil & Gas
 
 
Total
 
 
Water
 
 
Oil & Gas
 
 
Total
 

 
(In thousands)
 

Product revenue

 
$
18,464
 
 
$
114
 
 
$
18,578
 
 
$
46,628
 
 
$
414
 
 
$
47,042
 

Product cost of revenue

 
 
4,851
 
 
 
171
 
 
 
5,022
 
 
 
13,719
 
 
 
593
 
 
 
14,312
 

Product gross profit (loss)

 
 
13,613
 
 
 
(57
)
 
 
13,556
 
 
 
32,909
 
 
 
(179
)
 
 
32,730
 

License and development revenue

 
 
–
 
 
 
3,661
 
 
 
3,661
 
 
 
–
 
 
 
9,768
 
 
 
9,768
 

Operating expenses

General and administrative

 
 
470
 
 
 
373
 
 
 
843
 
 
 
1,441
 
 
 
1,395
 
 
 
2,836
 

Sales and marketing

 
 
1,435
 
 
 
335
 
 
 
1,770
 
 
 
4,243
 
 
 
997
 
 
 
5,240
 

Research and development

 
 
545
 
 
 
3,713
 
 
 
4,258
 
 
 
1,019
 
 
 
10,753
 
 
 
11,772
 

Amortization of intangibles

 
 
158
 
 
 
–
 
 
 
158
 
 
 
474
 
 
 
–
 
 
 
474
 

Total operating expenses

 
 
2,608
 
 
 
4,421
 
 
 
7,029
 
 
 
7,177
 
 
 
13,145
 
 
 
20,322
 

Operating income (loss)

 
$
11,005
 
 
$
(817
)
 
 
10,188
 
 
$
25,732
 
 
$
(3,556
)
 
 
22,176
 

Less: Corporate operating expenses

 
 
 
 
 
 
 
 
 
 
4,538
 
 
 
 
 
 
 
 
 
 
 
13,617
 

Income from operations

 
 
 
 
 
 
 
 
 
 
5,650
 
 
 
 
 
 
 
 
 
 
 
8,559
 

Other income

 
 
 
 
 
 
 
 
 
 
347
 
 
 
 
 
 
 
 
 
 
 
976
 

Income before income taxes

 
 
 
 
 
 
 
 
 
$
5,997
 
 
 
 
 
 
 
 
 
 
$
9,535
 

ENERGY RECOVERY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

 
(In thousands, except per share data)
 

Product revenue

 
$ 
21,752
 
 
$ 
18,578
 
 
$ 
57,050
 
 
$ 
47,042
 

License and development revenue

 
 
3,098
 
 
 
3,661
 
 
 
10,391
 
 
 
9,768
 

Total revenue

 
$ 
24,850
 
 
$ 
22,239
 
 
$ 
67,441
 
 
$ 
56,810
 

Product gross profit

 
$ 
16,327
 
 
$ 
13,556
 
 
$ 
41,207
 
 
$ 
32,730
 

License and development revenue

 
 
3,098
 
 
 
3,661
 
 
 
10,391
 
 
 
9,768
 

Total gross profit (non-GAAP)

 
$ 
19,425
 
 
$ 
17,217
 
 
$ 
51,598
 
 
$ 
42,498
 

Product gross margin

 
 
75.1
%
 
 
73.0
%
 
 
72.2
%
 
 
69.6
%

Total gross margin (non-GAAP)

 
 
78.2
%
 
 
77.4
%
 
 
76.5
%
 
 
74.8
%

Net income

 
$ 
5,149
 
 
$ 
4,658
 
 
$ 
11,522
 
 
$ 
19,675
 

Reversal of non-recurring tax benefit

 
 
–
 
 
 
–
 
 
 
–
 
 
 
(10,763
)

Reversal of federal research and development tax credits

 
 
(971
)
 
 
–
 
 
 
(971
)
 
 
–
 

Adjusted net income (non-GAAP)

 
$ 
4,178
 
 
$ 
4,658
 
 
$ 
10,551
 
 
$ 
8,912
 

Income per share:

Diluted

 
$ 
0.09
 
 
$ 
0.08
 
 
$ 
0.21
 
 
$ 
0.36
 

Diluted (non-GAAP)

 
$ 
0.07
 
 
$ 
0.08
 
 
$ 
0.19
 
 
$ 
0.16
 

Number of diluted shares used in per share calculations:

Diluted shares

 
 
56,384
 
 
 
55,295
 
 
 
55,971
 
 
 
55,382
 

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.

ReleaseID: 564801