Energy Recovery Reports Unaudited Financial Results for the First Quarter of 2015
FIRST QUARTER HIGHLIGHTS:
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Total revenue increased by 50% to
$5.9 million in the current period, from$3.9 million in the first quarter of 2014 - Gross profit margin was 57% in the current period, compared to 58% in the first quarter of 2014, as a result of lower production levels offset by a favorable shift in mix
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Operating expenses increased by
$5.4 million , or 91%, from$6.0 million in the first quarter of 2014 to$11.4 million in the current period primarily due to non-recurring legal and CEO transition expenses and to a lesser extent, higher research & development expenses -
Net loss of
$(8.3) million , or$(0.16) per share, in the current period, compared to net loss of$(3.7) million , or$(0.07) per share, in the first quarter of 2014, as a result of higher operating expenses and lower production levels, offset by higher volume
Revenues
The Company generated net revenue of
Gross Margins
Lower production was the primary driver to a gross profit margin decline from 58% in the prior-year quarter to 57% in the current period. Offsetting the negative impact of lower production on gross margins was a favorable shift in mix and manufacturing efficiencies. The Company reduced the average manufacturing headcount from 45 in the first quarter of 2014 to 38 in the current period.
The Company's gross profit margin decreased sequentially from 61% in the fourth quarter of 2014 mainly due to an unfavorable shift in mix attributed to a lack of mega-project shipments.
Operating Expenses
Operating expenses for the quarter ended
To summarize financial performance in first quarter of 2015, the Company reported a net loss of
Cash Flow Highlights
For the first quarter ended
Cash used by operating activities was
Excluding current and non-current restricted cash of
FORWARD-LOOKING STATEMENTS
This press release includes "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 us and on management's beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. When used in this document, the words such as "continue," "excited," "optimism", and similar expressions are intended to identify forward-looking statements, but are not exclusive means of identifying such statements. 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. In addition to any other factors that may have been discussed herein regarding the risks and uncertainties of our business, please see "Risk Factors" in our Form 10-K filed with the
CONFERENCE CALL TO DISCUSS FIRST QUARTER RESULTS FOR 2015
Live Conference Call Webcast: Listen-only, Toll-free: 888-417-8465 Listen-only, Local: 719-325-2323 Conference ID: 1256107 |
Conference Call Replay: Toll-free: 888-203-1112 Local: 719-457-0820 Access code: 12356107 Expiration: |
Investors may also access the live call or the replay over the internet at www.streetevents.com or www.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.
ABOUT
Unaudited Consolidated Financial Results | ||
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(in thousands, except per share data) | ||
(unaudited) | ||
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Three Months Ended March 31, |
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2015 | 2014 | |
Net revenue | $ 5,864 | $ 3,897 |
Cost of revenue | 2,531 | 1,652 |
Gross profit | 3,333 | 2,245 |
Operating expenses: | ||
General and administrative | 6,278 | 2,039 |
Sales and marketing | 2,433 | 2,495 |
Research and development | 2,533 | 1,234 |
Amortization of intangible assets | 159 | 215 |
Total operating expenses | 11,403 | 5,983 |
Loss from operations | (8,070) | (3,738) |
Interest expense | (40) | — |
Other non-operating (expense) income | (102) | 121 |
Loss before income taxes | (8,212) | (3,617) |
Provision for income taxes | 71 | 66 |
Net loss | $ (8,283) | $ (3,683) |
Basic and diluted net loss per share | $ (0.16) | $ (0.07) |
Shares used in basic and diluted per share calculation | 51,948 | 51,446 |
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CONSOLIDATED BALANCE SHEETS | ||
(unaudited) | ||
March 31, 2015 | December 31, 2014 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 20,391 | $ 15,501 |
Restricted cash | 2,263 | 2,623 |
Short-term investments | 8,323 | 13,072 |
Accounts receivable, net of allowance for doubtful accounts of |
5,333 | 10,941 |
Unbilled receivables, current | 1,023 | 1,343 |
Inventories | 9,334 | 8,204 |
Deferred tax assets, net | 240 | 240 |
Prepaid expenses and other current assets | 1,163 | 1,317 |
Total current assets | 48,070 | 53,241 |
Restricted cash, non-current | 2,126 | 2,850 |
Unbilled receivables, non-current | 420 | 414 |
Long-term investments | 265 | 267 |
Property and equipment, net of accumulated depreciation of |
12,574 | 13,211 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 3,007 | 3,166 |
Other assets, non-current | 2 | 2 |
Total assets | $ 79,254 | $ 85,941 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 2,032 | $ 1,817 |
Accrued expenses and other current liabilities | 7,242 | 8,427 |
Income taxes payable | 6 | 4 |
Accrued warranty reserve | 756 | 755 |
Deferred revenue | 1,134 | 519 |
Current portion of long-term debt | 11 | — |
Total current liabilities | 11,181 | 11,522 |
Long-term debt, net of current portion | 44 | — |
Deferred tax liabilities, non-current, net | 2,054 | 1,989 |
Deferred revenue, non-current | 18 | 59 |
Other non-current liabilities | 2,881 | 2,453 |
Total liabilities | 16,178 | 16,023 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
54 | 54 |
Additional paid-in capital | 125,847 | 124,440 |
Accumulated other comprehensive loss | (39) | (73) |
Treasury stock, at cost 2,479,456 shares repurchased at both |
(6,835) | (6,835) |
Accumulated deficit | (55,951) | (47,668) |
Total stockholders' equity | 63,076 | 69,918 |
Total liabilities and stockholders' equity | $ 79,254 | $ 85,941 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(unaudited) | ||
Three Months Ended | ||
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2015 | 2014 | |
Cash Flows From Operating Activities | ||
Net loss | $ (8,283) | $ (3,683) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 1,140 | 581 |
Depreciation and amortization | 979 | 983 |
Unrealized loss on foreign currency transactions | 124 | 10 |
Amortization of premiums/discounts on investments | 79 | 125 |
Deferred income taxes | 65 | 56 |
Provision for warranty claims | 21 | 3 |
Provision for doubtful accounts | 2 | 72 |
Valuation adjustments for excess or obsolete inventory | (10) | 40 |
Other non-cash adjustments | 428 | (125) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,524 | (2,052) |
Deferred revenue | 574 | 15 |
Unbilled receivables | 314 | 4,696 |
Accounts payable | 215 | 448 |
Prepaid and other assets | 154 | (1,112) |
Income taxes payable | 2 | 7 |
Accrued expenses and other liabilities | (1,192) | (2,638) |
Inventories | (1,120) | (3,361) |
Net cash used in operating activities | (984) | (5,935) |
Cash Flows From Investing Activities | ||
Maturities of marketable securities | 4,675 | 2,600 |
Restricted cash | 1,084 | 412 |
Capital expenditures | (179) | (38) |
Net cash provided by investing activities | 5,580 | 2,974 |
Cash Flows From Financing Activities | ||
Net proceeds from issuance of common stock | 250 | 604 |
Proceeds from borrowings | 55 | — |
Repurchase of common stock for treasury | — | (633) |
Net cash provided by (used in) financing activities | 305 | (29) |
Effect of exchange rate differences on cash and cash equivalents | (11) | 56 |
Net change in cash and cash equivalents | 4,890 | (2,934) |
Cash and cash equivalents, beginning of period | 15,501 | 14,371 |
Cash and cash equivalents, end of period | $ 20,391 | $ 11,437 |
CONTACT:Source:Joel Gay President and Chief Executive Officer 510-483-7370