Energy Recovery Reports Record Fiscal Year End 2016 Financial Results
Full Year Summary:
- Revenue increased 22% year-over-year to
$54.7 million , the strongest top-line performance for in Company history - Product gross margin of 64%; a year-over-year increase of 790 basis points, highest in Company history
- Total gross margin(1) of 67%; a year-over-year increase of 1,010 basis points, highest in Company history
- Operating expenses decreased 2% to
$36.5 million year-over-year - Net Income of
$1.0 million , or$0.02 per share, positive for first time since 2009 - Net cash flow of
$0.8 million , excluding purchase of$38.8 million marketable securities and changes in restricted cash of$0.6 million
Fourth Quarter Summary:
- Revenue increased 10% year-over-year to
$17.9 million - Product gross margin of 64%; a year-over-year increase of 890 basis points, highest in Company history
- Total gross margin(1) of 67%; a year-over-year increase of 850 basis points, highest in Company history
- Operating expenses decreased 4% to
$9.3 million year-over-year - Net Income of
$3.1 million , or$0.06 per share
Revenues
The Company generated total revenue of
Of the
License and development revenue increased by
This exclusivity fee will continue to be amortized on a level basis through the duration of the 15-year agreement. Pursuant to the license agreement, our license partner will also pay two (2) separate
For the fourth quarter of 2016, the Company generated total revenue of
Gross Margin
For the fiscal year 2016, the Company had record product and total gross margin(1). Product gross margin increased to 64% in 2016 from 56% in 2015 due to higher revenue across all Water sales channels, favorable shift in product mix and price, and increased production. Including license and development revenue, total gross margin(1) increased by 1,010 basis points to 67% in 2016.
For the fourth quarter of 2016, product gross margin increased by 890 basis points to 64%, compared to 55% in the fourth quarter of 2015. This increase was largely driven by favorable aftermarket channel and product mix, and increased production. Including license and development revenue, total gross margin(1) increased by 850 basis points to 67% in the fourth quarter of 2016.
Operating Expenses
For the fiscal year 2016, operating expenses decreased by
For the fourth quarter of 2016, operating expenses decreased by
Bottom Line Summary
To summarize financial performance on a full-year basis, the Company reported a net income of
Cash Flow Highlights
For the fiscal year ended
The Company ended the year with unrestricted cash of
Forward-Looking Statements
Certain matters discussed in this press release and on the conference call are "forward-looking statements" under the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, including the Company's expectations for its future financial performance and the Company's ability to achieve the milestones under the Schlumberger licensing agreement and receive the related contractual payments. 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. Accordingly, you should not place undue reliance on these forward-looking statements. Potential risks and uncertainties include our ability to achieve the milestones under the Schlumberger agreement, any other factors that may have been discussed herein regarding the risks and uncertainties of our business, and other risk factors included in documents that the Company has filed with the
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including total gross profit, total gross margin, adjusted net profit (loss), and adjusted basic net profit (loss) per share, in addition to traditional GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes 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
Conference Call to Discuss Fourth Quarter and Fiscal Year 2016 Financial Results
LIVE CONFERENCE CALL: Listen-only, Toll-free: 888-708-5689 Listen-only, Local: 913-312-1448 Access code: 1593249 |
CONFERENCE CALL REPLAY: Expiration: Toll-free: 888-203-1112 Local: 719-457-0820 Access code: 1593249 |
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
About
Contact
buhlmer@energyrecovery.com
(713) 858-2284
| ||
December 31, | ||
2016 |
2015 | |
(In thousands, except share data and par value) | ||
ASSETS | ||
Current assets: |
||
Cash and cash equivalents |
$ 61,364 |
$ 99,931 |
Restricted cash |
2,297 |
1,490 |
Short-term investments |
39,073 |
257 |
Accounts receivable, net of allowance for doubtful accounts of |
11,759 |
11,590 |
Unbilled receivables, current |
190 |
1,879 |
Cost and estimated earnings in excess of billings |
1,825 |
— |
Inventories |
4,550 |
6,503 |
Deferred tax assets, net |
— |
938 |
Prepaid expenses and other current assets |
1,311 |
943 |
Total current assets |
122,369 |
123,531 |
Restricted cash, non-current |
2,087 |
2,317 |
Unbilled receivables, non-current |
— |
6 |
Deferred tax assets, non-current |
1,270 |
— |
Property and equipment, net |
8,643 |
10,622 |
|
12,790 |
12,790 |
Other intangible assets, net |
1,900 |
2,531 |
Other assets, non-current |
4 |
2 |
Total assets |
$ 149,063 |
$ 151,799 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: |
||
Accounts payable |
$ 1,505 |
$ 1,865 |
Accrued expenses and other current liabilities |
9,019 |
7,808 |
Income taxes payable |
16 |
2 |
Accrued warranty reserve |
406 |
461 |
Deferred revenue, current |
6,201 |
5,878 |
Current portion of long-term debt |
11 |
10 |
Total current liabilities |
17,158 |
16,024 |
Long-term debt, less current portion |
27 |
38 |
Deferred tax liabilities, non-current |
2,233 |
2,360 |
Deferred revenue, non-current |
63,958 |
69,000 |
Other non-current liabilities |
554 |
718 |
Total liabilities |
83,930 |
88,140 |
Commitments and Contingencies (Note 9) |
||
Stockholders' equity: |
||
Preferred stock, |
— |
— |
Common stock, |
57 |
55 |
Additional paid-in capital |
139,676 |
129,809 |
Accumulated other comprehensive loss |
(118) |
(64) |
|
(16,210) |
(6,835) |
Accumulated deficit |
(58,272) |
(59,306) |
Total stockholders' equity |
65,133 |
63,659 |
Total liabilities and stockholders' equity |
$ 149,063 |
$ 151,799 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Years Ended | |||
2016 |
2015 |
2014 | |
(In thousands, except per share data) | |||
Product revenue |
$ 49,715 |
$ 43,671 |
$ 30,426 |
Product cost of revenue |
17,849 |
19,111 |
13,713 |
Product gross profit |
31,866 |
24,560 |
16,713 |
License and development revenue |
5,000 |
1,042 |
— |
Operating expenses: |
|||
General and administrative |
16,626 |
19,773 |
14,139 |
Sales and marketing |
9,116 |
9,326 |
10,525 |
Research and development |
10,136 |
7,659 |
9,690 |
Amortization of intangible assets |
631 |
635 |
842 |
Total operating expenses |
36,509 |
37,393 |
35,196 |
Income (loss) from operations |
357 |
(11,791) |
(18,483) |
Other (expense) income: |
|||
Interest (expense) |
(3) |
(42) |
— |
Other non-operating income (expense) |
290 |
(139) |
69 |
Income (loss) before income taxes |
644 |
(11,972) |
(18,414) |
(Benefit from) provision for income taxes |
(390) |
(334) |
291 |
Net income (loss) |
$ 1,034 |
$ (11,638) |
$ (18,705) |
Income (loss) per share: |
|||
Basic |
$ 0.02 |
$ (0.22) |
$ (0.36) |
Diluted |
$ 0.02 |
$ (0.22) |
$ (0.36) |
Number of shares used in per share calculations: |
|||
Basic |
52,341 |
52,151 |
51,675 |
Diluted |
55,451 |
52,151 |
51,675 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Years Ended | |||
2016 |
2015 |
2014 | |
(In thousands) | |||
Cash Flows From Operating Activities: |
|||
Net income (loss) |
$ 1,034 |
|
$ (18,705) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) |
|||
Depreciation and amortization |
3,680 |
3,838 |
4,028 |
Stock-based compensation |
3,263 |
4,059 |
2,104 |
Provision for warranty claims |
208 |
135 |
156 |
Amortization of premiums on investments |
174 |
162 |
453 |
Provision for doubtful accounts |
76 |
112 |
299 |
Change in fair value of put options |
33 |
58 |
— |
Loss (gain) on foreign currency transactions |
13 |
1 |
(153) |
Loss on disposal of fixed assets |
— |
— |
38 |
Gain on fair value remeasurement of contingent consideration |
— |
— |
(149) |
Deferred income taxes |
(459) |
(326) |
315 |
Valuation adjustments for excess or obsolete inventory |
(361) |
(250) |
320 |
Reversal of accruals related to expired warranties |
(236) |
(395) |
— |
Other non-cash adjustments |
(164) |
(35) |
375 |
Changes in operating assets and liabilities: |
|||
Inventories |
2,287 |
1,951 |
(3,569) |
Unbilled receivables |
1,695 |
(128) |
4,882 |
Accrued expenses and other liabilities |
1,259 |
(708) |
1,864 |
Deferred revenue, product |
280 |
343 |
(331) |
Income taxes payable |
14 |
(3) |
(18) |
Litigation settlement |
— |
(1,700) |
— |
Accounts receivable |
(244) |
(743) |
4,002 |
Accounts payable |
(360) |
48 |
628 |
Prepaid and other assets |
(402) |
316 |
(254) |
Costs and estimated earnings in excess of billings |
(1,825) |
— |
— |
Deferred revenue, license and development |
(5,000) |
73,958 |
— |
Net cash provided by (used in) operating activities |
4,965 |
69,055 |
(3,715) |
Cash Flows From Investing Activities: |
|||
Maturities of marketable securities |
7,535 |
12,925 |
6,027 |
Restricted cash |
(577) |
1,665 |
3,306 |
Capital expenditures |
(1,112) |
(572) |
(2,562) |
Purchases of marketable securities |
(46,552) |
— |
(273) |
Net cash (used in) provided by investing activities |
(40,706) |
14,018 |
6,498 |
Cash Flows From Financing Activities: |
|||
Net proceeds from issuance of common stock |
6,600 |
1,326 |
2,405 |
Proceeds from long-term debt |
— |
55 |
— |
Payment of contingent consideration |
— |
— |
(1,375) |
Repayment of long-term debt |
(10) |
(7) |
— |
Repurchase of common stock |
(9,375) |
— |
(2,835) |
Net cash (used in) provided by financing activities |
(2,785) |
1,374 |
(1,805) |
Effect of exchange rate differences on cash and cash equivalents |
(41) |
(17) |
152 |
Net change in cash and cash equivalents |
(38,567) |
84,430 |
1,130 |
Cash and cash equivalents, beginning of year |
99,931 |
15,501 |
14,371 |
Cash and cash equivalents, end of year |
$ 61,364 |
$ 99,931 |
$ 15,501 |
Supplemental disclosure of cash flow information: |
|||
Cash paid for interest |
$ 3 |
$ 42 |
$ — |
Cash received for income tax refunds |
$ 2 |
$ 4 |
$ 1 |
Cash paid for income taxes |
$ 51 |
$ 24 |
$ 35 |
Supplemental disclosure of non-cash transactions: |
|||
Purchases of property and equipment in trade accounts payable and accrued expenses and other liabilities |
$ 66 |
$ 43 |
$ 1 |
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 Schlumberger exclusivity fee.
Three Months Ended |
Years Ended | |||||
2016 |
2015 |
2016 |
2015 |
2014 | ||
Product revenue |
$ 16,667 |
$ 15,211 |
$ 49,715 |
$ 43,671 |
$ 30,426 | |
License and development revenue |
1,250 |
1,042 |
5,000 |
1,042 |
— | |
Total revenue |
$ 17,917 |
$ 16,253 |
$ 54,715 |
$ 44,713 |
$ 30,426 | |
Product gross profit |
$ 10,696 |
$ 8,415 |
$ 31,866 |
$ 24,560 |
$ 16,713 | |
License and development gross profit |
1,250 |
1,042 |
5,000 |
1,042 |
— | |
Total gross profit (Non-GAAP) |
$ 11,946 |
$ 9,457 |
$ 36,866 |
$ 25,602 |
$ 16,713 | |
Product gross margin |
64.2% |
55.3% |
64.1% |
56.2% |
54.9% | |
Total gross margin (Non-GAAP) |
66.7% |
58.2% |
67.4% |
57.3% |
54.9% | |
Net income / (loss) |
$ 3,123 |
$ 312 |
$ 1,034 |
$ (11,638) |
$ (18,705) | |
Interest (expense) |
(1) |
(2) |
(3) |
(42) |
— | |
Other non-operating income (expense) |
153 |
(9) |
290 |
(139) |
69 | |
(Benefit from) provision for income taxes |
(291) |
(514) |
(390) |
(334) |
291 | |
Depreciation and amortization |
909 |
941 |
3,680 |
3,838 |
4,028 | |
EBITDA (Non-GAAP) |
$ 3,589 |
$ 750 |
$ 4,037 |
$ (7,953) |
$ (14,455) | |
Net income / (loss) |
$ 3,123 |
$ 312 |
$ 1,034 |
$ (11,638) |
$ (18,705) | |
Non-core operating expenses |
— |
491 |
1,008 |
6,246 |
— | |
Adjusted net income / (loss) (Non-GAAP) |
$ 3,123 |
$ 803 |
$ 2,042 |
$ (5,392) |
$ (18,705) | |
Basic net income / (loss) per share |
$ 0.06 |
$ 0.01 |
$ 0.02 |
$ (0.22) |
$ (0.36) | |
Adjusted basic net income / (loss) per share (Non-GAAP) |
$ 0.06 |
$ 0.02 |
$ 0.04 |
$ (0.11) |
$ (0.36) | |
Weighted average shares outstanding – basic |
52,681 |
52,386 |
52,231 |
52,151 |
51,675 |
_________________________________________
1 Total gross margin is a Non-GAAP financial measure. Please refer to the discussion under headings "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Financial Measures."
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/energy-recovery-reports-record-fiscal-year-end-2016-financial-results-300420644.html
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