Energy Recovery Posts Strong Quarterly Product Revenue Growth in Second Quarter
"Our desalination business continues to thrive, driven in part by returning demand in segments and regions hard-hit by COVID-19," said
Financial Results
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||
(In millions, except net income per share, percentages and basis points) | ||||||||||||||||||||||||
Product revenue | $ | 20.6 | $ | 19.3 | 7 | % | $ | 49.5 | $ | 38.3 | 30 | % | ||||||||||||
License and development revenue (1) | - | 24.4 | (100 | %) | - | 26.9 | (100 | %) | ||||||||||||||||
Total revenue | $ | 20.6 | $ | 43.6 | (53 | %) | $ | 49.5 | $ | 65.2 | (24 | %) | ||||||||||||
Product gross profit | $ | 13.4 | $ | 12.7 | 6 | % | $ | 33.4 | $ | 26.0 | 28 | % | ||||||||||||
Product gross margin | 65.1 | % | 66.0 | % | (90) bps | 67.4 | % | 68.0 | % | (60) bps | ||||||||||||||
Operating expense | $ | 13.1 | $ | 15.8 | (17 | %) | $ | 27.0 | $ | 31.5 | (14 | %) | ||||||||||||
Operating income | $ | 0.3 | $ | 21.3 | (99 | %) | $ | 6.4 | $ | 21.4 | (70 | %) | ||||||||||||
Net income | $ | 1.1 | $ | 16.9 | (94 | %) | $ | 7.9 | $ | 17.5 | (55 | %) | ||||||||||||
Diluted net income per share | $ | 0.02 | $ | 0.30 | $ | (0.28 | ) | $ | 0.13 | $ | 0.31 | $ | (0.18 | ) | ||||||||||
Operating cash flow | $ | 11.5 | $ | 5.6 | $ | 5.9 | $ | 11.5 | $ | (0.3 | ) | $ | 11.8 | |||||||||||
Cash and investments | $ | 120.7 | $ | 96.9 | 25 | % | $ | 120.7 | $ | 96.9 | 25 | % |
(1) | In |
Product Channel Revenue
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||
Megaproject | $ | 13.3 | $ | 12.0 | 11 | % | $ | 37.0 | $ | 26.4 | 40 | % | ||||||||||||
Original equipment manufacturer | 4.3 | 4.1 | 6 | % | 7.1 | 7.6 | (7 | %) | ||||||||||||||||
Aftermarket | 3.0 | 3.2 | (6 | %) | 5.4 | 4.3 | 29 | % | ||||||||||||||||
Total product revenue | $ | 20.6 | $ | 19.3 | 7 | % | $ | 49.5 | $ | 38.3 | 30 | % |
"We experienced another solid financial quarter at
Second Quarter 2021 Business Highlights
Water Segment
- Steady product revenue growth in the second quarter was driven by megaproject ("MPD") and original equipment manufacturer ("OEM") channels, with year-to-date sales representing growth of 30% across all channels, compared to the same period in 2020. The MPD channel continues to drive stable growth from large scale SWRO projects, while the OEM channel is beginning to rebound. This upward trend within the OEM channel is being driven primarily by large greenfield plant installations and brownfield retrofits, which include upgrades to existing operations leveraging our pressure exchanger technology and ancillary equipment.
- Our continued focus on manufacturing efficiencies, cost discipline and mix normalization is expected to improve the product gross margin profile from the low margin observed in second quarter. Gross margin was lower this quarter largely due to product mix as we sold a higher mix of non-PX products during the quarter from our growth in OEM sales.
Emerging Technologies Segment
- Testing of our PX G1300 energy recovery device for CO2 refrigeration continues to affirm expected energy savings and system efficiency gains we can achieve for CO2 refrigeration systems. We are seeking our first commercial deployment of the PX G1300.
- We are continuing our live well field trials of the VorTeq. The next scheduled field trial will test our efforts to extend the service life of the VorTeq cartridges.
- Excluding 2020 impairment costs, operating expenses in this segment decreased year-over-year, due primarily to reduced development expenditures related to the VorTeq which were partially offset by a shift of R&D investment to our commercial refrigeration efforts.
Bottom Line Summary
On a quarterly basis, we reported a net income of
Cash Flow Highlights
The Company finished the first quarter ended
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 the company is embarking on a path of sustainable, disciplined and diversified growth; our ability to develop pressure exchanged-based solutions for new industries; our belief that our carbon dioxide commercial refrigeration solution excels in warmer climates as compared to the market-leading technology; our belief that the Company's future is bright; our belief that the Company can work towards a more diversified revenue stream for the future; and our belief that the Company is making significant progress in our emerging technology projects. 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 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
Conference Call to Discuss Second Quarter 2021 Financial Results
LIVE CONFERENCE CALL:
Listen-only, US / Canada Toll-Free: +1 (877) 709-8150
Listen-only, Local / International Toll: +1 (201) 689-8354
Access code: 13720677
CONFERENCE CALL REPLAY:
Expiration:
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13720677
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:
Investor Relations
ir@energyrecovery.com
+1 (281) 962-8105
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 103,302 | $ | 94,255 | ||||
Short-term investments | 17,394 | 20,446 | ||||||
Accounts receivable, net | 7,599 | 11,792 | ||||||
Inventories, net | 15,289 | 11,748 | ||||||
Prepaid expenses and other assets, current | 4,265 | 4,950 | ||||||
Total current assets | 147,849 | 143,191 | ||||||
Deferred tax assets, net | 12,471 | 11,030 | ||||||
Property and equipment, net | 20,443 | 20,176 | ||||||
Operating lease, right of use asset | 15,383 | 16,090 | ||||||
12,833 | 12,839 | |||||||
Other assets, non-current | 365 | 988 | ||||||
Total assets | $ | 209,344 | $ | 204,314 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,278 | $ | 1,118 | ||||
Accrued expenses and other liabilities, current | 8,397 | 11,816 | ||||||
Lease liabilities, current | 1,473 | 1,243 | ||||||
Contract liabilities, current | 1,117 | 1,552 | ||||||
Total current liabilities | 13,265 | 15,729 | ||||||
Lease liabilities, non-current | 15,682 | 16,443 | ||||||
Other liabilities, non-current | 571 | 518 | ||||||
Total liabilities | 29,518 | 32,690 | ||||||
Stockholders' equity: | ||||||||
Common stock | 63 | 62 | ||||||
Additional paid-in capital | 191,087 | 179,161 | ||||||
Accumulated other comprehensive (loss) income | (53 | ) | 53 | |||||
(42,040 | ) | (30,486 | ) | |||||
Retained earnings | 30,769 | 22,834 | ||||||
Total stockholders' equity | 179,826 | 171,624 | ||||||
Total liabilities and stockholders' equity | $ | 209,344 | $ | 204,314 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Product revenue | $ | 20,607 | $ | 19,256 | $ | 49,547 | $ | 38,257 | ||||||||
Product cost of revenue | 7,181 | 6,549 | 16,162 | 12,233 | ||||||||||||
Product gross profit | 13,426 | 12,707 | 33,385 | 26,024 | ||||||||||||
License and development revenue | - | 24,352 | - | 26,895 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 6,175 | 5,599 | 12,781 | 12,480 | ||||||||||||
Sales and marketing | 2,537 | 1,497 | 5,240 | 3,635 | ||||||||||||
Research and development | 4,424 | 6,352 | 8,926 | 13,061 | ||||||||||||
Amortization of intangible assets | 3 | 4 | 7 | 8 | ||||||||||||
Impairment of long-lived assets | - | 2,332 | - | 2,332 | ||||||||||||
Total operating expenses | 13,139 | 15,784 | 26,954 | 31,516 | ||||||||||||
Income from operations | 287 | 21,275 | 6,431 | 21,403 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 51 | 255 | 143 | 675 | ||||||||||||
Other non-operating expense, net | (12 | ) | (18 | ) | (22 | ) | (30 | ) | ||||||||
Total other income, net | 39 | 237 | 121 | 645 | ||||||||||||
Income before income taxes | 326 | 21,512 | 6,552 | 22,048 | ||||||||||||
(Benefit from) provision for income taxes | (743 | ) | 4,586 | (1,383 | ) | 4,501 | ||||||||||
Net income | $ | 1,069 | $ | 16,926 | $ | 7,935 | $ | 17,547 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.30 | $ | 0.14 | $ | 0.32 | ||||||||
Diluted | $ | 0.02 | $ | 0.30 | $ | 0.13 | $ | 0.31 | ||||||||
Number of shares used in per share calculations: | ||||||||||||||||
Basic | 57,253 | 55,614 | 57,066 | 55,513 | ||||||||||||
Diluted | 58,999 | 56,371 | 58,822 | 56,438 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended | ||||||||
2021 | 2020 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,935 | $ | 17,547 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities | ||||||||
Stock-based compensation | 3,341 | 2,595 | ||||||
Depreciation and amortization | 2,733 | 2,751 | ||||||
Amortization of premiums and discounts on investments | 139 | 215 | ||||||
Deferred income taxes | (1,441 | ) | 4,666 | |||||
Impairment of long-lived assets | - | 2,332 | ||||||
Other non-cash adjustments | 149 | 228 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 4,193 | 101 | ||||||
Contract assets | 1,356 | (198 | ) | |||||
Inventories, net | (3,621 | ) | 260 | |||||
Prepaid and other assets | (47 | ) | (278 | ) | ||||
Accounts payable | 1,237 | 1,285 | ||||||
Accrued expenses and other liabilities | (3,999 | ) | (4,009 | ) | ||||
Contract liabilities | (434 | ) | (27,789 | ) | ||||
Net cash provided by (used in) operating activities | 11,541 | (294 | ) | |||||
Cash flows from investing activities: | ||||||||
Sales of marketable securities | - | 9,767 | ||||||
Maturities of marketable securities | 14,861 | 43,286 | ||||||
Purchases of marketable securities | (12,034 | ) | (12,855 | ) | ||||
Capital expenditures | (2,449 | ) | (4,410 | ) | ||||
Other | 5 | - | ||||||
Net cash provided by investing activities | 383 | 35,788 | ||||||
Cash flows from financing activities: | ||||||||
Net proceeds from issuance of common stock | 8,697 | 1,128 | ||||||
Tax payment for employee shares withheld | - | (23 | ) | |||||
Repurchase of common stock | (11,554 | ) | - | |||||
Net cash (used in) provided by financing activities | (2,857 | ) | 1,105 | |||||
Effect of exchange rate differences on cash and cash equivalents | (20 | ) | (15 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 9,047 | 36,584 | ||||||
Cash, cash equivalents and restricted cash, beginning of year | 94,358 | 26,488 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 103,405 | $ | 63,072 |
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Product revenue | $ | 20,568 | $ | 39 | $ | - | $ | 20,607 | $ | 19,256 | $ | - | $ | - | $ | 19,256 | ||||||||||||||||
Product cost of revenue | 7,181 | - | - | 7,181 | 6,549 | - | - | 6,549 | ||||||||||||||||||||||||
Product gross profit | 13,387 | 39 | - | 13,426 | 12,707 | - | - | 12,707 | ||||||||||||||||||||||||
License and development revenue | - | - | - | - | - | 24,352 | - | 24,352 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
General and administrative | 1,776 | 1,315 | 3,084 | 6,175 | 1,967 | 1,150 | 2,482 | 5,599 | ||||||||||||||||||||||||
Sales and marketing | 2,121 | 229 | 187 | 2,537 | 1,124 | 262 | 111 | 1,497 | ||||||||||||||||||||||||
Research and development | 595 | 3,829 | - | 4,424 | 960 | 5,392 | - | 6,352 | ||||||||||||||||||||||||
Amortization of intangible assets | 3 | - | - | 3 | 4 | - | - | 4 | ||||||||||||||||||||||||
Impairment of long-lived assets | - | - | - | - | - | 2,332 | - | 2,332 | ||||||||||||||||||||||||
Total operating expenses | 4,495 | 5,373 | 3,271 | 13,139 | 4,055 | 9,136 | 2,593 | 15,784 | ||||||||||||||||||||||||
Operating income (loss) | $ | 8,892 | $ | (5,334 | ) | $ | (3,271 | ) | 287 | $ | 8,652 | $ | 15,216 | $ | (2,593 | ) | 21,275 | |||||||||||||||
Other income, net | 39 | 237 | ||||||||||||||||||||||||||||||
Income before income taxes | $ | 326 | $ | 21,512 |
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Product revenue | $ | 49,508 | $ | 39 | $ | - | $ | 49,547 | $ | 38,257 | $ | - | $ | - | $ | 38,257 | ||||||||||||||||
Product cost of revenue | 16,162 | - | - | 16,162 | 12,233 | - | - | 12,233 | ||||||||||||||||||||||||
Product gross profit | 33,346 | 39 | - | 33,385 | 26,024 | - | - | 26,024 | ||||||||||||||||||||||||
License and development revenue | - | - | - | - | - | 26,895 | - | 26,895 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
General and administrative | 3,333 | 2,481 | 6,967 | 12,781 | 4,046 | 2,642 | 5,792 | 12,480 | ||||||||||||||||||||||||
Sales and marketing | 4,285 | 408 | 547 | 5,240 | 2,800 | 574 | 261 | 3,635 | ||||||||||||||||||||||||
Research and development | 1,096 | 7,830 | - | 8,926 | 1,862 | 11,199 | - | 13,061 | ||||||||||||||||||||||||
Amortization of intangible assets | 7 | - | - | 7 | 8 | - | - | 8 | ||||||||||||||||||||||||
Impairment of long-lived assets | - | - | - | - | - | 2,332 | - | 2,332 | ||||||||||||||||||||||||
Total operating expenses | 8,721 | 10,719 | 7,514 | 26,954 | 8,716 | 16,747 | 6,053 | 31,516 | ||||||||||||||||||||||||
Operating income (loss) | $ | 24,625 | $ | (10,680 | ) | $ | (7,514 | ) | 6,431 | $ | 17,308 | $ | 10,148 | $ | (6,053 | ) | 21,403 | |||||||||||||||
Other income, net | 121 | 645 | ||||||||||||||||||||||||||||||
Income before income taxes | $ | 6,552 | $ | 22,048 |
View source version on accesswire.com:
https://www.accesswire.com/658617/Energy-Recovery-Posts-Strong-Quarterly-Product-Revenue-Growth-in-Second-Quarter