Energy Recovery Reports Unaudited Financial Results for the Fourth Quarter and Fiscal Year of 2014
FOURTH QUARTER SUMMARY:
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Total revenue decreased by 36% to
$14.8 million in the current period, from$23.2 million in the fourth quarter of 2013 - Gross profit margin was 61% in the current period, compared to 63% in the fourth quarter of 2013, as a result of lower production levels and, to a lesser extent, a shift in mix
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Operating expenses increased by
$6.0 million , or 78%, from$7.8 million in the fourth quarter of 2013 to$13.8 million in the current period due to an increase in research & development and legal expenses -
Net loss of
$(4.9) million , or$(0.09) per share, in the current period, compared to net income of$6.7 million , or$0.13 per share, in the fourth quarter of 2013, on lower volume, higher operating expenses and a shift in mix
FULL YEAR SUMMARY:
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Total revenue decreased by
$12.6 million , from$43.0 million in 2013 to$30.4 million in 2014 - Gross profit margin decreased from 60% in 2013 to 55% in 2014 as a result of lower production levels and, to a lesser extent, a shift in mix
-
Operating expenses increased by
$6.6 million , or 23%, from$28.6 million in 2013 to$35.2 million in 2014 -
Net loss of
$(18.7) million , or$(0.36) per share in 2014, compared to$(3.1) million , or$(0.06) per share in 2013, on lower volume, higher operating expenses and a shift in mix -
Net cash flow of
$1.1 million in 2014 -
At
December 31, 2014 , excluding current and non-current restricted cash of$5.5 million , the Company reported unrestricted cash of$15.5 million , short-term investments of$13.1 million , and long-term investments of$0.3 million , all of which represent a combined total of$28.9 million .
REVENUES
The Company generated net revenue of
For the year ended
GROSS MARGIN
Decreased production was the primary driver to a gross profit margin decline from 63% in the prior-year quarter to 61% in the current period. A favorable shift in mix due to MPD shipments resulted in the Company's gross profit margin increase in sequential terms from 44% in the third quarter of 2014 to 61% in the current period.
For the year, gross profit margin decreased from 60% in 2013 to 55% in 2014 due to decreased production and to a lesser extent, a shift in mix.
OPERATING EXPENSES
Operating expenses for the quarter ended
For the fiscal year ended in 2014, operating expenses increased by
To summarize financial performance on a full-year basis, the Company reported a net loss of
CASHFLOW HIGHLIGHTS
For the fiscal year ended in 2014, the Company generated net cash flow of
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 "anticipate," "believe," "continue," "excited," "expect," "remain," "will," "probable" 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 Fourth Quarter and Full Year Results for 2014
LIVE CONFERENCE CALL WEBCAST: | CONFERENCE CALL REPLAY: |
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Expiration: |
Listen-only, Toll-free: 888-455-2263 | |
Listen-only, Int'l Toll: 719-325-2469 | Toll-free: 888-203-1112 |
Conference ID: 8618195 | Int'l Toll: 719-457-0820 |
Access code: 8618195 |
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 December 31, |
Year Ended December 31, |
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2014 | 2013 | 2014 | 2013 | |
Net revenue | $ 14,780 | $ 23,235 | $ 30,426 | $ 43,045 |
Cost of revenue | 5,722 | 8,708 | 13,713 | 17,323 |
Gross profit | 9,058 | 14,527 | 16,713 | 25,722 |
Operating expenses: | ||||
General and administrative | 6,027 | 4,071 | 14,139 | 15,192 |
Sales and marketing | 2,977 | 2,345 | 10,525 | 7,952 |
Research and development | 4,601 | 1,115 | 9,690 | 4,361 |
Amortization of intangible assets | 196 | 230 | 842 | 921 |
Restructuring charges | — | — | — | 184 |
Total operating expenses | 13,801 | 7,761 | 35,196 | 28,610 |
(Loss) income from operations | (4,743) | 6,766 | (18,483) | (2,888) |
Other income (expense): | ||||
Other non-operating income | (58) | 30 | 69 | 109 |
(Loss) income before income taxes | (4,801) | 6,796 | (18,414) | (2,779) |
Provision for income taxes | 104 | 69 | 291 | 327 |
Net (loss) income | $ (4,905) | $ 6,727 |
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$ (3,106) |
(Loss) income per share: | ||||
Basic | $ (0.09) | $ 0.13 | $ (0.36) | $ (0.06) |
Diluted | $ (0.09) | $ 0.13 | $ (0.36) | $ (0.06) |
Number of shares used in per share calculations: | ||||
Basic Shares | 51,822 | 51,200 | 51,675 | 51,066 |
Diluted Shares | 51,822 | 53,305 | 51,675 | 51,006 |
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CONSOLIDATED BALANCE SHEETS | ||
(unaudited) | ||
December 31, | ||
2014 | 2013 | |
(In thousands, except share data and par value) |
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ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 15,501 | $ 14,371 |
Restricted cash | 2,623 | 4,311 |
Short-term investments | 13,072 | 5,856 |
Accounts receivable, net of allowance for doubtful accounts of |
10,941 | 15,222 |
Unbilled receivables, current | 1,343 | 5,442 |
Inventories | 8,204 | 4,955 |
Deferred tax assets, net | 240 | 698 |
Prepaid expenses and other current assets | 1,317 | 1,018 |
Total current assets | 53,241 | 51,873 |
Restricted cash, non-current | 2,850 | 4,468 |
Unbilled receivables, non-current | 414 | 1,197 |
Long-term investments | 267 | 13,694 |
Property and equipment, net | 13,211 | 13,903 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 3,166 | 4,008 |
Other assets, non-current | 2 | 2 |
Total assets | $ 85,941 | $ 101,935 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 1,817 | $ 1,209 |
Accrued expenses and other current liabilities | 8,427 | 7,963 |
Income taxes payable | 4 | 22 |
Accrued warranty reserve | 755 | 709 |
Deferred revenue | 519 | 779 |
Total current liabilities | 11,522 | 10,682 |
Deferred tax liabilities, non-current, net | 1,989 | 2,131 |
Deferred revenue, non-current | 59 | 130 |
Other non-current liabilities | 2,453 | 2,077 |
Total liabilities | 16,023 | 15,020 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
54 | 53 |
Additional paid-in capital | 124,440 | 119,932 |
Accumulated other comprehensive loss | (73) | (107) |
Treasury stock, at cost 2,479,456 shares repurchased at |
(6,835) | (4,000) |
Accumulated deficit | (47,668) | (28,963) |
Total stockholders' equity | 69,918 | 86,915 |
Total liabilities and stockholders' equity | $ 85,941 | $ 101,935 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(unaudited) | |||
Years Ended |
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2014 | 2013 | 2012 | |
(In thousands) | |||
Cash Flows From Operating Activities | |||
Net loss |
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$ (3,106) | $ (8,254) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
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Depreciation and amortization | 4,028 | 3,797 | 3,802 |
Stock-based compensation | 2,104 | 2,177 | 2,615 |
Amortization of premiums on investments | 453 | 409 | 507 |
Valuation adjustments for excess or obsolete inventory | 320 | 297 | 857 |
Deferred income taxes | 315 | 227 | 150 |
Provision for doubtful accounts | 299 | 69 | 6 |
Provision for warranty claims | 156 | 126 | 601 |
Loss on disposal of fixed assets | 38 | 71 | 49 |
Gain on fair value remeasurement of contingent consideration | (149) | — | — |
Gain on foreign currency transactions | (111) | (27) | (5) |
Tax benefit on other comprehensive income | (42) | — | — |
Non-cash restructuring charges | — | 184 | 314 |
Impairment of intangible assets | — | — | 1,020 |
Interest accrued on notes receivables from stockholders | — | — | (1) |
Reversal of accruals related to expired warranties | — | (340) | — |
Other non-cash adjustments | 375 | (123) | 113 |
Changes in operating assets and liabilities: | |||
Unbilled receivables | 4,882 | (751) | (4,830) |
Accounts receivable | 4,002 | (2,042) | (6,779) |
Accrued expenses and other liabilities | 1,864 | (686) | 2,068 |
Accounts payable | 628 | (866) | 583 |
Inventories | (3,569) | (117) | 1,832 |
Deferred revenue | (331) | (420) | 209 |
Prepaid and other assets | (254) | 3,227 | 692 |
Income taxes payable | (18) | (18) | 19 |
Net cash (used in) provided by operating activities | (3,715) | 2,088 | (4,432) |
Cash Flows From Investing Activities | |||
Maturities of marketable securities | 6,027 | 9,573 | 13,116 |
Restricted cash | 3,306 | 822 | 1,318 |
Capital expenditures | (2,562) | (1,132) | (2,810) |
Purchases of marketable securities | (273) | (15,278) | (4,961) |
Proceeds from sale of capitalized assets | — | 1,163 | — |
Net cash provided by (used in) investing activities | 6,498 | (4,852) | 6,663 |
Cash Flows From Financing Activities | |||
Net proceeds from issuance of common stock | 2,405 | 504 | 30 |
Repurchase of common stock | (2,835) | — | (4,000) |
Payment of contingent consideration | (1,375) | — | — |
Repayment of long-term debt | — | — | (85) |
Repayment of capital lease obligation | — | (18) | (82) |
Repayment of notes receivable from stockholders | — | — | 24 |
Net cash (used in) provided by financing activities | (1,805) | 486 | (4,113) |
Effect of exchange rate differences on cash and cash equivalents | 152 | 7 | 17 |
Net change in cash and cash equivalents | 1,130 | (2,271) | (1,865) |
Cash and cash equivalents, beginning of year | 14,371 | 16,642 | 18,507 |
Cash and cash equivalents, end of year | $ 15,501 | $ 14,371 | $ 16,642 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | $ — | $ 1 | $ 6 |
Cash received for income tax refunds | $ 1 | $ 3,123 | $ 442 |
Cash paid for income taxes | $ 35 | $ 22 | $ 23 |
Supplemental disclosure of non-cash transactions: | |||
Purchases of property and equipment in trade accounts payable and accrued expenses and other liabilities | $ 1 | $ 31 | $ 279 |
CONTACT:Source:Joel Gay Chief Financial Officer 510-483-7370