Energy Recovery Reports Unaudited Financial Results for the Second Quarter of 2012
SECOND QUARTER HIGHLIGHTS:
- Reflecting increased volume related to mega-project shipments, net revenue increased 85% over the same period of the prior year
- Gross profit margin was 54%, up from 35% in the second quarter of 2011 and 26% in the first quarter of 2012
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Operating expenses decreased by nearly
$1.0 million , or 13%, compared to the second quarter of the prior year due to cost savings realized in 2012 -
Operating income was
$0.1 million compared to an operating loss of$5.2 million in the same period of the prior year -
Including a net tax benefit of
$373,000 , the Company reported net income of$439,000 in the second quarter of 2012, or$0.01 per share -
The Company used
$4.0 million of cash in the first six months to repurchase 1.8 million shares - Management reinforces guidance previously conveyed of 40% revenue growth in 2012 compared to 2011
In the context of increased volume, the Company reported gross profit margin of 54% in the current period compared to 35% in the second quarter of 2011 and 26% in the first quarter of 2012. The increase in gross profit margin was caused primarily by strong volume and positive operating leverage related to large shipments, a beneficial product mix that favored PX® devices over turbochargers and pumps, and diminished costs realized through plant consolidation and vertical integration. The Company expects that these levels of gross profit margin will continue, and even improve, to the extent that volume remains healthy as forecasted through current backlog and sales visibility; manufacturing operations continue to progress while generating higher yields, lower scrap, and greater labor productivity; and strategic initiatives aimed at diversification and product cost reduction begin to bear fruit.
Total operating expenses were
With much increased revenue realized through large shipments, a significant expansion of gross profit margin attributable primarily to volume and product mix, and reduced operating expenses achieved through focused cost reduction in 2011, the Company attained positive operating income of
Even after a share repurchase program that used
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 include our projections and guidance regarding 2012 revenues; our belief that strong revenue levels will persist through the balance of the year; our prediction that current levels of gross profit margin will continue, and even improve, through volume, manufacturing efficiencies, and cost-reduction initiatives; our estimate that operating expenses should increase modestly in future periods due to certain R&D investments; our statement that future capital projects will likely include investment for ERP and fixed assets related to oil & gas diversification; and our belief that we can implement measures to enhance profitability in future periods. 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. Factors that could cause actual results to differ materially include, but are not limited to, delays in, or cancellation of, the construction of desalination plants; risks that our market diversification and other strategic efforts will not yield intended benefits; political unrest; the inability of our customers to obtain project financing; delays in governmental approvals; changes in end users' budgets for desalination plants or the timing of their purchasing decisions; our ability to ship new products to meet scheduled delivery times; the state of the global economy; our ability to develop other energy recovery solutions for markets outside of desalination; and other risks detailed in the Company's filings with the
Conference Call to Discuss Second Quarter Results
The conference call scheduled tomorrow at
About
Unaudited Consolidated Financial Results | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(in thousands, except per share data) | ||||
(unaudited) | ||||
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2012 | 2011 | 2012 | 2011 | |
Net revenue |
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Cost of revenue | 5,636 | 4,304 | 9,140 | 10,007 |
Gross profit | 6,660 | 2,328 | 7,912 | 6,992 |
Operating expenses: | ||||
General and administrative | 3,606 | 4,325 | 7,074 | 8,382 |
Sales and marketing | 1,772 | 2,009 | 3,254 | 4,079 |
Research and development | 866 | 871 | 1,560 | 1,900 |
Amortization of intangible assets | 261 | 345 | 523 | 691 |
Restructuring charges | 79 | — | 110 | — |
Total operating expenses | 6,584 | 7,550 | 12,521 | 15,052 |
Income (loss) from operations | 76 | (5,222) | (4,609) | (8,060) |
Interest expense | (1) | (5) | (5) | (25) |
Other non-operating income (expense), net | (9) | 61 | 63 | 255 |
Income (loss) before income taxes | 66 | (5,166) | (4,551) | (7,830) |
Benefit from income taxes | (373) | (1,828) | (307) | (2,734) |
Net income (loss) |
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Net income (loss) per share: | ||||
Basic |
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Diluted |
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Number of shares used in per share calculations: | ||||
Basic | 51,432 | 52,605 | 52,025 | 52,592 |
Diluted | 52,070 | 52,605 | 52,025 | 52,592 |
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands, except share data and par value) | ||
(unaudited) | ||
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2012 | 2011 | |
ASSETS | ||
Current assets: |
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Cash and cash equivalents | ||
Restricted cash | 3,832 | 5,687 |
Short-term investments | 12,033 | 11,706 |
Accounts receivable, net of allowance for doubtful accounts of |
9,186 | 6,498 |
Unbilled receivables | 1,264 | 1,059 |
Inventories | 7,020 | 7,824 |
Deferred tax assets, net | 460 | 460 |
Prepaid expenses and other current assets | 4,287 | 4,929 |
Land and building held for sale | 1,581 | 1,660 |
Total current assets | 58,492 | 58,330 |
Restricted cash, non-current | 5,441 | 5,232 |
Long-term investments | 4,466 | 11,198 |
Property and equipment, net | 15,935 | 16,170 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 6,468 | 6,991 |
Other assets, non-current | 2 | 2 |
Total assets |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable |
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Accrued expenses and other current liabilities | 5,271 | 6,474 |
Income taxes payable | 29 | 21 |
Accrued warranty reserve | 943 | 852 |
Deferred revenue | 1,563 | 859 |
Current portion of long-term debt | 21 | 85 |
Current portion of capital lease obligations | 37 | 82 |
Total current liabilities | 9,218 | 9,879 |
Capital lease obligations, non-current | — | 18 |
Deferred tax liabilities, non-current, net | 1,634 | 1,516 |
Deferred revenue, non-current | 230 | 261 |
Other non-current liabilities | 2,252 | 2,085 |
Total liabilities | 13,334 | 13,759 |
Commitments and Contingencies (Note 9) | ||
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
53 | 53 |
Additional paid-in capital | 116,131 | 114,619 |
Notes receivable from stockholders | (24) | (23) |
Accumulated other comprehensive loss | (53) | (92) |
Treasury stock, at cost — 1,782,603 and 0 shares repurchased at |
(4,000) | — |
Accumulated deficit | (21,847) | (17,603) |
Total stockholders' equity | 90,260 | 96,954 |
Total liabilities and stockholders' equity |
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CONTACT:Source:Alexander J. Buehler Chief Financial Officer (510) 483-7370