Energy Recovery Reports Unaudited Financial Results for the First Quarter of 2014
FIRST QUARTER HIGHLIGHTS:
- Reflective of continued manufacturing efficiencies, gross profit margin increased from 47% in the first quarter of 2013 to 58% in the current period despite a revenue decrease of 39% caused by lower OEM sales
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Operating expenses decreased
$1.5 million , or 20%, from$7.5 million in the first quarter of 2013 to$6.0 million in the current period due to lower general and administrative expenses -
On increased gross profit margin and lower operating expenses, net loss was reduced from
$(4.5) million , or$(0.09) per share, in the first quarter of 2013 to$(3.7) million , or$(0.07) per share, in the first quarter of 2014
On decreased revenue in the first quarter of 2014, the Company was still able to increase gross profit margin from 47% in the prior-year quarter to 58% in the current period. While the Company's gross profit margin decreased in sequential terms from 63% in the fourth quarter of 2013, the gross profit margin of 58% in the current quarter included diminished levels of production in light of a plant shutdown in January along with decreased demand, thus causing lower absorption of fixed costs with a commensurate impact on margins. Product mix in the first quarter of 2014 was 61% related to PX® devices and related products and services, 35% associated with pumps and turbochargers, and 4% for rental income tied to a new oil & gas device, the last of which was for an operating lease of a IsoGenTM system to a customer in Saudi Arabia. This IsoGen system converts hydraulic pressure energy to electrical energy in a gas processing application. The product mix in the first quarter of 2013 was similar, with 62% of net revenue comprised of PX devices and 38% for pumps and turbochargers.
On increased gross profit margin and decreased revenue, the Company demonstrated a reduction in operating expenses of
On decreased revenue, increased gross profit margin, and reduced operating expenses, the Company reported a net loss of
In the three months ended
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," "expect," 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 2014
The conference call scheduled for tomorrow at
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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2014 | 2013 | |
Net revenue | $ 3,897 | $ 6,373 |
Cost of revenue | 1,652 | 3,356 |
Gross profit | 2,245 | 3,017 |
Operating expenses: | ||
General and administrative | 2,039 | 4,170 |
Sales and marketing | 2,495 | 2,011 |
Research and development | 1,234 | 1,082 |
Amortization of intangible assets | 215 | 230 |
Total operating expenses | 5,983 | 7,493 |
Loss from operations | (3,738) | (4,476) |
Other non-operating income, net of expenses | 121 | 27 |
Loss before income taxes | (3,617) | (4,449) |
Provision for income taxes | 66 | 61 |
Net loss | $ (3,683) | $ (4,510) |
Basic and diluted net loss per share | $ (0.07) | $ (0.09) |
Shares used in basic and diluted per share calculation | 51,446 | 50,982 |
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CONSOLIDATED BALANCE SHEETS | ||
(unaudited) | ||
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2014 |
2013 |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 11,437 | $ 14,371 |
Restricted cash | 5,157 | 4,311 |
Short-term investments | 8,017 | 5,856 |
Accounts receivable, net of allowance for doubtful accounts of |
17,202 | 15,222 |
Unbilled receivables | 746 | 5,442 |
Inventories | 8,276 | 4,955 |
Deferred tax assets, net | 698 | 698 |
Prepaid expenses and other current assets | 2,131 | 1,018 |
Total current assets | 53,664 | 51,873 |
Restricted cash, non-current | 3,210 | 4,468 |
Unbilled receivables, non-current | 1,197 | 1,197 |
Long-term investments | 8,810 | 13,694 |
Property and equipment, net of accumulated depreciation of |
13,161 | 13,903 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 3,792 | 4,008 |
Other assets, non-current | 2 | 2 |
Total assets | $ 96,626 | $ 101,935 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 1,639 | $ 1,209 |
Accrued expenses and other current liabilities | 5,362 | 7,963 |
Income taxes payable | 28 | 22 |
Accrued warranty reserve | 705 | 709 |
Deferred revenue | 830 | 779 |
Total current liabilities | 8,564 | 10,682 |
Deferred tax liabilities, non-current, net | 2,186 | 2,131 |
Deferred revenue, non-current | 94 | 130 |
Other non-current liabilities | 1,951 | 2,077 |
Total liabilities | 12,795 | 15,020 |
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
53 | 53 |
Additional paid-in capital | 121,119 | 119,932 |
Accumulated other comprehensive loss | (62) | (107) |
Treasury stock, at cost, 1,897,903 and 1,782,603 shares repurchased at |
(4,633) | (4,000) |
Accumulated deficit | (32,646) | (28,963) |
Total stockholders' equity | 83,831 | 86,915 |
Total liabilities and stockholders' equity | $ 96,626 | $ 101,935 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(unaudited) | ||
Three Months Ended March 31, |
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2014 | 2013 | |
Cash Flows From Operating Activities | ||
Net loss | $ (3,683) | $ (4,510) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 983 | 911 |
Loss on disposal of fixed assets | — | 13 |
Amortization of premiums/discounts on investments | 125 | 89 |
Share-based compensation | 581 | 689 |
Loss on foreign currency transactions | 10 | 10 |
Deferred income taxes | 56 | 56 |
Provision for doubtful accounts | 72 | 40 |
Provision for warranty claims | 3 | 97 |
Valuation adjustments for excess or obsolete inventory | 40 | (20) |
Other non-cash adjustments | (125) | (29) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,052) | 1,426 |
Unbilled receivables | 4,696 | 2,232 |
Inventories | (3,361) | (1,480) |
Prepaid and other assets | (1,112) | (121) |
Accounts payable | 448 | (117) |
Accrued expenses and other liabilities | (2,638) | (2,810) |
Income taxes payable | 7 | 4 |
Deferred revenue | 15 | (334) |
Net cash used in operating activities | (5,935) | (3,854) |
Cash Flows From Investing Activities | ||
Capital expenditures | (38) | (384) |
Purchase of marketable securities | — | (3,464) |
Maturities of marketable securities | 2,600 | 4,250 |
Restricted cash | 412 | 59 |
Net cash provided by investing activities | 2,974 | 461 |
Cash Flows From Financing Activities | ||
Repayment of capital lease obligation | — | (14) |
Net proceeds from issuance of common stock | 604 | 200 |
Repurchase of common stock for treasury | (633) | — |
Net cash provided by (used in) financing activities | (29) | 186 |
Effect of exchange rate differences on cash and cash equivalents | 56 | (12) |
Net change in cash and cash equivalents | (2,934) | (3,219) |
Cash and cash equivalents, beginning of period | 14,371 | 16,642 |
Cash and cash equivalents, end of period | $ 11,437 | $ 13,423 |
CONTACT:Source:Alexander J. Buehler Chief Financial Officer (510) 483-7370