Energy Recovery Reports Third Quarter 2015 Results
THIRD QUARTER HIGHLIGHTS:
-
Revenue increased 127% to
$12.1 million in the current period, from$5.3 million in the third quarter of 2014 based on strengthening demand and sales in the global desalination market - Gross margin improved to 59% from 44%, an increase of 1,500 basis points year-over-year
-
Operating expenses of
$7.4 million , down 5% year-over-year -
Net loss of
$(0.3) million , or$(0.01) per share, in the current period, compared to net loss of$(5.5) million , or$(0.11) per share in prior year period
Management Commentary
Revenue
The Company generated net revenue of
Gross Margin
Higher sales volume attributable to a mega-project shipment was the primary driver to a gross profit margin increase to 59% in the third quarter of 2015 from 44% in the prior-year quarter. Other contributing factors also include a favorable shift in both price and mix. The Company's gross profit margin also increased sequentially from 54% in the second quarter of 2015 mainly due to a shift in channel and better pricing.
Operating Expense
Operating expenses decreased to
Bottom Line Summary
To summarize financial performance for the third quarter of 2015, the Company reported a net loss of
Cash Flow Highlights
For the nine months ended
The net loss of
Cash used by operating activities was
Cash generated from investing activities was
Balance Sheet Highlights
The Company reported 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 such as "confident," "encouraging," "reflect," "validate," 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 THIRD QUARTER RESULTS FOR 2015
Live Conference Call: Listen-only, Toll-free: 888-632-3383 Listen-only, Local: 785-424-1676 Conference ID: 555478 |
Conference Call Replay: Toll-free: 888-203-1112 Local: 719-457-0820 Access code: 555478 Expiration: |
Investors may also access the live call or the replay online at www.streetevents.com or at the Investors section of the Company's website at www.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.
ABOUT
Unaudited Consolidated Financial Results | |||||
|
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(in thousands, except per share data) | |||||
(unaudited) | |||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
2015 | 2014 | 2015 | 2014 | ||
Net revenue | $ 12,112 | $ 5,342 | $ 28,460 | $ 15,646 | |
Cost of revenue | 4,948 | 3,007 | 12,315 | 7,991 | |
Gross profit | 7,164 | 2,335 | 16,145 | 7,655 | |
Operating expenses: | |||||
General and administrative | 3,590 | 3,078 | 15,230 | 8,112 | |
Sales and marketing | 2,195 | 2,351 | 6,622 | 7,548 | |
Research and development | 1,474 | 2,131 | 5,417 | 5,089 | |
Amortization of intangible assets | 159 | 216 | 476 | 646 | |
Total operating expenses | 7,418 | 7,776 | 27,745 | 21,395 | |
Loss from operations | (254) | (5,441) | (11,600) | (13,740) | |
Interest expense | — | — | (40) | — | |
Other non-operating (expense) income | (48) | (2) | (130) | 127 | |
Loss before income taxes | (302) | (5,443) | (11,770) | (13,613) | |
Provision for income taxes | 38 | 63 | 180 | 187 | |
Net loss | $ (340) | $ (5,506) | $ (11,950) | $ (13,800) | |
Basic and diluted net loss per share | $ (0.01) | $ (0.11) | $ (0.23) | $ (0.27) | |
Shares used in basic and diluted per share calculation | 52,237 | 51,861 | 52,071 | 51,626 |
|
||
CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
(unaudited) | ||
September 30, 2015 | December 31, 2014 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 21,498 | $ 15,501 |
Restricted cash | 1,385 | 2,623 |
Short-term investments | 1,344 | 13,072 |
Accounts receivable, net of allowance for doubtful accounts of |
8,060 | 10,941 |
Unbilled receivables, current | 828 | 1,343 |
Inventories | 8,893 | 8,204 |
Income taxes receivable | 5 | — |
Deferred tax assets, net | 240 | 240 |
Prepaid expenses and other current assets | 1,506 | 1,317 |
Total current assets | 43,759 | 53,241 |
Restricted cash, non-current | 2,232 | 2,850 |
Unbilled receivables, non-current | 420 | 414 |
Long-term investments | — | 267 |
Property and equipment, net of accumulated depreciation of |
11,346 | 13,211 |
|
12,790 | 12,790 |
Other intangible assets, net | 2,690 | 3,166 |
Other assets, non-current | 2 | 2 |
Total assets | $ 73,239 | $ 85,941 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 1,683 | $ 1,817 |
Accrued expenses and other current liabilities | 4,835 | 8,427 |
Income taxes payable | — | 4 |
Accrued warranty reserve | 600 | 755 |
Deferred revenue | 948 | 519 |
Current portion of long-term debt | 11 | — |
Total current liabilities | 8,077 | 11,522 |
Long-term debt, net of current portion | 39 | — |
Deferred tax liabilities, non-current, net | 2,160 | 1,989 |
Deferred revenue, non-current | 79 | 59 |
Other non-current liabilities | 764 | 2,453 |
Total liabilities | 11,119 | 16,023 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
55 | 54 |
Additional paid-in capital | 128,566 | 124,440 |
Accumulated other comprehensive loss | (48) | (73) |
|
(6,835) | (6,835) |
Accumulated deficit | (59,618) | (47,668) |
Total stockholders' equity | 62,120 | 69,918 |
Total liabilities and stockholders' equity | $ 73,239 | $ 85,941 |
|
||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in thousands) | ||
(unaudited) | ||
Nine Months Ended September 30 |
||
2015 | 2014 | |
Cash Flows From Operating Activities | ||
Net loss |
|
|
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 3,549 | 1,628 |
Depreciation and amortization | 2,897 | 3,025 |
Deferred income taxes | 172 | 169 |
Amortization of premiums/discounts on investments | 154 | 348 |
Provision for warranty claims | 91 | 87 |
Provision for doubtful accounts | 88 | 293 |
Loss on fair value remeasurement of hedge option | 55 | — |
Loss on foreign currency transactions | 54 | (10) |
Other non-cash adjustments | 11 | (179) |
Valuation adjustments for excess or obsolete inventory | (126) | 212 |
Reversal of accruals related to expired warranties | (213) | — |
Gain on fair value remeasurement of contingent consideration | — | (149) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,810 | 10,935 |
Unbilled receivables | 509 | 5,698 |
Deferred revenue | 449 | 203 |
Income taxes payable | (10) | (7) |
Accounts payable | (134) | 64 |
Prepaid and other assets | (242) | (1,045) |
Inventories | (563) | (5,484) |
Litigation settlement | (1,700) | — |
Accrued expenses and other liabilities | (3,602) | (2,256) |
Net cash used in operating activities | (7,701) | (268) |
Cash Flows From Investing Activities | ||
Maturities of marketable securities | 11,845 | 4,355 |
Restricted cash | 1,856 | 3,338 |
Purchase of marketable securities | — | (273) |
Capital expenditures | (557) | (2,301) |
Net cash provided by investing activities | 13,144 | 5,119 |
Cash Flows From Financing Activities | ||
Net proceeds from issuance of common stock | 558 | 1,165 |
Proceeds from borrowings | 55 | — |
Repayment of long-term debt | (5) | — |
Payment of contingent consideration | — | (1,375) |
Repurchase of common stock for treasury | — | (1,633) |
Net cash provided by (used in) financing activities | 608 | (1,843) |
Effect of exchange rate differences on cash and cash equivalents | (54) | 44 |
Net change in cash and cash equivalents | 5,997 | 3,052 |
Cash and cash equivalents, beginning of period | 15,501 | 14,371 |
Cash and cash equivalents, end of period | $ 21,498 | $ 17,423 |
CONTACT:Source:Chris Gannon Chief Financial Officer 510-483-7370 cgannon@energyrecovery.com