Energy Recovery Achieves Record-Breaking Fourth Quarter and Fiscal Year 2021 Product Revenue
"We are pleased to report another year of record revenue in 2021. This achievement reflects the important role our products play in reliably delivering energy and cost savings, as well as emissions reduction for critical industries. Additionally, our performance highlights the ability of our team to adapt and perform at the highest level, despite the many challenges presented by the global pandemic," said
"We are well down the clear and disciplined path we defined two years ago for our industrial wastewater treatment and refrigeration businesses. We have announced multiple contracts for the Ultra PX™ for use in multiple industrial wastewater treatment applications. Furthermore, we are in discussions with several refrigeration rack manufacturers in
"
Financial Results
Three Months Ended | Years Ended | |||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||
(In millions, except net income per share, percentages and basis points) | ||||||||||||||||||||||||
Product revenue | $ | 33.6 | $ | 26.4 | 27 | % | $ | 103.9 | $ | 92.1 | 13 | % | ||||||||||||
License and development revenue (1) | - | - | - | % | - | 26.9 | (100) | % | ||||||||||||||||
Total revenue | $ | 33.6 | $ | 26.4 | 27 | % | $ | 103.9 | $ | 119.0 | (13) | % | ||||||||||||
Product gross profit | $ | 23.2 | $ | 18.2 | 27 | % | $ | 71.2 | $ | 63.8 | 12 | % | ||||||||||||
Product gross margin | 68.9 | % | 69.0 | % | (10) bps | 68.6 | % | 69.3 | % | (70) bps | ||||||||||||||
Operating expense | $ | 17.2 | $ | 14.4 | 19 | % | $ | 57.4 | $ | 59.4 | (3) | % | ||||||||||||
Operating income | $ | 6.0 | $ | 3.8 | 57 | % | $ | 13.8 | $ | 31.3 | (56) | % | ||||||||||||
Net income | $ | 5.3 | $ | 3.5 | 52 | % | $ | 14.3 | $ | 26.4 | (46) | % | ||||||||||||
Diluted net income per share | $ | 0.09 | $ | 0.06 | $ | 0.03 | $ | 0.24 | $ | 0.47 | $ | (0.23) | ||||||||||||
Operating cash flow | $ | 6.2 | $ | 6.5 | $ | (0.3) | $ | 13.5 | $ | 16.9 | $ | (3.3) | ||||||||||||
Cash and investments | $ | 108.0 | $ | 114.7 | (6) | % | $ | 108.0 | $ | 114.7 | (6) | % | ||||||||||||
- In
June 2020 , the Company terminated the VorTeq License Agreement withSchlumberger Technology Corporation . As there were no future performance obligations to be recognized under the VorTeq License Agreement after the effective date, the Company recognized in full the remaining deferred revenue balance of$24.4 million in the second quarter of fiscal year 2020. In addition, no future license and development revenue was recognized under the VorTeq License Agreement after the second quarter of fiscal year 2020.
Product Channel Revenue
Three Months Ended | Years Ended | |||||||||||||||||||||||
2021 | 2020 | Variance | 2021 | 2020 | Variance | |||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||
Megaproject | $ | 25.1 | $ | 19.6 | 28 | % | $ | 75.4 | $ | 66.8 | 13 | % | ||||||||||||
Original equipment manufacturer | 5.7 | 4.1 | 37 | % | 17.6 | 15.8 | 11 | % | ||||||||||||||||
Aftermarket | 2.8 | 2.7 | 5 | % | 10.9 | 9.5 | 15 | % | ||||||||||||||||
Total product revenue | $ | 33.6 | $ | 26.4 | 27 | % | $ | 103.9 | $ | 92.1 | 13 | % | ||||||||||||
"We comfortably exceeded our guidance for the year by 3% following historic high fourth quarter revenue. In addition, operating expenditures were only 55% of product revenue, which is a significant decrease from 2020 and within guidance," said
Fourth Quarter 2021 Business Highlights
Water Segment
- We successfully balanced supply chain challenges to deliver recording-breaking product revenue of
$33.6 million . - Product gross margin came within guidance and in-line with recent quarters. We continue to invest in improving our PX devices and modernizing our manufacturing to ensure continued high-quality production with even greater efficiency.
- Operating expenses in this segment increased quarter-over-quarter due primarily to an increase in employee-related costs and R&D expenses.
Emerging Technologies Segment
- We continued our efforts to advance our overall PX and CO2 commercial refrigeration technology as well as to prepare and enhance our production, safety and testing measures for successful deployment of our first CO2 commercial installation.
- Operating expenses in this segment increased quarter-over-quarter, due primarily to an increase in expenditures for development of industrial and commercial refrigeration, including higher employee-related costs, partially offset by lower VorTeq-related expenses.
Fiscal Year 2021 Business Highlights
- New large greenfield plant installations and brownfield retrofits, and plant level resupply of critical components drove product revenues to exceed
$100 million . - Announced the first contract of our PX G1300 to a
U.S. supermarket chain. - Announced contracts to supply the Ultra PX to support the IWW treatment operations of two Chinese lithium-ion battery manufacturing facilities, as well as contracts with chemical manufacturing, landfill leachate and natural gas plants in
China . - Announced our joint-marketing effort with a global leader in purification and specialty-separation technologies, to spread the knowledge of advanced solutions improving the efficiency of many industrial wastewater treatment systems and the benefits of pairing our Ultra PX with third-party membranes in industrial wastewater treatment systems.
- Entered into a new
$50 million credit agreement withJPMorgan Chase Bank, N.A . inDecember 2021 to replace our existing$16 million loan and pledge agreement withCitibank, N.A . This new credit agreement will provide us with additional capital for growth and expansion into emerging markets utilizing our pressure exchanger technology.
Bottom Line Summary
On a quarterly basis, we reported a net income of
On an annual basis, we reported a net income of
Cash Flow Highlights
The Company finished the fourth 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's products play an important role in reliably delivering energy, emissions and cost savings for critical industries; that the Company is well down the clear and disciplined path for our industrial wastewater treatment and refrigeration business; and that we are poised to continue our growth in the years to come. 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
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including Non-GAAP income (loss) from operations. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in
Conference Call to Discuss Fourth Quarter and Year End 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: 13726065
CONFERENCE CALL REPLAY:
Expiration:
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13726065
Investors may also access the live call or the replay over the internet at ir.energyrecovery.com/websites/energyrecover/English/2200/calendar.html. The replay will be available approximately three hours after the live call concludes.
Disclosure Information
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+1 (281) 962-8105
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
2021 | 2020 | |||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 74,358 | $ | 94,255 | ||||
Short-term investments | 31,332 | 20,446 | ||||||
Accounts receivable, net | 20,615 | 11,792 | ||||||
Inventories, net | 20,383 | 11,748 | ||||||
Prepaid expenses and other assets | 5,075 | 4,950 | ||||||
Total current assets | 151,763 | 143,191 | ||||||
Long-term investments | 2,298 | - | ||||||
Deferred tax assets, net | 11,421 | 11,030 | ||||||
Property and equipment, net | 20,361 | 20,176 | ||||||
Operating lease, right of use asset | 14,653 | 16,090 | ||||||
12,827 | 12,839 | |||||||
Other assets, non-current | 367 | 988 | ||||||
Total assets | $ | 213,690 | $ | 204,314 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 909 | $ | 1,118 | ||||
Accrued expenses and other liabilities | 13,994 | 11,816 | ||||||
Lease liabilities | 1,564 | 1,243 | ||||||
Contract liabilities | 3,318 | 1,552 | ||||||
Total current liabilities | 19,785 | 15,729 | ||||||
Lease liabilities, non-current | 14,879 | 16,443 | ||||||
Other liabilities, non-current | 247 | 518 | ||||||
Total liabilities | 34,911 | 32,690 | ||||||
Stockholders' equity: | ||||||||
Common stock | 64 | 62 | ||||||
Additional paid-in capital | 195,593 | 179,161 | ||||||
Accumulated other comprehensive (loss) income | (149) | 53 | ||||||
(53,832) | (30,486) | |||||||
Retained earnings | 37,103 | 22,834 | ||||||
Total stockholders' equity | 178,779 | 171,624 | ||||||
Total liabilities and stockholders' equity | $ | 213,690 | $ | 204,314 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Years Ended | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Product revenue | $ | 33,576 | $ | 26,426 | $ | 103,904 | $ | 92,091 | ||||||||
Product cost of revenue | 10,419 | 8,200 | 32,670 | 28,249 | ||||||||||||
Product gross profit | 23,157 | 18,226 | 71,234 | 63,842 | ||||||||||||
License and development revenue | - | - | - | 26,895 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 6,530 | 6,768 | 25,162 | 25,519 | ||||||||||||
Sales and marketing | 3,924 | 2,351 | 12,160 | 8,127 | ||||||||||||
Research and development | 6,727 | 5,290 | 20,069 | 23,449 | ||||||||||||
Amortization of intangible assets | 3 | 4 | 12 | 16 | ||||||||||||
Impairment of long-lived assets | - | - | - | 2,332 | ||||||||||||
Total operating expenses | 17,184 | 14,413 | 57,403 | 59,443 | ||||||||||||
Income from operations | 5,973 | 3,813 | 13,831 | 31,294 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 25 | 104 | 204 | 913 | ||||||||||||
Other non-operating expense, net | (10) | (15) | (31) | (74) | ||||||||||||
Total other income, net | 15 | 89 | 173 | 839 | ||||||||||||
Income before income taxes | 5,988 | 3,902 | 14,004 | 32,133 | ||||||||||||
(Benefit from) provision for income taxes | 725 | 449 | (265) | 5,746 | ||||||||||||
Net income | $ | 5,263 | $ | 3,453 | $ | 14,269 | $ | 26,387 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.09 | $ | 0.06 | $ | 0.25 | $ | 0.47 | ||||||||
Diluted | $ | 0.09 | $ | 0.06 | $ | 0.24 | $ | 0.47 | ||||||||
Number of shares used in per share calculations: | ||||||||||||||||
Basic | 56,818 | 56,113 | 56,993 | 55,709 | ||||||||||||
Diluted | 58,502 | 57,261 | 58,723 | 56,637 | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Years Ended | ||||||||
2021 | 2020 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 14,269 | $ | 26,387 | ||||
Adjustments to reconcile net income to cash provided by operating activities | ||||||||
Stock-based compensation | 6,053 | 4,787 | ||||||
Depreciation and amortization | 5,939 | 5,299 | ||||||
Amortization of premiums and discounts on investments | 570 | 390 | ||||||
Deferred income taxes | (391) | 5,867 | ||||||
Impairment of long-lived assets | - | 2,332 | ||||||
Other non-cash adjustments | 955 | 395 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (8,823) | 1,098 | ||||||
Contract assets | 1,399 | (1,200) | ||||||
Inventories, net | (8,766) | (1,622) | ||||||
Prepaid and other assets | 314 | 415 | ||||||
Accounts payable | (155) | (205) | ||||||
Accrued expenses and other liabilities | 396 | 153 | ||||||
Contract liabilities | 1,766 | (27,226) | ||||||
Net cash provided by operating activities | 13,526 | 16,870 | ||||||
Cash flows from investing activities: | ||||||||
Sales of marketable securities | - | 10,573 | ||||||
Maturities of marketable securities | 35,019 | 55,667 | ||||||
Purchases of marketable securities | (48,903) | (12,855) | ||||||
Capital expenditures | (6,679) | (6,785) | ||||||
Net cash (used in) provided by investing activities | (20,563) | 46,600 | ||||||
Cash flows from financing activities: | ||||||||
Net proceeds from issuance of common stock | 10,554 | 4,397 | ||||||
Tax payment for employee shares withheld | - | (23) | ||||||
Repurchase of common stock | (23,346) | - | ||||||
Net cash (used in) provided by financing activities | (12,792) | 4,374 | ||||||
Effect of exchange rate differences on cash and cash equivalents | (68) | 26 | ||||||
Net change in cash, cash equivalents and restricted cash | (19,897) | 67,870 | ||||||
Cash, cash equivalents and restricted cash, beginning of year | 94,358 | 26,488 | ||||||
Cash, cash equivalents and restricted cash, end of year | $ | 74,461 | $ | 94,358 | ||||
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
Three Months Ended | Three Months Ended | ||||||||||||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Product revenue | $ | 33,576 | $ | - | $ | - | $ | 33,576 | $ | 26,396 | $ | 30 | $ | - | $ | 26,426 | |||||||||
Product cost of revenue | 10,419 | - | - | 10,419 | 8,190 | 10 | - | 8,200 | |||||||||||||||||
Product gross profit | 23,157 | - | - | 23,157 | 18,206 | 20 | - | 18,226 | |||||||||||||||||
Operating expenses | |||||||||||||||||||||||||
General and administrative | 1,562 | 1,308 | 3,660 | 6,530 | 2,755 | 1,409 | 2,604 | 6,768 | |||||||||||||||||
Sales and marketing | 3,024 | 202 | 698 | 3,924 | 1,651 | 291 | 409 | 2,351 | |||||||||||||||||
Research and development | 731 | 5,996 | - | 6,727 | 388 | 4,902 | - | 5,290 | |||||||||||||||||
Amortization of intangible assets | 3 | - | - | 3 | 4 | - | - | 4 | |||||||||||||||||
Total operating expenses | 5,320 | 7,506 | 4,358 | 17,184 | 4,798 | 6,602 | 3,013 | 14,413 | |||||||||||||||||
Operating income (loss) | $ | 17,837 | $ | (7,506) | $ | (4,358) | 5,973 | $ | 13,408 | $ | (6,582) | $ | (3,013) | 3,813 | |||||||||||
Other income, net | 15 | 89 | |||||||||||||||||||||||
Income before income taxes | $ | 5,988 | $ | 3,902 | |||||||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Product revenue | $ | 103,851 | $ | 53 | $ | - | $ | 103,904 | $ | 92,061 | $ | 30 | $ | - | $ | 92,091 | |||||||||
Product cost of revenue | 32,670 | - | - | 32,670 | 28,239 | 10 | - | 28,249 | |||||||||||||||||
Product gross profit | 71,181 | 53 | - | 71,234 | 63,822 | 20 | - | 63,842 | |||||||||||||||||
License and development revenue | - | - | - | - | - | 26,895 | - | 26,895 | |||||||||||||||||
Operating expenses | |||||||||||||||||||||||||
General and administrative | 6,330 | 5,162 | 13,670 | 25,162 | 9,172 | 5,410 | 10,937 | 25,519 | |||||||||||||||||
Sales and marketing | 9,559 | 937 | 1,664 | 12,160 | 5,958 | 1,192 | 977 | 8,127 | |||||||||||||||||
Research and development | 2,589 | 17,480 | - | 20,069 | 2,973 | 20,476 | - | 23,449 | |||||||||||||||||
Amortization of intangible assets | 12 | - | - | 12 | 16 | - | - | 16 | |||||||||||||||||
Impairment of long-lived assets | - | - | - | - | - | 2,332 | - | 2,332 | |||||||||||||||||
Total operating expenses | 18,490 | 23,579 | 15,334 | 57,403 | 18,119 | 29,410 | 11,914 | 59,443 | |||||||||||||||||
Operating income (loss) | $ | 52,691 | $ | (23,526) | $ | (15,334) | 13,831 | $ | 45,703 | $ | (2,495) | $ | (11,914) | 31,294 | |||||||||||
Other income, net | 173 | 839 | |||||||||||||||||||||||
Income before income taxes | $ | 14,004 | $ | 32,133 | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
This press release includes certain non-GAAP financial information because we plan and manage our business using such information. Our Non-GAAP income (loss) from operations is determined by subtracting the license and development revenue and adding back the impairment of long-lived assets, both related to the VorTeq License Agreement activities.
Years Ended | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In thousands) | ||||||||||||
GAAP income from operations | $ | 13,831 | $ | 31,294 | $ | 10,364 | ||||||
Adjustments: | ||||||||||||
License and development revenue | - | (26,895) | (14,108) | |||||||||
Impairment of long-lived assets | - | 2,332 | - | |||||||||
Non-GAAP income (loss) from operations | $ | 13,831 | $ | 6,731 | $ | (3,744) | ||||||
SOURCE:
View source version on accesswire.com:
https://www.accesswire.com/690322/Energy-Recovery-Achieves-Record-Breaking-Fourth-Quarter-and-Fiscal-Year-2021-Product-Revenue