Energy Recovery Achieves Record-Breaking First Quarter 2022 Revenue
News Summary
- Revenue of
$32.5 million , an increase of 12% year-over-year ("YoY"). - Income from operations of
$8.2 million , an increase of 34% YoY, and adjusted income from operations(1) of$10.1 million , or an increase of 25% YoY. - Net income per share of
$0.14 , an increase of 17% YoY; adjusted net income per share(1) of$0.16 , an increase of 23% YoY. - Adjusted EBITDA(1) grew 22% YoY to
$11.1 million . - Share repurchases of
$8.1 million , or 0.4 million shares, for cumulative repurchases under theMarch 2021 Authorization of$31.4 million , or 1.7 million shares. - Cash and investments of
$96.6 million , which include cash, cash equivalents, and short-term and long-term investments. - Our MSCI ESG rating was upgraded for the second year in a row to "AA" in April.
- Full year revenue guidance of up to
$130 million reaffirmed.
"We not only delivered record first quarter revenue, but also grew our quarterly operating income 34% year-on-year despite the inflationary environment as we execute on our disciplined growth path," said
"Our Q1 results included industrial wastewater sales equivalent to nearly 50% of 2021's total sales in this market. In addition, we are preparing for the installation of a CO2 refrigeration rack fully integrated with our PX G1300 for
"The transformation of
First Quarter Financial Highlights
GAAP | Non-GAAP(1) | ||||||||||||||||||
Q1 2022 | Q1 2021 | vs. Q1 2021 | Q1 2022 | Q1 2021 | vs. Q1 2021 | ||||||||||||||
(In millions except for percentages, basis points and per share amounts) | |||||||||||||||||||
Revenue | $ | 32.5 | $ | 28.9 | up 12% | $ | 32.5 | $ | 28.9 | up 12% | |||||||||
Gross margin | 70.8 | % | 69.0 | % | up 185 bps | 71.3 | % | 69.4 | % | up 183 bps | |||||||||
Operating margin | 25.3 | % | 21.2 | % | up 403 bps | 31.0 | % | 27.8 | % | up 312 bps | |||||||||
Net income | $ | 7.9 | $ | 6.9 | up 15% | $ | 9.1 | $ | 7.2 | up 28% | |||||||||
Net income per share | $ | 0.14 | $ | 0.12 | up 17% | $ | 0.16 | $ | 0.13 | up 23% | |||||||||
Effective tax rate | 5.3 | % | (10.3 | %) | up 1560 bps | 10.2 | % | 12.1 | % | down 193 bps | |||||||||
Adjusted EBITDA | $ | 11.1 | $ | 9.1 | up 22% | ||||||||||||||
Free cash flow | $ | (3.6 | ) | $ | (0.6 | ) | up 530% |
(1) "Adjusted income from operations," "Adjusted net income per share," "Free cash flow" and "Adjusted EBITDA" are non-GAAP financial measures. Refer to the sections "Use of Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Financial Measures."
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 timing of the installation of the Company's PX G1300, and the Company's belief that it will be able to continue to innovate and create value for its customers and shareholders. 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 adjusted income from operations, adjusted net income per share, free cash flow and adjusted EBITDA. 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
Notes to the First Quarter 2022 Financial Results
- Adjusted EBITDA is a non-GAAP financial measure that the Company defines as income from operations which excludes depreciation, amortization, share-based compensation, and non-recurring and extraordinary items.
- Adjusted net income per share is a non-GAAP financial measure that the Company defines as adjusted net income, which excludes share-based compensation and non-recurring and extraordinary items and the applicable tax effect, divided by basic shares outstanding.
- Free cash flow is a non-GAAP financial measure that the Company defines as net cash (used in) provided by operating activities less capital expenditures.
Conference Call to Discuss First Quarter 2022 Financial Results
LIVE CONFERENCE CALL:
Listen-only, US / Canada Toll-Free: +1 (877) 709-8150
Listen-only, Local / International Toll: +1 (201) 689-8354
CONFERENCE CALL REPLAY:
Expiration:
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13727335
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.
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+1 (281) 962-8105
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
2022 | 2021 | |||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Cash, cash equivalents and investments | $ | 96,556 | $ | 107,988 | ||||
Accounts receivable and contract assets | 27,466 | 21,108 | ||||||
Inventories, net | 23,482 | 20,383 | ||||||
Prepaid expenses and other assets | 5,802 | 4,582 | ||||||
Property, equipment and operating leases | 34,211 | 35,014 | ||||||
12,824 | 12,827 | |||||||
Deferred tax assets and other assets | 11,435 | 11,788 | ||||||
TOTAL ASSETS | $ | 211,776 | $ | 213,690 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 12,453 | $ | 14,903 | ||||
Contract liabilities | 2,124 | 3,406 | ||||||
Lease liabilities | 16,074 | 16,443 | ||||||
Other liabilities, non-current | 159 | 159 | ||||||
Total liabilities | 30,810 | 34,911 | ||||||
Stockholders' equity | ||||||||
Common stock and additional paid-in capital | 198,275 | 195,657 | ||||||
Accumulated other comprehensive loss | (418 | ) | (149 | ) | ||||
(61,888 | ) | (53,832 | ) | |||||
Retained earnings | 44,997 | 37,103 | ||||||
Total stockholders' equity | 180,966 | 178,779 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 211,776 | $ | 213,690 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | ||||||||
2022 | 2021 | |||||||
(In thousands, except per share data) | ||||||||
Revenue | $ | 32,546 | $ | 28,940 | ||||
Cost of revenue | 9,498 | 8,981 | ||||||
Gross profit | 23,048 | 19,959 | ||||||
Operating expenses | ||||||||
General and administrative | 6,551 | 6,610 | ||||||
Sales and marketing | 3,364 | 2,703 | ||||||
Research and development | 4,911 | 4,502 | ||||||
Total operating expenses | 14,826 | 13,815 | ||||||
Income from operations | 8,222 | 6,144 | ||||||
Other income, net | 117 | 82 | ||||||
Income before income taxes | 8,339 | 6,226 | ||||||
Provision for (benefit from) income taxes | 445 | (640 | ) | |||||
Net income | $ | 7,894 | $ | 6,866 | ||||
Net income per share | ||||||||
Basic | $ | 0.14 | $ | 0.12 | ||||
Diluted | $ | 0.14 | $ | 0.12 | ||||
Number of shares used in per share calculations | ||||||||
Basic | 56,783 | 56,877 | ||||||
Diluted | 58,181 | 58,597 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended | ||||||||
2022 | 2021 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,894 | $ | 6,866 | ||||
Non-cash adjustments | 3,964 | 2,650 | ||||||
Net cash used in operating assets and liabilities | (13,460 | ) | (9,462 | ) | ||||
Net cash (used in) provided by operating activities | (1,602 | ) | 54 | |||||
Cash flows from investing activities: | ||||||||
Net investment in marketable securities | (18,956 | ) | 5,710 | |||||
Capital expenditures | (1,976 | ) | (622 | ) | ||||
Net cash (used in) provided by investing activities | (20,932 | ) | 5,088 | |||||
Cash flows from financing activities: | ||||||||
Net proceeds from issuance of common stock | 763 | 6,059 | ||||||
Repurchase of common stock | (8,056 | ) | - | |||||
Net cash (used in) provided by financing activities | (7,293 | ) | 6,059 | |||||
Effect of exchange rate differences | (11 | ) | (25 | ) | ||||
Net change in cash, cash equivalents and restricted cash | (29,838 | ) | 11,176 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 44,623 | $ | 105,534 |
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)
Channel Revenue
Three Months Ended | ||||||||||
2022 | 2021 | vs. 2021 | ||||||||
(In thousands, except percentages) | ||||||||||
Megaproject | $ | 23,840 | $ | 23,757 | no change | |||||
Original equipment manufacturer | 4,671 | 2,791 | up 67% | |||||||
Aftermarket | 4,035 | 2,392 | up 69% | |||||||
Total Revenues | $ | 32,546 | $ | 28,940 | up 12% |
Segment Activity
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
Water | Emerging Technologies | Corporate | Total | Water | Emerging Technologies | Corporate | Total | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Revenue | $ | 32,516 | $ | 30 | $ | - | $ | 32,546 | $ | 28,940 | $ | - | $ | - | $ | 28,940 | ||||||||||||||||
Cost of revenue | 9,480 | 18 | - | 9,498 | 8,981 | - | - | 8,981 | ||||||||||||||||||||||||
Gross profit | 23,036 | 12 | - | 23,048 | 19,959 | - | - | 19,959 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
General and administrative | 1,464 | 908 | 4,179 | 6,551 | 1,561 | 1,166 | 3,883 | 6,610 | ||||||||||||||||||||||||
Sales and marketing | 2,301 | 527 | 536 | 3,364 | 2,164 | 179 | 360 | 2,703 | ||||||||||||||||||||||||
Research and development | 800 | 4,111 | - | 4,911 | 501 | 4,001 | - | 4,502 | ||||||||||||||||||||||||
Total operating expenses | 4,565 | 5,546 | 4,715 | 14,826 | 4,226 | 5,346 | 4,243 | 13,815 | ||||||||||||||||||||||||
Operating income (loss) | $ | 18,471 | $ | (5,534 | ) | $ | (4,715 | ) | $ | 8,222 | $ | 15,733 | $ | (5,346 | ) | $ | (4,243 | ) | $ | 6,144 |
Share-based Compensation
Three Months Ended | ||||||||
2022 | 2021 | |||||||
(In thousands) | ||||||||
Stock-based compensation expense charged to: | ||||||||
Cost of revenue | $ | 146 | $ | 138 | ||||
General and administrative | 968 | 896 | ||||||
Sales and marketing | 433 | 444 | ||||||
Research and development | 335 | 436 | ||||||
Total stock-based compensation expense | $ | 1,882 | $ | 1,914 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1)
(Unaudited)
This press release includes certain non-GAAP financial information because we plan and manage our business using such information. The following table reconciles the GAAP financial information to the non-GAAP financial information.
Gross margin | 70.8 | % | 69.0 | % | ||||
Share-based compensation as a percent of revenue | 0.5 | % | 0.5 | % | ||||
Adjusted gross margin | 71.3 | % | 69.4 | % | ||||
Income from operations | $ | 8.2 | $ | 6.1 | ||||
Share-based compensation | 1.9 | 1.9 | ||||||
Adjusted income from operations | $ | 10.1 | $ | 8.1 | ||||
Operating margin | 25.3 | % | 21.2 | % | ||||
Share-based compensation as a percent of revenue | 5.7 | % | 6.6 | % | ||||
Adjusted operating margin | 31.0 | % | 27.8 | % | ||||
Net income | $ | 7.9 | $ | 6.9 | ||||
Share-based compensation | 1.9 | 1.9 | ||||||
Share-based compensation discrete tax item | (0.6 | ) | (1.6 | ) | ||||
Adjusted net income | $ | 9.1 | $ | 7.2 | ||||
Net income per share | $ | 0.14 | $ | 0.12 | ||||
Adjustments to net income per share (2) | 0.02 | 0.01 | ||||||
Adjusted net income per share | $ | 0.16 | $ | 0.13 | ||||
Diluted shares used in calculating net income per diluted share | 56,783 | 56,877 | ||||||
Effective tax rate | 5.3 | % | (10.3 | %) | ||||
Adjustments to effective tax rate (3) | 4.9 | % | 22.4 | % | ||||
Adjusted effective tax rate | 10.2 | % | 12.1 | % | ||||
Income from operations | $ | 8.2 | $ | 6.1 | ||||
Share-based compensation | 1.9 | 1.9 | ||||||
Depreciation and amortization | 1.0 | 1.0 | ||||||
Adjusted EBITDA | $ | 11.1 | $ | 9.1 | ||||
Net cash (used in) provided by operating activities | $ | (1.6 | ) | $ | 0.1 | |||
Capital expenditures | (2.0 | ) | (0.6 | ) | ||||
Free cash flow (non-GAAP) | $ | (3.6 | ) | $ | (0.6 | ) |
- Amounts may not total due to rounding.
- Adjustments to net income per share reflects the adjustments for share-based compensation and share-based compensation discrete tax item on a per share basis.
- Adjustments to effective tax rate reflects adjustments for share-based compensation and share-based compensation discrete tax item.
SOURCE:
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