Energy Recovery Reports Unaudited Financial Results for the Second Quarter of 2015
SECOND QUARTER HIGHLIGHTS:
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Revenue increased by 64% to
$10.5 million in the current period, from$6.4 million in the second quarter of 2014, as a result of a strengthening global desalination market - Gross profit margin improved to 54% in the current period, from 48% in the second quarter of 2014, as a result of MPD shipments and a favorable shift in mix
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Operating expenses increased by
$1.3 million , or 17%, from$7.6 million in the second quarter of 2014 to$8.9 million in the current period. The increase was primarily driven by non-recurring CEO transition expenses which were offset by austerity measures initiated in the first quarter of 2015 -
Net loss of
$(3.3) million , or$(0.06) per share, in the current period, compared to net loss of$(4.6) million , or$(0.09) per share, in the second quarter of 2014, as a result of higher sales volume and favorable mix, offset by higher operating expenses -
Non-recurring expenses totaled
$2.7 million in the current period, down from$3.0 million in the first quarter of 2015. YTD total non-recurring expenses totaled$5.7 million -
Adjusted net loss of
$(0.6) million , or$(0.01) per share, in the current period and YTD adjusted net loss of$(5.9) million , or$(0.11) per share
Management Commentary
"A major initiative this year was the implementation of austerity measures throughout the business in pursuit of achieving break-even profitability in an acceptable time frame. Excluding non-recurring events, operating expenses of
Revenue
The Company generated net revenue of
Gross Margin
Higher sales volume attributable to mega-project shipments was the primary driver to a gross profit margin increase to 54% in the second quarter of 2015 from 48% in the prior-year quarter. Other contributing factors also include a favorable shift in price and mix. The Company's gross profit margin decreased sequentially from 57% in the first quarter of 2015 mainly due to lower pricing from a shift in channel and segment mix.
Operating Expense
Operating expenses increased to
Bottom Line Summary
To summarize financial performance for the second quarter of 2015, the Company reported a net loss of
Excluding non-recurring items, for the second quarter of 2015, the Company incurred a net loss of
Cash Flow Highlights
For the second quarter ended
The net loss of
Cash used by operating activities was
Cash generated from investing activities was
Balance Sheet Highlights
Including 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 "bullish," "confident," "expect," "encourage," "maintain," "suggest," 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 SECOND QUARTER RESULTS FOR 2015
Live Conference Call: | |
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Listen-only, Toll-free: | 888-505-4368 |
Listen-only, Local: | 719-325-2472 |
Conference ID: | 9658352 |
Conference Call Replay: | |
Toll-free: | 888-203-1112 |
Local: | 719-457-0820 |
Access code: | 9658352 |
Expiration: |
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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 | ||||
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(in thousands, except per share data) | ||||
(unaudited) | ||||
Three Months Ended | Six Months Ended | |||
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2015 | 2014 | 2015 | 2014 | |
Net revenue |
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Cost of revenue | 4,836 | 3,332 | 7,367 | 4,984 |
Gross profit | 5,648 | 3,075 | 8,981 | 5,320 |
Operating expenses: | ||||
General and administrative | 5,362 | 2,995 | 11,640 | 5,034 |
Sales and marketing | 1,994 | 2,702 | 4,427 | 5,197 |
Research and development | 1,410 | 1,724 | 3,943 | 2,958 |
Amortization of intangible assets | 158 | 215 | 317 | 430 |
Total operating expenses | 8,924 | 7,636 | 20,327 | 13,619 |
Loss from operations | (3,276) | (4,561) | (11,346) | (8,299) |
Interest expense | — | — | (40) | — |
Other non-operating (expense) income | 20 | 8 | (82) | 129 |
Loss before income taxes | (3,256) | (4,553) | (11,468) | (8,170) |
Provision for income taxes | 71 | 58 | 142 | 124 |
Net loss |
( |
( |
( |
( |
Basic and diluted net loss per share |
( |
( |
( |
( |
Shares used in basic and diluted per share calculation | 52,026 | 51,566 | 51,987 | 51,506 |
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CONSOLIDATED BALANCE SHEETS | ||
(unaudited) | ||
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ASSETS | ||
Current assets: | ||
Cash and cash equivalents |
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Restricted cash | 1,347 | 2,623 |
Short-term investments | 4,713 | 13,072 |
Accounts receivable, net of allowance for doubtful accounts of |
7,429 | 10,941 |
Unbilled receivables, current | 1,193 | 1,343 |
Inventories | 9,703 | 8,204 |
Deferred tax assets, net | 240 | 240 |
Prepaid expenses and other current assets | 1,080 | 1,317 |
Total current assets | 43,812 | 53,241 |
Restricted cash, non-current | 1,704 | 2,850 |
Unbilled receivables, non-current | 504 | 414 |
Long-term investments | 262 | 267 |
Property and equipment, net of accumulated depreciation of |
12,085 | 13,211 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 2,849 | 3,166 |
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 | 4,886 | 8,427 |
Income taxes payable | 8 | 4 |
Accrued warranty reserve | 747 | 755 |
Deferred revenue | 1,224 | 519 |
Current portion of long-term debt | 11 | — |
Total current liabilities | 9,242 | 11,522 |
Long-term debt, net of current portion | 42 | — |
Deferred tax liabilities, non-current, net | 2,119 | 1,989 |
Deferred revenue, non-current | 68 | 59 |
Other non-current liabilities | 839 | 2,453 |
Total liabilities | 12,310 | 16,023 |
Commitments and Contingencies (Note 9) | ||
Stockholders' equity: | ||
Preferred stock, |
— | — |
Common stock, |
55 | 54 |
Additional paid-in capital | 127,803 | 124,440 |
Accumulated other comprehensive loss | (47) | (73) |
Treasury stock, at cost 2,479,456 shares repurchased at both |
(6,835) | (6,835) |
Accumulated deficit | (59,278) | (47,668) |
Total stockholders' equity | 61,698 | 69,918 |
Total liabilities and stockholders' equity |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(unaudited) | ||
Six Months Ended | ||
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2015 | 2014 | |
Cash Flows From Operating Activities | ||
Net loss |
( |
( |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 3,053 | 1,215 |
Depreciation and amortization | 1,959 | 1,998 |
Deferred income taxes | 131 | 111 |
Amortization of premiums/discounts on investments | 130 | 239 |
Other non-cash adjustments | 86 | (153) |
Provision for doubtful accounts | 59 | 126 |
Valuation adjustments for excess or obsolete inventory | 21 | 43 |
Unrealized loss on foreign currency transactions | 21 | 41 |
Provision for warranty claims | 15 | 48 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,472 | 5,724 |
Deferred revenue | 714 | 153 |
Accounts payable | 549 | 610 |
Prepaid and other assets | 239 | (213) |
Unbilled receivables | 60 | 5,281 |
Income taxes payable | 4 | 4 |
Inventories | (1,520) | (4,683) |
Litigation settlement | (1,700) | — |
Accrued expenses and other liabilities | (3,633) | (2,443) |
Net cash used in operating activities | (7,950) | (193) |
Cash Flows From Investing Activities | ||
Maturities of marketable securities | 8,235 | 4,065 |
Restricted cash | 2,422 | (192) |
Capital expenditures | (429) | (2,140) |
Net cash provided by investing activities | 10,228 | 1,733 |
Cash Flows From Financing Activities | ||
Net proceeds from issuance of common stock | 293 | 1,138 |
Proceeds from borrowings | 55 | — |
Repayment of long-term debt | (2) | — |
Repurchase of common stock for treasury | — | (633) |
Net cash provided by financing activities | 346 | 505 |
Effect of exchange rate differences on cash and cash equivalents | (18) | 31 |
Net change in cash and cash equivalents | 2,606 | 2,076 |
Cash and cash equivalents, beginning of period | 15,501 | 14,371 |
Cash and cash equivalents, end of period |
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CONTACT:Source:Chris Gannon Chief Financial Officer 510-483-7370 cgannon@energyrecovery.com