Energy Recovery Inc
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
ERII$7.39+3.4%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-21.
0001421517-24-000055
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001421517-25-000048
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 507 previous paragraphs and 574 current paragraphs.
369 unchanged; 127 reworded; 77 added; 11 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (77)
Current report
High-Pressure PX family of products and the low pressure PX. While we have enjoyed some initial market adoption in certain key markets,
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Our expected future development of the next generation of the PX G1300 may not be completed as anticipated and/or may not meet
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We are currently working on the next generation of the PX G1300. If the project timeline is not completed as anticipated, or if the
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development of the next generation of the PX G1300 does not meet the expected goals, or if we experience unanticipated problems, we may
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incur a reduction in our forecasted revenues or market share. In addition, any delays may adversely affect our competitive position and could
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Material variations to our forecasted MPD project delivery timeline in the fourth quarter of a fiscal year may have a substantial
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negative impact on our annual operating results and financial condition. Each of our MPD contracts generally has a minimum dollar value of
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approximately$1.0 million, with larger MPD contracts exceeding$10.0 million. We generally recognize revenue under MPD contracts when
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control of the promised goods or services is transferred to our customers. If 1) delivery is cancelled, postponed or otherwise delayed beyond
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the end of the fourth quarter; or 2) if control of the promised goods or services is transferred beyond the end of the fourth quarter; we will not
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be able to recognize that revenue for the fiscal year. For example, in fiscal year 2024, we forecasted over 40% of our annual net revenue to
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be realized in the fourth quarter. Had we experienced unforeseen delivery cancellations, postponements or other delays due to project
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cancellations, project delays, transportation or other shipping delays, or other adverse events would have prevented delivery in the fourth
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quarter, it is unlikely we would have had sufficient time to make up such revenue shortfall.
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Our corporate growth strategy provides a roadmap for overall growth of our Company, including certain product introduction timelines,
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market opportunities and operating cost measures. While we believe that this roadmap prepares us for the future growth and longevity of our
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Company, we cannot be assured that all aspects in our corporate growth strategy will result in a favorable impact. Accordingly, actual
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implementation of our corporate growth strategy may vary from the original roadmap, and the variations may be material. In light of the
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foregoing, our corporate growth strategy, and/or subsequent changes to our corporate growth strategy, could have an adverse effect on our
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earthquake faults and has experienced earthquakes in the past. If a natural disaster occurs, our ability to conduct our operations could be
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We face risks arising from the restructuring of our operations and uncertainty with respect toour ability to achieve any anticipated
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During the fourth quarter of fiscal year 2024, we implemented a restructuring plan which included reductions in workforce in all
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functions of the organization, primarily in our San Leandro location, in order to lower ouroperating cost structure, and to position usfor
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profitable growth. Charges related to such actions may harm our profitability in the periods incurred.
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Restructuring program actions, which include a reduction in workforce, may present a number of significant risks that could have a
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material adverse effect on our operations, financial condition, results of operations, cash flow, or business reputation, including:
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•incurrence of additional costs in the short-term, including workforce reduction costs, training of employees or third-party
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resources, and charges relating to consolidation of excess facilities;
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•actual or perceived disruption of service or reduction in service levels to our customers;
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•potential disruption of manufacturing of product to satisfy our contractual commitments;
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•potential adverse effects on our internal control environment and inability to preserve adequate internal controls relating to our
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•actual or perceived disruption to customers, suppliers, distribution networks and other important operational relationships and the
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inability to resolve potential conflicts in a timely manner;
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•diversion of management’s attention from ongoing business activities and strategic objectives;
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•failure to maintain employee morale, damage to company culture and an increase in employment claims;
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•employee attrition beyond planned reductions and workforce transitions, including inadequate transfers of knowledge; and
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Removed paragraphs (11)
Previous report
addition, in the past, customer buying patterns led to a significant portion of our sales occurring in the fourth quarter. This presents the risk
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that delays, cancellations, or other adverse events in the fourth quarter could have a substantial negative impact on that year’s annual
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earthquake faults and has experienced earthquakes in the past. In addition, our facilities in California are located in areas that are subject to
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public safety power shutdowns (“PSPS”). If a natural disaster occurs or we are subject to PSPS, our ability to conduct our operations could
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Legal or regulatory measures to address climate change, may negatively affect us.
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predict how such actions may impact our business, or the business of our customers. Our business operations, as well as the businesses of
Reworded paragraphs (127)
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companies produce superior products or offers their products at substantially lower prices, our competitive position in the market
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companies produce superior products or offer their products at substantially lower prices, our competitive position in the market
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Gulf Cooperation Council, China, and India. Weak economic conditions, inflation and global uncertainty including the continuing conflicts in
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Gulf Cooperation Council, China, Taiwan and India. Weak economic conditions, inflation and global uncertainty including the continuing
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Ukraine and many parts of the Middle East may have a negative economic impact on these and other countries, which may impact the levels
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conflicts in Ukraine and many parts of the Middle East may have a negative economic impact on these and other countries, which may
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of spending on, timing of, delays to, and availability of, project financing for new desalination and retrofit plant projects. The inability of our
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impact the levels of spending on, timing of, delays to, and availability of, project financing for new desalination and retrofit plant projects. The
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customers to secure credit or financing for these projects, may result in the postponement or cancellation of these projects. In addition, the
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inability of our customers to secure credit or financing for these projects, may result in the postponement or cancellation of these projects. In
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change in government priorities and/or their reduction in spending for water treatment projects could result in decreased demand for our
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addition, the change in government priorities and/or their reduction in spending for water treatment projects could result in decreased demand
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products and services, which could have an adverse effect on our business, financial condition or results of operations.
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for our products and services, which could have an adverse effect on our business, financial condition or results of operations.
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We have introduced a number of products designed specifically for thewastewater market, including the Ultra PX family of products
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We have introduced a number of products designed specifically for thewastewater market in the last few years, including the Ultra
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and the low pressure PX. Thewastewater market is evolving and covers a wide range of industries and geographies, and utilizes a variety of
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thewastewater market continues to evolve and covers a wide range of industries and geographies, and utilizes a variety of RO technologies.
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RO technologies. While our products can be a potential solution to these different applications, there is no guarantee that we will be
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While we believe our products can be a potential solution to these different applications, there is no guarantee that we will continue to be
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regulations or minimal regulations for treating wastewater. Accordingly, end users in such areas may not be willing to implement wastewater
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regulations or minimal regulations for treating wastewater. Accordingly, end users inother parts of the world with no or minimal regulations
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treatment at all or, if they do plan to implement awastewater treatment program, they may select a competitive or alternative wastewater
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may not be willing to implement wastewater treatment at all or, if they do plan to implement awastewater treatment program, they may select
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treatment technology. Similar to the desalination market, there are many competitors and competitive products that can service wastewater
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a competitive or alternative wastewater treatment technology. Similar to the desalination market, there are many competitors and competitive
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industries that do not include RO technologies or utilize our products. These competitors may have existing relationships with end users,
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products that can service wastewater industries that do not include RO technologies or utilize our products. These competitors may have
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greater name recognition, and/or significantly greater financial, technical, marketing and other resources that may make it challenging for us
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existing relationships with end users, greater name recognition, and/or significantly greater financial, technical, marketing and other resources
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to compete in this industry. As a result of the foregoing, we may not be able to successfully develop ourwastewater business, develop any
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that may make it challenging for us to compete in this industry. As a result of the foregoing, we may not be able to successfully develop our
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market share, or win any large contracts, which would affect our business, operating results and financial condition.
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wastewater business, develop any market share, or win any large contracts, which would affect our business, operating results and financial
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guarantee that we will be successful in generating sustained interest and, more importantly, adoption of our technology on a timeline
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guarantee that we will ultimately be successful in generating sustained interest and, more importantly, adoption of our technology on a
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necessary to meet our goals, or at all. Theglobal commercial and industrial refrigeration industry can be slow to adopt new technologies and
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timeline necessary to meet our goals, or at all. Theglobal commercial and industrial refrigeration industry can be slow to adopt new
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alternative technologies or new refrigerants may emerge, slowing the adoption of the PX G1300. In addition, we may encounter new
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technologies and alternative technologies or new refrigerants may emerge, which may slow the adoption of the PX G1300. In addition, we
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technological challenges that we will need to solve in order to achieve adoption of the technology. Theglobal commercial and industrial
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may encounter new technological challenges that we will need to solve in order to achieve adoption of the technology. Theglobal
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refrigeration industry is also saturated with very large, established companies who have greater experience and resources and may provide
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commercial and industrial refrigeration industry is also saturated with very large, established companies who have greater experience and
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cost saving methods that utilize novel system architectures, new and improved equipment or materials, ejectors and/or other energy recovery
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resources and may provide cost saving methods that utilize novel system architectures, new and improved equipment or materials, ejectors
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devices, all or some of which could improve energy efficiency that compete against the PX G1300. If we are unable to solve any
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and/or other energy recovery devices, all or some of which could improve energy efficiency that compete against the PX G1300. If we are
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technological challenges, generate and sustain sufficient interest for our CO 2-based refrigeration technology, we may not be able to
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unable to solve any technological challenges, generate and sustain sufficient interest for our CO 2-based refrigeration technology, we may not
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successfully compete in the CO 2-based refrigeration market, which could have anadverse effect on our CO 2 business, and our Emerging
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be able to successfully compete in the CO 2-based refrigeration market, which could have an adverse effect on our CO 2 business, and our
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Technologies segment financial condition or results of operation.
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Emerging Technologies segment financial condition or results of operation.
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We have made a substantial investment in R&D and sales and marketing to execute on our diversification strategy into fluid flow
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We have made a substantial investment in R&D andsales and marketing to execute our diversification strategy into new and existing
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markets, including our recent commercial refrigeration products. While we see diversification as core to our growth strategy, there is no
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fluid flow markets, including our recent commercial refrigeration products. While we see diversification as core to our growth strategy, there is
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guarantee that we will be successful in our efforts. Our model for growth is based in part on our ability to initiate and embrace disruptive
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no guarantee that we will be successful in our efforts. Our model for growth is based in part on our ability to initiate and embrace disruptive
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(ii) defend our market share against an ever-expanding number of competitors, (iii) enhance our product and service offerings by adding
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(ii) defend our market share against current and any future competitors, (iii) enhance our product and service offerings by adding innovative
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innovative features or disruptive technologies that differentiate them from those of our competitors and prevent commoditization, (iv) develop,
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features or disruptive technologies that differentiate them from those of our competitors and prevent commoditization, (iv) develop,
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experienced significant fluctuations in revenue from quarter-to-quarter and year-to-year, and we expect such fluctuations to continue. In
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experienced significant fluctuations in revenue from quarter-to-quarter and year-to-year, and we expect such fluctuations to continue. As a
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results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Since it is difficult for us to
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result, comparing our operating results on a period-to-period basis may not be meaningful. Since it is difficult for us to anticipate the impact
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anticipate the impact of these fluctuations on our future results, in the event our revenue or operating results fall below the expectations of
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of these fluctuations on our future results, in the event our revenue or operating results fall below the expectations of investors or securities
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investors or securities analysts, our stock price may be negatively affected.
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analysts, our stock price may be negatively affected.
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particularly pronounced when dealing with product introduction into new fluid flow industrial verticals. In our Water segment, the average
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particularly pronounced when dealing with product introduction into new fluid flow industrial verticals. For example, in our Water segment, the
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Water segment sales cycle for our international MPD customers, which are involved with larger desalination plants, typically ranges from 16
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average Water segment sales cycle for our international MPD customers, which are involved with larger desalination plants, typically ranges
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to 36 months, and may exceed 36 months from time-to-time, and the average sales cycle for our OEM customers, which are involved with
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from 16 to 36 months, and may exceed 36 months from time-to-time, and the average sales cycle for our OEM customers, which are involved
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smaller desalination plants, ranges fromone to 16 months, and may exceed 16 months from time-to-time. These long sales cycles make
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with smaller desalination plants, ranges fromone to 16 months, and may exceed 16 months from time-to-time. These long sales cycles
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Current report — wording carried from elsewhere
business, financial condition, or results of operations.