Energy Recovery, Inc.
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 6, 2025
ERII$7.15+6.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001421517-25-000078
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001421517-25-000118
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe 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 172 previous paragraphs and 219 current paragraphs.
98 unchanged; 61 reworded; 56 added; 11 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 7 previous and 16 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 (56)
Current report
We generally track our revenues by channels. The channels we recognize and channel definitions we utilize are as follows:
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•Megaproject (“MPD”) channel: The MPD channel has been the main driver of our long-term growth as revenue from this channel
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benefits from a growing number of projects as well as an increase in the capacity of these projects in some cases. MPD projects
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are large-scale in nature and generally have shipment timelines from 16 to 36 months from contract date. Recognition of
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revenue is dependent oncustomers’ project timing and execution of these projects.
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•Original Equipment Manufacturer (“OEM”) channel: The OEM channel reflects sales to a wide variety of industries in the
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desalination, wastewater, and the refrigeration markets. This channel contains projects smaller in size and revenue, and of
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shorter duration compared to those projects in the MPD channel.
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•Aftermarket (“AM”) channel: The AM channel represents support and services rendered to our installed customer base. AM
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revenue generally fluctuates from year-to-year and is dependent on our customers’ timing of product upgrades, as well as their
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replenishment of spare parts and supplies.
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1 Within the Middle East and Africa market, the following countries represented revenue in excess of 10%.
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2 Within the Asia market, the following countries represented revenue in excess of 10%.
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3 Within the Europe market, the following countries represented revenue in excess of 10%.
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1 Within the Middle East and Africa market, the following countries represented revenue in excess of 10%.
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2 Within the Asia market, the following countries represented revenue in excess of 10%.
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3 Within the Europe market, the following countries represented revenue in excess of 10%.
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Three months ended June 30, 2025, as compared to the three months ended June 30, 2024
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and Asia markets, partially offset by higher shipments of products to the Europe market.
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Theincrease in OEM revenueof$1.4 million was due primarily to:
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•Wastewater: The increase in revenue of $1.7 million was due primarily to higher shipments of products to the Asia and Europe
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•Desalination: The decrease in revenue of$0.4 million was due primarily to lower shipments of products to the Europe, MEA, and
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Americas markets, partially offset by higher shipments of products to the Asia market.
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Theincrease in AM revenue of$0.5 million was due primarily to higher shipments of products to the Europe and Asia markets.
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Six months ended June 30, 2025, as compared to thesix months ended June 30, 2024
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Thedecrease in MPDrevenueof $5.1 million was due primarily to lower shipments to the MEA, Asia, and Americas markets, partially
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offset by higher shipments of products to the Europe market.
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•Wastewater: The increase in revenue of $1.7 million was due primarily to higher shipments of products to the Asia and Europe
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markets.
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lower shipments to the Americas, Europe, and MEA markets.
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Thedecrease in AM revenue of$0.2 million was due primarily to lower shipments to the Americas market, partially offset by higher
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shipments of products to the Europe and Asia markets.
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Theincrease ingross profit anddecrease in gross margin for the three months ended June 30, 2025, as compared to the prior year,
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was due primarily to costs related to product mix and tariffs.
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primarily to costs related to product mix and tariffs during thesix months ended June 30, 2025.
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Three months ended June 30, 2025, as compared to the three months ended June 30, 2024
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Overall Operating Expenditures. Overall operating expenditures decreased$3.1 million, or(15.8%). This decrease wasdue primarily
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tolower employee compensation costs, a severance charge in the three months ended June 30, 2024 that did not recur andhigher
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consulting costs incurred in the previous year related to our corporate strategy.
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employee compensation costs, including stock-based compensation.
Showing the first 40 of 56 passages. Open the source sections for the rest.
Removed paragraphs (11)
Previous report
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of
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1 Within the Asia market, India represented revenue of$1,456, or 18% of total revenue during thethree months ended March 31, 2025
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Three months ended March 31, 2025, as compared to thethree months ended March 31, 2024
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(“MEA”) and Americas as compared to thethree months ended March 31, 2024.
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Thedecrease in aftermarket (“AM”) revenue of$0.6 million was due primarily to lower shipments to the America markets, partially
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primarily to lower sales volume spread over fixed costs during thethree months ended March 31, 2025.
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Three months ended March 31, 2025, as compared to thethree months ended March 31, 2024
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compensation.
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year, was due primarily to thefollowing factors:
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•Inventories: a decrease in cash due to cash used to build finished goods inventory in the first quarter of 2025; and
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•Net loss: an increase in net loss after excluding the effects of non-cash adjustments.
Reworded paragraphs (61)
Previous wording
A discussion regarding our financial condition and results of operations for thethree months ended March 31, 2025, compared to the
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A discussion regarding our financial condition and results of operations for thethree and six months ended June 30, 2025, compared
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three months ended March 31, 2024, is presented below.
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to thethree and six months ended June 30, 2024, is presented below.
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Thedecrease in megaproject (“MPD”) revenue of$4.1 million was due primarily to lower shipments to the Middle East and Africa
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Thedecrease in MPD revenue of$1.0 million was due primarily to lower shipments of products to the Middle East and Africa (“MEA”)
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and MEA markets, partially offset by lower shipments to the Americas and Europe markets.
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markets, partially offset by lower shipments of products to the Americas market.
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Theincrease in original equipment manufacturer (“OEM”) revenue of$0.7 million was primarily due to higher shipments to the Asia
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Theincrease in OEM revenue of$2.1 million was primarily due:
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offset by higher shipments to the Asia market.
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•Desalination: The increase in revenue of $0.3 million was due primarily to higher shipments to the Asia market, partially offset by
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Thedecrease in gross profit and gross margin for thethree months ended March 31, 2025, as compared to the prior year, was due
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Thedecrease in gross profit and gross margin for thesix months ended June 30, 2025, as compared to the prior year, was due
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The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and research and development
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The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and R&D operating expenses for the
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(“R&D”) operating expenses for thethree months ended March 31, 2025, as compared to the comparable period in the prior year, are
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three and six months ended June 30, 2025, as compared to the comparable periodsin the prior year, are discussed within the following
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discussed within the following overall operating expenditures, and the segment and corporate operating expenses discussions below.
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overall operating expenditures, and the segment and corporate operating expenses discussions below.
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Water Segment. Water segment operating expenses decreased by$0.7 million, or(9.8%). This decrease was due primarily tolower
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Water Segment. Water segment operating expenses decreased by$0.6 million, or(9.0)%. This decrease was due primarily to lower
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Overall Operating Expenditures. Overall operating expenditures decreased by$1.0 million, or(5.8%). This decrease was due
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Overall Operating Expenditures. Overall operating expenditures decreased by$4.1 million, or(11.0%). This decrease was due
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primarily to a decrease in employee costs, such as employee compensation and stock-based compensation, partially offset by restructuring
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primarily to adecrease in employee costs, such as employee compensation and stock-based compensation as well as severance charges
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charges, and an increase in consulting costs. Changes in non-employee costs included:
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costs. Changes in non-employee costs included:
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•G&A: higher consulting costs related to the enhancement of our corporate strategy as well as$0.4 million ofimpairment costs
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•G&A: higher consulting costs related to the enhancement of our corporate strategy as well as$0.4 million of impairment costs
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employee costs, including commission costs and stock-based compensation costs.
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employee costs, including stock-based compensation costs.
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Emerging Technologies Segment. Emerging Technologies operating expenses decreased by$2.1 million, or(34.6%). This decrease
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Emerging Technologies Segment. Emerging Technologies operating expenses decreased by$3.7 million, or(31.6%). This decrease
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was due primarily to lower development costs and lower employee costs, primarily related to stock-based compensation.
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was due primarily to lower employee costs, including stock-based compensation, as well as lower development costs.
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Corporate Operating Expenses. Corporate operating expenses increased by$1.7 million, or 32.9%. This increase was due primarily
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Corporate Operating Expenses. Corporate operating expenses increased by$0.8 million, or 6.4%. This increase wasprimarily due
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to increases in consulting, restructuring, and recruiting costs, as well as impairment costs associated with the sublease of the Katy, Texas
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to higher consulting costs, restructuring charges and impairment costs associated with the sublease of the Katy, Texas lease incurred during
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lease. The increase was partially offset by lower employee costs.
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thesix months ended June 30, 2025, partially offset by lower employee costs.
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to position the Companyfor profitable growth. We recorded a restructuring charge of$3.0 million, of which$0.5 million was recorded during
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to position the Companyfor profitable growth. We recorded a restructuring charge of approximately$3.0 million, of which$0.5 million was
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the first quarter of fiscal year 2025. This charge relates to severance and benefits, including reemployment assistance, for 38 terminated
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months ended June 30, 2025. The total restructuring charge relates to severance and benefits, including reemployment assistance, for
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employees, which was approximately 15% of ourworkforce. The implementation of the restructuring plan was substantially complete by the
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38 terminated employees, which was approximately 15% of ourworkforce. The implementation of the restructuring plan was substantially
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end of the first quarter of fiscal year 2025 and the Company does not expect to incur significant additional expenses related to the
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complete by the end of the first quarter of fiscal year 2025 and the Company does not expect to incur significant additional expenses related
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restructuring. See Note 4, “Other Financial Information –Restructuring,”of the Notes for further discussion and disclosure on our
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to the restructuring. See Note 4, “Other Financial Information –Restructuring,”of the Notes for further discussion and disclosure on our
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Thedecrease in “Total other income, net” in thethree months ended March 31, 2025, as compared to the comparable period in the
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Thedecrease in “Total other income, net” in thethree and six months ended June 30, 2025, as compared to the comparable period in
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prior year, wasprimarily due to a decrease in short- and long-termin vestments.
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the prior year, was primarily due to a decrease in short- and long-term investments.
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The interim periodtax benefit from income taxes is determined using an estimate of ourannual effective tax rate, adjusted for discrete
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The interim periodtax provision for (benefit from) income taxes is determined using an estimate of ourannual effective tax rate,
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items, if any, that arise during the period. Each quarter, we update ourestimate of the annual effective tax rate, and if the estimated annual
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adjusted for discrete items, if any, that arise during the period. Each quarter, we update ourestimate of the annual effective tax rate, and if
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effective tax rate changes, we make a cumulative adjustment in such period. Thequarterly tax provision and estimate of ourannual effective
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the estimated annual effective tax rate changes, we make a cumulative adjustment in such period. Thequarterly tax provision and estimate
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tax rate are subject to variation due to several factors, including variability in accurately predicting ourpre-tax income or loss and the mix of
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of ourannual effective tax rate are subject to variation due to several factors, including variability in accurately predicting ourpre-tax income
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jurisdictions to which they relate, the applicability of special tax regimes, and changes in how we dobusiness.
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or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in how we dobusiness.
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certain permanent differences, such as stock-based compensation shortfalls, and partial release of California valuation allowance.
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intangible income (“FDII”), federal R&D tax credit, certain permanent differences, such as stock-based compensation shortfalls, and partial
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For the three months ended March 31, 2024, the recognized benefit from income taxes resulted from the loss for the quarter and
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For the three and six months ended June 30, 2024, the recognized provision for and (benefit from) income taxes, respectively,
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full year forecasted profit and included benefits related to the U.S. federal foreign-derived intangible income (“FDII”), federal R&D tax credit,
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resulted from the tax projection based on the full year forecasted profit and included benefits related to the U.S. FDII, federal R&D tax credit,
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included benefits related to the U.S. FDII and federal R&D tax credit, partially offset by certain permanent differences, such as share-based
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and certain permanent differences, such as share-based compensation windfalls.
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The effective tax rate excluding discrete items for thethree months ended March 31, 2025, as compared to the prior year, differed
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The effective tax rate excluding discrete items for thesix months ended June 30, 2025, as compared to the prior year, differed
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financing. As of March 31, 2025, our principal sources of liquidity consisted of (i)unrestricted cash and cash equivalents of$49.1 million that
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financing. As of June 30, 2025, our principal sources of liquidity consisted of (i) unrestricted cash and cash equivalents of$57.1 million that
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instruments of$57.6 million that are primarily invested in U.S. treasury securities, corporate notes and bonds, and municipal and agency
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instruments of$36.6 million that are primarily invested in U.S. treasury securities, corporate notes and bonds, and municipal and agency
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
resulted from the tax projection based on the full year forecasted profit and included benefits related to the U.S. federal foreign-derived
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stock, at the discretion of management, up to$25.0 million in aggregate cost, which includes both the share value of the acquired common
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stock and the fees charged in connection with acquiring the common stock (the “August 2025 Authorization”). We expect to commence
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2025 Authorization will expire in May 2026.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
For thethree months ended March 31, 2025, the recognized benefit from income taxes resulted from the tax projection based on the
Previous report — wording carried elsewhere
the fourth quarter of 2024; partially offset by