Energy Recovery, Inc.
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
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.
Sep 30, 2026 · Filed Nov 4, 2026
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 2026-06-30; filed 2026-08-05.
0001421517-26-000083
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001421517-26-000093
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 220 previous paragraphs and 210 current paragraphs.
117 unchanged; 70 reworded; 22 added; 27 removed; 6 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 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 (22)
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Operations
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presentation.
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•Desalination: The decrease in revenue of $0.3 million was due primarily to lower shipments of products to the America and Africa
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•Wastewater: The decrease in revenue of $2.4 million was due primarily to lower shipments of products to the Asia and Europe
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and Middle East markets.
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Nine months ended September 30, 2026, as compared to thenine months ended September 30, 2025
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•Wastewater: The decrease in revenue of $3.8 million was due primarily to lower shipments of products to the Asia and Europe
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Thedecrease in gross profit and gross margin for the three months ended September 30, 2026, as compared to the prior year, was
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due primarily to lower volume as well as product mix and indirect manufacturing costs, partially offset by channel mix.
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Thedecrease in gross profit and gross margin for thenine months ended September 30, 2026, as compared to the prior year, was
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retail grocery business, partially offset by product and channel mix.
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due to higher product development costs.
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employee compensation costs, including stock-based compensation expense and consulting costs.
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Nine months ended September 30, 2026, as compared to thenine months ended September 30, 2025
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primarily due to higher consulting costs, which was offset by lower employee compensation costs, including stock-based compensation costs.
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grocery business.
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expenses related to the restructuring.
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the Company’s change in the full year forecast.
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approximately$19.3 million. No shares were purchased during the three months ended September 30, 2026.
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$3.7 million of which 287,700 and 444,600 shares were purchased during thethree and nine months ended September 30, 2026 at an
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aggregate cost of$2.4 million and$3.7 million, respectively.
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quarter of 2025, partially offset by,
Removed paragraphs (27)
Previous report
Results of Operations
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•Desalination: The decrease in revenue of $1.3 million was due primarily to lower shipments of products to the Asia and Africa
Previous report
•Wastewater: The decrease in revenue of $1.9 million was due primarily to lower shipments of products to the Asia markets.
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Middle East and Asia markets.
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Six months ended June 30, 2026, as compared to thesix months ended June 30, 2025
Previous report
•Wastewater: The decrease in revenue of $1.4 million was due primarily to lower shipments of products to the Asia market.
Previous report
The decrease in gross profit for the three months ended June 30, 2026, as compared to the prior year, was due primarily to lower
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volume as compared to the prior year, partially offset by decreases to indirect manufacturing costs and channel mix.
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Theincrease ingross margin for the three months ended June 30, 2026, as compared to the prior year, was due primarily to indirect
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manufacturing costs and channel mix, partially offset by lower volume.
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Thedecrease ingross profit and gross margin for thesix months ended June 30, 2026, as compared to the prior year, was due
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the wind down of the CO 2 retail grocery business, as well as increased costs related to product and channel mix, pricing, and tariffs, partially
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offset by improvements to indirect manufacturing costs during thesix months ended June 30, 2026.
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restructuring charges incurred in thethree months ended June 30, 2026.
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due to higher employee costs, including stock-based compensation expense.
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to higher employee costs and higher consulting costs.
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development costs, partially offset byrestructuring charges incurred in the three months ended June 30, 2026.
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of approximately$0.9 million during the three months ended June 30, 2026. The total restructuring charge recorded relates to severance and
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Six months ended June 30, 2026, as compared to thesix months ended June 30, 2025
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primarily due to to higher employee costs and higher consulting costs.
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expenses related to therestructuring.
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the Company’sforecasted loss in 2026.
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approximately$8.7 million and$19.3 million, respectively.
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156,900 shares were purchased during thethree and six months ended June 30, 2026.
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quarter of 2025;
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•Accrued liabilities: an increase in cash provided due to incentives and restructuring expenses paid out in 2025, partially offset by,
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made during the previous fiscal year.
Reworded paragraphs (70)
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Item 2 — Management’s Discussion and Analysis of Financial Condition and
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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of
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During thesix months ended June 30, 2026, we changed the composition of our reportable segments to better reflect how the CODM
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During thenine months ended September 30, 2026, we changed the composition of our reportable segments to reflect the change in
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manages the business. During the fist quarter of fiscal 2026, the Water segment was separated into two segments, the Desalination segment
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how the CODM manages the business. During thefirst quarter of fiscal 2026, the Water segment was separated into two segments, the
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and the Wastewater segment. Duringthe first quarter of fiscal 2026, the CO 2 retail grocery business within the Emerging Technologies
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Desalination segment and the Wastewater segment. During thefirst quarter of fiscal 2026, the CO 2 retail grocery business within the
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segment was wound-down, which resulted in the Emerging Technologies segment no longer meeting the criteria of a reportable segment as
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Emerging Technologies segment was wound-down, which resulted in the Emerging Technologies segment no longer meeting the criteria of a
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of the second quarter of fiscal 2026. As a result, revenue and expenses associated with the former Emerging Technologies segment have
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reportable segment as of the second quarter of fiscal 2026. As a result, revenue and expenses associated with the former Emerging
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been included within Corporate and Other. Prior periods have been recast to conform to the current year presentation.
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Technologies segment have been included within Corporate and Other. Prior periods have been recast to conform to the current year
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A discussion regarding our financial condition and results of operations for thethree and six months ended June 30, 2026, compared
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A discussion regarding our financial condition and results of operations for thethree and nine months ended September 30, 2026,
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to thethree and six months ended June 30, 2025, is presented below.
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compared to thethree and nine months ended September 30, 2025, is presented below.
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Thedecrease in Original Equipment Manufacturer (“OEM”) revenue of$3.2 million was due primarilyto:
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Thedecrease in Original Equipment Manufacturer (“OEM”) revenue of$2.7 million was due primarily to:
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markets, partially offset by higher shipments of products to the America, Europe and Middle East markets.
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markets, partially offset by higher shipments of products to the Europe, Asia, and Middle East markets.
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Thedecrease in After Market (“AM”)revenue of$0.8 million was due primarily to lower shipment of products to the Europe and Asia
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Thedecrease in After Market (“AM”) revenueof$0.6 million was due primarily to lower shipment of products to the Africa market.
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Thedecrease in Megaproject (“MPD”) revenue of$12.1 million was primarily due to lower shipments of products to the Europe,
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Thedecrease in Megaproject (“MPD”) revenue of$17.5 million was dueprimarily to lower shipments of products to the Africa, Asia,
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Thedecrease in OEM revenue of$0.6 million was due primarily to:
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Thedecrease in OEM revenue of$3.3 million was due primarily to:
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•Desalination: The increase in revenue of $0.8 million was due primarily to higher shipments of products to the Europe, Middle
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•Desalination: The increase in revenue of $0.5 million was due primarily to higher shipments of products to the Europe and Middle
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East and Africa markets, partially offset by lower shipments of products to the Asia market.
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East markets, partially offset by lower shipments of products to the Asia and Africa markets.
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Thedecrease in AM revenue of$2.1 million was primarily due to lower shipments to the Asia and Europe markets.
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Thedecrease in AM revenue of$2.7 million was primarily due to lower shipments to the Asia, Europe, and Africa markets.
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Thedecrease in MPD revenue of$11.8 million was due primarily to lower shipments to the Europe, Asia and Middle East markets.
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Thedecrease in MPD revenue of$29.2 million was due primarily to lower shipments to the Asia, Africa, Europe and Middle East
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Gross profit represents revenue less cost of revenue. Cost of revenue consists primarily of raw materials, personnel costs (including
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Gross profit represents revenue less cost of revenue and restructuring - inventory reserve. Cost of revenue consists primarily of raw
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stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense.
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materials, personnel costs (including stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense.
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primarily to lower volume as compared to the prior year as well as$1.6 million of restructuring charges booked to inventory associated with
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due primarily to lower volume as well as$1.6 million of restructuring charges booked to inventory associated with the wind down of the CO 2
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three months ended June 30, 2026, as compared to the comparable periodsinthe prior year, are discussed within the following overall
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three and nine months ended September 30, 2026, as compared to the comparable periodsin the prior year, are discussed within the
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operating expenditures, and the segment and corporate operating expenses discussions below.
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following overall operating expenditures, and the segment and corporate operating expenses discussions below.
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Overall Operating Expenditures. Overall operating expenditures decreased$1.6 million, or(10.0%). This decrease was primarily due
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Overall Operating Expenditures. Overall operating expenditures decreased$2.9 million, or(17.2%). This decrease was primarily due
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to lower employee compensation costs, including stock-based compensation expense, and lower consulting costs, partially offset by
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to lower employee compensation costs, including stock-based compensation expense, and lower consulting costs.
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Desalination Segment. Desalination segment operating expenses increased by$1.5 million, or 35.2%. This increase was primarily
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Desalination Segment. Desalination segment operating expenses increased by$0.8 million, or 15.7%. This increase was primarily
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Wastewater Segment. Wastewater segment operating expenses increased by$0.5 million, or 26%. This increase was primarily due
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Wastewater Segment. Wastewater segment operating expenses decreased by$0.5 million, or(23.8%). This decrease was primarily
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Corporate and Other. Corporate and Other decreased by$3.6 million, or(35.5)%. This decrease was primarily due to lower
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Corporate and Other. Corporate and Other decreased by$3.2 million, or(32.1)%. This decrease was primarily due to lower
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Overall Operating Expenditures. Overall operating expenditures decreased by$1.1 million, or(3.3%). This decrease was primarily
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Overall Operating Expenditures. Overall operating expenditures decreased by$4.0 million, or(7.9%). This decrease was primarily
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due to to lower employee compensation costs, including stock-based compensation expense, and lower consulting costs, and waspartially
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due to lower employee compensation costs, including stock-based compensation expense, and lower consulting costs, and was partially
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partially offset byimpairment of goodwill and restructuring charges incurred as part of the wind down of the CO 2 retail grocery business.
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offset byimpairment of goodwill and restructuring charges incurred as part of the wind down of the CO 2 retail grocery business.
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Desalination Segment. Desalination segment related operating expenses increased by$2.8 million, or 34.1%. This increase was
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Desalination Segment. Desalination segment related operating expenses increased by$3.6 million, or 27.2%. This increase was
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primarily due to to higher employee costs, including stock-based compensation costs, and higher restructuring charges.
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primarily due to higher employee compensation costs, including stock-based compensation costs and higher restructuring charges.
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Wastewater Segment. Wastewater segment related operating expenses increased by$0.6 million, or 14.2%. This increase was
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Wastewater Segment. Wastewater segment related operating expenses increased by$0.1 million, or 1.6%. This increase was
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Corporate and Other. Corporate and Other decreased by$4.5 million, or(21.2)%. This decrease was primarily due to lower
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Corporate and Other. Corporate and Other decreased by$7.7 million, or (24.7)%. This decrease was primarily due to lower
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offset byimpairment of goodwill and restructuring charges incurred as part of the wind down of the CO2 retail grocery business.
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development costs, partially offset byimpairment of goodwill and restructuring charges incurred as part of the wind down of the CO 2 retail
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approximately$2.4 million during thesix months ended June 30, 2026. The total restructuring charge recorded relates to severance and
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approximately$2.4 million during thenine months ended September 30, 2026. The total restructuring charge recorded relates to severance
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benefits, including reemployment assistance, for 23 terminated employees. In addition to the restructuring charges, we incurred other related
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and benefits, including reemployment assistance, for 23 terminated employees. In addition to the restructuring charges, we incurred other
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charges associated with the wind down of the CO 2 retail grocery business, including excess and obsolescence reserves taken on CO 2
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related charges associated with the wind down of the CO 2 retail grocery business, including excess and obsolescence reserves taken on CO 2
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plan was substantially complete by the end of thesecond quarter of fiscal year 2026 and we do not expect to incur significant additional
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plan was substantially complete by the end of the second quarter of fiscal year 2026 and we do not expect to incur significant additional
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Rearranged current paragraphs (1)
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due to lower employee compensation costs, including stock-based compensation expense.
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markets, partially offset by higher shipments of products to the Middle East market.
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Restructuring Charges. During the first quarter of fiscal year 2026, we wound down operations of the CO 2 retail grocery business
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within our Emerging Technologies segment due to a fundamental change in the outlook of the business. We recorded a restructuring charge
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benefits, including reemployment assistance, for 23 terminated employees. The restructuring plan was substantially complete by the end of
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the second quarter of fiscal year 2026 and we do not expect to incur significant additional expenses related to the restructuring.
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employee costs, including stock-based compensation expense, lower consulting costs and lower emerging technology development costs,