Energy Recovery, Inc. (NASDAQ: ERII ) Q2 '25 results were positive in its three business segments: it signed contracts in desalination, returned to exports to China in wastewater, and has reached 50 locations for summer testing inLong-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the ...

Financial Data and Key Metrics Changes - The company reiterated its 2025 guidance on all metrics and reinstated its wastewater guidance, indicating resilience in its core desalination business despite macroeconomic challenges [4][5] - An additional share repurchase program was announced, totaling $105 million over the past ten months, aiming to repurchase over 10% of outstanding shares while continuing to invest in growth [5] Business Line Data and Key Metrics Changes - The contracted desalination capacity, water reuse capacity, and CO2 refrigeration installations are all experiencing high growth rates, positioning the company to capture upside trends towards its 2029 goals [5][6] - The company reported shipping over $2 million in the quarter due to improved tariff conditions in China, which allowed previously stalled projects to proceed [24][25] Market Data and Key Metrics Changes - The company has broadened its wastewater footprint significantly, focusing on five key verticals: municipal, chemical, textile, manufacturing, and mining, which are expected to yield the largest market share [27][28] - The reduction in tariffs in China has positively impacted project execution, leading to better-than-expected results in that market [24][25] Company Strategy and Development Direction - The company is focused on long-term trends driving its business, including increasing water scarcity and the need for water reuse, which are expected to enhance growth opportunities [5][35] - The management emphasized the importance of regulatory drivers and economic factors in the increasing demand for wastewater treatment solutions [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving higher revenue targets for desalination in 2026, citing a strong pipeline of contracted capacity [10][11] - The management noted that the current testing season for new products is progressing well, with ongoing engagement with OEMs and the addition of new testing sites [16][17] Other Important Information - The company is developing a business case for data center markets and heat pumps, with initial assessments indicating limited growth potential in the CO2 segment for data centers [18][19] - The management highlighted the importance of reliability testing for new products, which is crucial for converting testers into dedicated users [30][31] Q&A Session Summary Question: Confidence in achieving higher desalination revenue targets - Management indicated that while it's too early to tell, recent awards and contracted capacity give them confidence for 2026, with more guidance expected in the next earnings call [10][11][12] Question: Expectations for next-gen PX product pricing - The company expects to maintain or increase selling prices based on capacity, with fewer units needed to fill a plant [14] Question: Update on CO2 work with OEMs - Discussions with Hill Phoenix are ongoing, and the summer testing season is proceeding as expected with new sites being added [16][17] Question: Progress on data center market business case - Initial assessments suggest limited growth potential for CO2 in data centers, but heat pumps show promise [18][19] Question: Better-than-expected results in China - The reduction in tariffs allowed previously stalled projects to move forward, leading to improved results [24][25] Question: Broadened wastewater footprint - The company has successfully expanded its reference case list in key verticals, meeting its expectations [27][28] Question: Drivers for increasing water reuse - The motivations for increased water reuse are both economic and regulatory, driven by water scarcity issues [35]

For the transition period from ____________ to __________ Commission File Num001-341 ber: 12 WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19 For the quarterly period eJnudneed 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Energy Recovery, Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdict ...

Exhibit 99.1 Energy Recovery Reports its Second Quarter 2025 Financial Results SAN LEANDRO, Calif. - August 6, 2025 – Energy Recovery, Inc. (Nasdaq:ERII) ("Energy Recovery" or the "Company") today announced its financial results for the second quarter and six months ended June 30, 2025. Second Quarter Highlights In conjunction with these financial results, management has released a letter to shareholders reviewing business and financial updates from the second quarter and discussing our outlook for 2025. Th ...

Nasdaq:ERII Charting our way forward Presenting our vision and financial framework for continued success November 2024 Welcome! Agenda and Introduction Lionel McBee Director, Investor Relations 2 2 Agenda today David Moon CEO Rodney Clemente SVP, Water Ricardo Freitas VP & GM, CO2 Michael Mancini CFO Our growth vision, executable path forward, and key enablers to ensure success Our approach for fortifying share and profitability in desalination and driving focused growth in wastewater Building from summer t ...

Group 1 - Energy Recovery (NASDAQ: ERII) reported 1Q25 results, indicating operations were within guidelines but expressed significant concerns regarding the China business, which generated $9 million [1] - The company has removed guidance on its Wastewater segment, suggesting potential uncertainty in future performance [1] Group 2 - The investment approach focuses on long-only strategies, evaluating companies from an operational and buy-and-hold perspective, rather than market-driven dynamics [2] - The articles emphasize understanding the long-term earnings power of companies and the competitive dynamics within their industries [2] - Most recommendations are holds, reflecting a cautious stance in a bullish market environment [2]

Financial Performance - Energy Recovery (ERII) reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.01, and compared to a loss of $0.08 per share a year ago, indicating a significant earnings surprise of -1,200% [1] - The company posted revenues of $8.07 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 56.31%, and down from $12.09 million in the same quarter last year [2] - Over the last four quarters, Energy Recovery has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Market Performance - Energy Recovery shares have increased by approximately 1.2% since the beginning of the year, contrasting with the S&P 500's decline of -4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $31.6 million, while for the current fiscal year, it is $0.80 on revenues of $159.56 million [7] Industry Outlook - The Pollution Control industry, to which Energy Recovery belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Energy Recovery's stock performance [5]

Financial Data and Key Metrics Changes - Q1 performance was in line with expectations regarding revenue and profitability, consistent with a heavily back-end weighted year [4] - A small order of approximately $2 million was shipped but not recognized as revenue in Q1, impacting revenue and gross margin [12] Business Line Data and Key Metrics Changes - The desalination business remains strong and on track for the year, with a robust pipeline and active contracted projects [5][11] - The CO2 business is progressing towards full commercialization, with three OEMs working to integrate the PX into their designs [5][6] Market Data and Key Metrics Changes - The company remains bullish on the desalination market, particularly in the Middle East and North Africa, despite a tougher macro backdrop [11][25] - There is a small presence in India, with plans to double resources, and North America is seen as a significant market opportunity, especially in water reuse [27][28] Company Strategy and Development Direction - The company prefers to establish a 100% owned and operated energy recovery facility, but is open to partnerships for short-term solutions [13] - The focus is on mitigating tariff impacts and rightsizing the cost structure while aiming for margin expansion in 2025 [37] Management Comments on Operating Environment and Future Outlook - Management is confident in desalination and CO2 revenue guidance, with visibility into more than 80% of expected 2025 revenue from contracted projects and high-probability pipeline [37] - The company is actively working on additional options to mitigate tariff impacts [37] Other Important Information - The collaboration with Hill Phoenix is seen as a positive development, with potential for multifaceted customer relationships in both retail and industrial spaces [32] Q&A Session Summary Question: Insights on the desalination market and geographical enthusiasm - Management remains optimistic about the desalination market, particularly in the Middle East and North Africa, with a strong pipeline and active projects [11] Question: Revenue impact from a mega project order not recognized in Q1 - The order was approximately $2 million, which provides context for Q1 revenue and gross margin [12] Question: International footprint strategy regarding manufacturing - The preference is to establish a fully owned facility, but partnerships may be considered to navigate tariffs [13] Question: Opportunities to offset lost revenue from China - Management believes there are opportunities to offset some of the $9 million lost revenue from China through sales in other geographies [14] Question: Progress with Hill Phoenix and future milestones - Key milestones include finalizing a commercial agreement and establishing a test site for the PXG integrated into Hill Phoenix systems [16][17] Question: Long-term advantages of developing an international production presence - Closer proximity to customers in key regions like the Middle East and North Africa could enhance service and support [25][26] Question: Alternative markets for ERI Solutions beyond China - India and North America are identified as markets with significant upside potential, with plans to increase resources in both regions [27][28] Question: Gross margin guidance amidst various factors - Management is comfortable with the gross margin guidance and remains focused on both gross and EBITDA margins [30] Question: Potential upside from collaborations with Hill Phoenix - Hill Phoenix is viewed as a diverse customer with opportunities in both retail and industrial applications, potentially leading to increased activity by the end of 2025 [32]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the three months ended March 31, 2025, show a significant decrease in revenue and a wider net loss compared to the same period in 2024, with total assets decreasing from year-end 2024 primarily due to reduced accounts receivable and short-term investments. Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $8,065 | $12,090 | -33.3% | | Gross Profit | $4,458 | $7,135 | -37.5% | | Loss from Operations | $(12,562) | $(10,934) | +14.9% | | Net Loss | $(9,880) | $(8,260) | +19.6% | | Diluted Net Loss per Share | $(0.18) | $(0.14) | +28.6% | Condensed Consolidated Balance Sheets (As of March 31, 2025) | Metric | March 31, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | Total Current Assets | $154,592 | $173,656 | | Total Assets | $225,394 | $242,792 | | Total Current Liabilities | $18,434 | $23,428 | | Total Liabilities | $27,281 | $32,782 | | Total Stockholders' Equity | $198,113 | $210,010 | Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (In thousands) | Q1 2024 (In thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,678 | $6,497 | | Net cash provided by (used in) investing activities | $12,674 | $(4,986) | | Net cash (used in) provided by financing activities | $(3,874) | $1,190 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and financial data, with the Water segment generating nearly all revenue, a restructuring plan substantially completed in Q1 2025, and a new share repurchase program initiated in February 2025. - The Water Technologies segment accounted for **$8.064 million** of the total **$8.065 million** revenue in Q1 2025[37](index=37&type=chunk) - A restructuring plan initiated in Q4 2024 resulted in **$0.5 million** of charges in Q1 2025 and is now substantially complete, with total restructuring expenses recognized at **$3.015 million**[55](index=55&type=chunk) - In February 2025, the Board authorized a new **$30.0 million** share repurchase program, under which the company had repurchased **279,295 shares** for **$4.5 million** as of March 31, 2025[73](index=73&type=chunk)[74](index=74&type=chunk) - In Q1 2025, the company granted **287,298 Performance Restricted Stock Units (PRSUs)** that vest over 3 years based on cumulative revenue and adjusted EBITDA targets, with no expense recognized as performance conditions are not yet considered probable[75](index=75&type=chunk)[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 33% year-over-year revenue decline in Q1 2025 primarily to a **$4.1 million (99%)** drop in megaproject shipments, leading to a gross margin contraction from 59.0% to 55.3% due to lower sales volume over fixed costs, while operating expenses decreased by **$1.0 million** driven by lower employee costs, partially offset by restructuring charges and consulting fees. [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Total revenue for Q1 2025 was **$8.1 million**, a 33% decrease from **$12.1 million** in Q1 2024, driven by a 99% decline in Megaproject revenue, partially offset by a 20% increase in Original Equipment Manufacturer (OEM) revenue, leading to a **$2.7 million** drop in gross profit and a 370 basis point contraction in gross margin to 55.3%. Revenue by Channel (Q1 2025 vs Q1 2024) | Channel | Q1 2025 Revenue (thousands) | Q1 2024 Revenue (thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Aftermarket | $4,028 | $4,644 | (13%) | | Original equipment manufacturer | $4,001 | $3,346 | 20% | | Megaproject | $36 | $4,100 | (99%) | | **Total revenue** | **$8,065** | **$12,090** | **(33%)** | - The decrease in gross profit and margin was primarily due to lower sales volume spread over fixed manufacturing costs[87](index=87&type=chunk) - Operating expenses in the Emerging Technologies segment decreased by **$2.1 million (34.6%)** due to lower development costs and employee-related expenses[89](index=89&type=chunk) - Corporate operating expenses increased by **$1.7 million (32.9%)** due to higher consulting, restructuring, and recruiting costs, as well as impairment costs from a sublease[90](index=90&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company's principal liquidity sources included **$49.1 million** in cash and cash equivalents and **$57.6 million** in marketable securities, with a **$50.0 million** revolving credit facility having no outstanding loans but **$15.7 million** utilized for letters of credit. - Principal sources of liquidity as of March 31, 2025, consist of **$49.1 million** in cash and cash equivalents, **$57.6 million** in short- and long-term investments, and **$32.4 million** in net accounts receivable[95](index=95&type=chunk) - The company has a **$50.0 million** credit agreement expiring in December 2026, with no revolving loans outstanding and **$15.7 million** of a **$30.0 million** sub-limit for Letters of Credit utilized as of Q1 2025[96](index=96&type=chunk) - Cash flow from investing activities provided **$12.7 million**, a significant shift from a **$5.0 million** use of cash in the prior year, driven by lower purchases and higher maturities of marketable securities[99](index=99&type=chunk)[102](index=102&type=chunk) - Cash flow from financing activities was a use of **$3.9 million**, compared to a source of **$1.2 million** in the prior year, mainly due to **$4.5 million** spent on common stock repurchases[100](index=100&type=chunk)[103](index=103&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange rates and interest rates, with foreign currency risk arising from expenses denominated in various foreign currencies, though revenue contracts are in USD, and interest rate risk affecting its **$63.1 million** investment portfolio, which is mitigated by a weighted average maturity of approximately nine months. - Revenue contracts are denominated in USD, but the company incurs expenses in foreign currencies, creating exposure to fluctuations in the British pound, Saudi riyal, Emirati dirham, European euro, Chinese yuan, Indian rupee, and Canadian dollar[108](index=108&type=chunk)[110](index=110&type=chunk) - The investment portfolio of **$63.1 million** is subject to interest rate risk, where a hypothetical 1% increase in interest rates would cause a fair value decrease of less than **$0.3 million** as of March 31, 2025[114](index=114&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded that they were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter. - Based on an evaluation, the President and CEO and the CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[116](index=116&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2025[117](index=117&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that it believes are likely to have a material adverse effect on its financial condition or operating results. - As of the report date, the company is not involved in any legal proceedings expected to have a material adverse effect on its business[119](index=119&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to risk factors from the 2024 Annual Report, except for an updated risk concerning U.S. trade policy, highlighting that changes in U.S. policy, particularly regarding tariffs and trade relations with China, could increase costs or reduce global access to its products, potentially having a material adverse impact on the business. - A specific risk factor has been updated to address the potential material adverse impact of changes in U.S. trade policy, including tariffs and trade relations, particularly with China[120](index=120&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None reported for the period. - The company reported no unregistered sales of equity securities during the period[124](index=124&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement, and on January 23, 2025, the Compensation Committee adopted a new form of Performance Restricted Stock Unit (PRSU) award agreement under the 2020 Equity Incentive Plan. - No directors or officers adopted or terminated a Rule 10b5-1 trading plan in Q1 2025[126](index=126&type=chunk) - On January 23, 2025, the Compensation Committee adopted a new form of PRSU award agreement to define performance metrics and periods[127](index=127&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including employment agreements and officer certifications.

Energy Recovery First Quarter 2025 Financial Results [Financial Highlights](index=1&type=section&id=First%20Quarter%20Highlights) Q1 2025 results showed a 33% revenue decrease to $8.1 million and a $9.9 million net loss, with strong cash Q1 2025 vs. Q1 2024 Financial Highlights | | 2025 | 2024 | 2025 vs. 2024 | | :--- | :--- | :--- | :--- | | **Revenue** | $8.1M | $12.1M | down 33% | | **Gross margin** | 55.3% | 59.0% | down 370 bps | | **Operating margin** | (155.8%) | (90.4%) | NM | | **Net loss** | ($9.9M) | ($8.3M) | down 20% | | **Net loss per share** | ($0.18) | ($0.14) | down $0.04 | | **Cash provided by operations** | $10.7M | $6.5M | up 65% | - The **$4.0 million** decrease in revenue compared to Q1 2024 was attributed to the timing of revenue recognition from contracted projects[5](index=5&type=chunk) - Operating expenses decreased by **5.8%** to **$17.0 million**, mainly due to lower employee costs, partially offset by **$0.5 million** in restructuring charges and **$0.4 million** in impairment costs[5](index=5&type=chunk) - The company maintained a solid liquidity position with **$106.7 million** in cash, cash equivalents, and short- and long-term investments[5](index=5&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Q1 2025 consolidated financials show total assets decreased, net loss widened to $9.9 million, and operating cash flow improved [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased to $225.4 million by Q1 2025 due to lower receivables, while cash and investments increased Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash, cash equivalents and investments** | $106,730 | $99,851 | | **Accounts receivable and contract assets** | $34,787 | $66,842 | | **Inventories, net** | $32,410 | $24,906 | | **Total Assets** | $225,394 | $242,792 | | **Total Liabilities** | $27,281 | $32,782 | | **Total Stockholders' Equity** | $198,113 | $210,010 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 revenue decreased 33% to $8.1 million, widening net loss to $9.9 million despite lower expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenue** | $8,065 | $12,090 | | **Gross Profit** | $4,458 | $7,135 | | **Total Operating Expenses** | $17,020 | $18,069 | | **Loss from Operations** | ($12,562) | ($10,934) | | **Net Loss** | ($9,880) | ($8,260) | | **Net Loss Per Share (Basic & Diluted)** | ($0.18) | ($0.14) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q1 2025 operating cash flow increased to $10.7 million, with overall cash and equivalents increasing by $19.5 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $10,678 | $6,497 | | **Net cash provided by (used in) investing activities** | $12,674 | ($4,986) | | **Net cash (used in) provided by financing activities** | ($3,874) | $1,190 | | **Net change in cash, cash equivalents and restricted cash** | $19,511 | $2,682 | [Supplemental Financial Information](index=8&type=section&id=SUPPLEMENTAL%20FINANCIAL%20INFORMATION) Supplemental data details the 33% revenue decline, segment performance shifts, and a significant decrease in stock-based compensation [Channel Revenue](index=8&type=section&id=Channel%20Revenue) Channel revenue breakdown shows a 99% decrease in Megaproject revenue, offset by a 20% increase in OEM revenue Channel Revenue (in thousands) | Channel | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Aftermarket** | $4,028 | $4,644 | down 13% | | **Original equipment manufacturer** | $4,001 | $3,346 | up 20% | | **Megaproject** | $36 | $4,100 | down 99% | | **Total revenue** | $8,065 | $12,090 | down 33% | [Segment Activity](index=8&type=section&id=Segment%20Activity) The Water segment recorded an operating loss of $1.6 million, while Emerging Technologies narrowed its operating loss Segment Operating Income (Loss) (in thousands) | Segment | Q1 2025 Revenue | Q1 2025 Operating (Loss) | Q1 2024 Revenue | Q1 2024 Operating Income (Loss) | | :--- | :--- | :--- | :--- | :--- | | **Water** | $8,064 | ($1,603) | $12,089 | $368 | | **Emerging Technologies** | $1 | ($4,016) | $1 | ($6,076) | [Stock-based Compensation](index=8&type=section&id=Stock-based%20Compensation) Total stock-based compensation expense decreased by 40% to $2.0 million in Q1 2025 across all categories Stock-based Compensation Expense (in thousands) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Cost of revenue** | $148 | $343 | | **General and administrative** | $870 | $1,407 | | **Sales and marketing** | $679 | $1,010 | | **Research and development** | $266 | $523 | | **Total** | $1,963 | $3,283 | [Non-GAAP Financial Measures and Reconciliation](index=2&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) Non-GAAP metrics show Q1 2025 adjusted net loss widened to $7.0 million, adjusted EBITDA loss to $8.7 million, but free cash flow improved Q1 2025 vs. Q1 2024 Non-GAAP Highlights | | 2025 | 2024 | 2025 vs. 2024 | | :--- | :--- | :--- | :--- | | **Adjusted operating margin** | (120.4%) | (59.4%) | NM | | **Adjusted net loss** | ($7.0M) | ($4.6M) | down 52% | | **Adjusted net loss per share** | ($0.13) | ($0.08) | down $0.05 | | **Adjusted EBITDA** | ($8.7M) | ($6.2M) | down 40% | | **Free cash flow** | $10.5M | $5.7M | up 84% | - Non-GAAP adjustments to net loss in Q1 2025 totaled **$2.9 million** and included stock-based compensation (**$2.0M**), restructuring charges (**$0.5M**), and impairment of long-lived assets (**$0.3M**)[25](index=25&type=chunk) - The company defines its non-GAAP measures to exclude items such as stock-based compensation, executive transition costs, restructuring charges, and impairment of long-lived assets to facilitate period-to-period comparisons of its core business[8](index=8&type=chunk)[11](index=11&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section covers forward-looking statements, a May 7, 2025 conference call, and Energy Recovery's leadership in energy efficiency technology - A conference call and Q&A session to discuss the financial results is scheduled for **May 7, 2025**, at **2:00 PM PT / 5:00 PM ET**[10](index=10&type=chunk) - The press release contains forward-looking statements based on currently available information and management's beliefs, which are not guarantees of future performance and are subject to risks[7](index=7&type=chunk) - Energy Recovery is a global leader in energy efficiency technology, specializing in high-performance solutions built on its pressure exchanger technology platform, with a strong foundation in the desalination industry[13](index=13&type=chunk)