Core Viewpoint - Energy Recovery, Inc. (ERII) shares experienced a 7% increase to $10.12, following a significant trading volume, despite a 41.8% decline over the past four weeks [1] Group 1: Company Performance - The recent rally in Energy Recovery's stock is attributed to optimism regarding its original equipment manufacturer business, with increased product shipments to the Americas, Asia, and Europe [2] - The company is expected to report a quarterly loss of $0.09 per share, reflecting a year-over-year improvement of 30.8%, with anticipated revenues of $8.75 million, marking an 8.5% increase from the previous year [3] - The consensus EPS estimate for the upcoming quarter has been revised 3.6% higher in the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [4] Group 2: Industry Context - Energy Recovery operates within the Zacks Pollution Control industry, where another company, CECO Environmental, saw a 5.7% increase in its stock price to $58.41, despite a -29.8% return over the past month [4] - CECO's consensus EPS estimate has decreased by 22.9% over the past month to $0.12, although this represents a 20% increase compared to the previous year [5]

Group 1 - Energy Recovery, Inc. (ERII) reported Q4 '25 results and provided updates on its business strategy and 2026 business guidance, leading to a stock price decline of over 30% the day after the release [1] Group 2 - The company focuses on operational aspects and long-term earnings power, evaluating companies from a buy-and-hold perspective rather than market-driven dynamics [2]

Energy Recovery, Inc. ( ERII ) reported Q4 '25 results and provided updates on its business strategy and 2026 business guidance , causing the cratering of its stock price 30%+ on the day after the release.Long-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 competitive dynamics of ...

Financial Data and Key Metrics Changes - The company experienced a shortfall in Q4 2025 due to delays in two contracts, which are now pushed into 2026, with a revenue guidance of approximately $45 million for 2026 [10][11] - Operating expenses decreased from $77 million to $64 million, with further potential cuts anticipated in 2026 [27][29] Business Line Data and Key Metrics Changes - The company is winding down its CO2 retail grocery business, which was unable to achieve scaled adoption, resulting in an annual savings of $7 million [4] - The water business remains a focus, with confidence in growth for 2027 based on the pipeline and underlying demand trends despite current project delays [3][4] Market Data and Key Metrics Changes - The company noted that larger desalination projects are more susceptible to delays, particularly in non-Gulf countries, but there is no disruption in demand for water [25][26] - The company is experiencing fewer EPCs bidding on desalination projects, which may extend the tendering process [25] Company Strategy and Development Direction - The company is focused on optimizing performance, investing in innovation, and growing its wastewater business while maintaining a high bar for capital allocation [5] - The introduction of the PX Q650 product is expected to improve gross margins and pricing strategy, with a higher effective ASP per product due to better specific energy consumption [48][49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the water business despite current project delays, emphasizing that the underlying demand for water remains strong [26] - The company is planning to finalize site selection for manufacturing expansion by the end of the first half of 2026, with production expected to start in Q1 2027 [50] Other Important Information - The company is taking legal action against Flowserve for patent infringement to protect its intellectual property [80][81] - Approximately 20 positions were eliminated as part of the wind-down of the CO2 business [57] Q&A Session Summary Question: Summary of Q4 shortfall - The shortfall was due to two projects being pushed into 2026, with a revenue guidance of $45 million for 2026 [10][11] Question: Common themes in project delays - Delays are attributed to larger project sizes and fewer EPCs bidding, affecting the tendering process [25][26] Question: Future cost savings and operational efficiency - The company plans further operational cuts and is exploring additional cost savings beyond the CO2 business [27][29] Question: Pricing strategy for new product PX Q650 - The new product is expected to have a higher effective ASP due to improved performance and energy efficiency [48][49] Question: Timeline for manufacturing expansion - Site selection is expected to be finalized by mid-2026, with production starting in Q1 2027 [50] Question: Impact of CO2 business wind-down on headcount - Approximately 20 positions were eliminated as part of the CO2 business wind-down [57] Question: Transition of legacy products - The Q400 is expected to ramp down as the Q650 is introduced, with a transition period of two to three years [62] Question: Legal action against Flowserve - The company is pursuing legal action to protect its intellectual property [80][81]

Energy Recovery (NasdaqGS:ERII) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsDavid Moon - President and CEOJoshua Ballard - CFOLarry Solow - Managing DirectorNone - Company RepresentativeConference Call ParticipantsJeffrey Campbell - Senior AnalystSandhya Iyer - Research AnalystOperatorGood day, ladies and gentlemen, and welcome to Energy Recovery's Q4 and full year 2025 earnings call. During today's call, Energy Recovery may make projections and other forward-looking statements u ...

Energy Recovery (NasdaqGS:ERII) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Speaker4Good day, ladies and gentlemen, and welcome to Energy Recovery's fourth quarter and full year 2025 earnings call. During today's call, Energy Recovery may make projections and other forward-looking statements under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our bus ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 Form10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year enDdecdember 31, 2025 Energy Recovery, Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification No.) Delaware 01-0616867 1717 Doolittle Drive San Leand,rCoalifornia94577 (Address of Principal Executive Offices) (Zip Code) ☐ TRANSITI ...

Revenue Performance - Revenue for Q4 2025 was $66.9 million, a decrease of 0.3% compared to Q4 2024, and total revenue for 2025 was $135.0 million, down 7% from 2024[4] - Total revenue for Q4 2025 was $66,871,000, showing no change compared to Q4 2024's $67,075,000[21] - Aftermarket revenue increased by 54% in Q4 2025 to $6,604,000, while original equipment manufacturer revenue decreased by 35% to $10,620,000[21] Profitability Metrics - Gross margin for Q4 2025 was 67.2%, down 300 basis points from Q4 2024, primarily due to product mix and tariff costs[4] - Operating margin increased to 46.8% in Q4 2025, up 860 basis points compared to Q4 2024, attributed to a significant reduction in operating expenses[4] - Operating margin improved to 46.8% in Q4 2025 from 38.2% in Q4 2024[26] - Net income for Q4 2025 was $26.9 million, representing a 15% increase from Q4 2024, while adjusted net income was $28.2 million, a slight decrease of 0%[4][5] - Net income for 2025 was $22,962,000, a slight decrease from $23,050,000 in 2024[20] - Gross profit for the year ended December 31, 2025, was $87,779,000, down from $96,921,000 in 2024[22] Operating Expenses - Operating expenses for Q4 2025 were $13.6 million, a decrease of 36.5% compared to Q4 2024, mainly due to lower employee and consulting costs[6] - Total operating expenses for 2025 were $64,042,000, compared to $77,209,000 in 2024[22] - Stock-based compensation expense for Q4 2025 was $1,613,000, down from $1,810,000 in Q4 2024[24] Cash Flow and Assets - Cash provided by operations in Q4 2025 was $7.1 million, down from $9.0 million in Q4 2024[4] - Free cash flow for Q4 2025 was $6,400,000, compared to $8,900,000 in Q4 2024[26] - Net cash provided by operating activities for 2025 was $18,770,000, down from $20,522,000 in 2024[20] - Cash, cash equivalents, and investments totaled $83.3 million as of December 31, 2025, down from $99.9 million in 2024[16] - Cash, cash equivalents, and restricted cash at the end of 2025 totaled $48,076,000, an increase from $29,757,000 in 2024[20] - Total assets as of December 31, 2025, were $231.5 million, a decrease from $242.8 million in 2024[16] Future Outlook - The company anticipates potential risks related to future demand for its products and performance by customers and partners, which may impact future results[7] EBITDA - Adjusted EBITDA for Q4 2025 was $33.6 million, reflecting an increase from Q4 2024[5]

Core Viewpoint - The investment case for Energy Recovery (ERII) remains bearish, with revenues stagnating and concerns about achieving the 2029 revenue target [1]. Revenue Performance - Energy Recovery's revenues are currently stuck, indicating a lack of growth and potential challenges in meeting future financial targets [1]. Analyst Background - The analyst has over a decade of experience in financial markets, primarily in hedge funds, with a focus on technology sectors such as SaaS and cloud businesses, which are seen as offering significant growth opportunities [1].

Group 1 - The core investment strategy of Quipus Capital focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective rather than market-driven dynamics [1] - Quipus Capital emphasizes understanding the long-term earnings power of companies and the competitive dynamics within their industries [1] - The majority of recommendations from Quipus Capital will be holds, indicating a cautious approach to market conditions and a belief that only a small fraction of companies are suitable for buying at any given time [1] Group 2 - The articles produced by Quipus Capital aim to provide valuable information for future investors while maintaining a healthy skepticism towards a generally bullish market [1]