Energy Recovery(ERII) - 2025 Q3 - Quarterly Results

Revenue Performance - Q3 2025 revenue was $32.0 million, a decrease of 17% compared to Q3 2024's $38.6 million, attributed to the timing of revenue from contracted projects[4] - Total revenue for the three months ended September 30, 2025, was $32,000,000, down 17% from $38,584,000 in 2024[21] - The Megaproject segment revenue decreased by 37% to $18,400,000 in Q3 2025 compared to $29,009,000 in Q3 2024[21] Profitability Metrics - Gross margin for Q3 2025 was 64.2%, down 90 basis points from 65.1% in Q3 2024, primarily due to product mix costs and tariffs[5] - Operating margin decreased to 11.4% in Q3 2025 from 18.3% in Q3 2024, reflecting a 690 basis point decline[4] - Adjusted operating margin for Q3 2025 was 18.3%, down 920 basis points from 27.5% in Q3 2024[6] - Net income for Q3 2025 was $3.9 million, down 54% from $8.5 million in Q3 2024, with net income per share decreasing from $0.15 to $0.07[4] - Adjusted net income for Q3 2025 was $6.3 million, a 47% decrease from $12.0 million in Q3 2024[6] - The company reported an adjusted EBITDA of $6.8 million for Q3 2025, down from $11.6 million in Q3 2024[6] - The company reported a free cash flow of $(3,500,000) for Q3 2025, compared to $(3,200,000) in Q3 2024[26] Operating Expenses and Cash Flow - Operating expenses for Q3 2025 were $16.9 million, a decrease of 6.4% compared to Q3 2024, mainly due to lower employee costs[5] - Cash flows from operating activities for the nine months ended September 30, 2025, were $11,693,000, slightly up from $11,567,000 in 2024[20] - The company had a net cash provided by investing activities of $37,012,000 for the nine months ended September 30, 2025, compared to a net cash used of $22,171,000 in 2024[20] Balance Sheet and Assets - Cash and investments totaled $79.9 million as of September 30, 2025, down from $99.9 million at the end of 2024[16] - Total assets decreased to $209.6 million as of September 30, 2025, from $242.8 million at the end of 2024[16] Losses and Financial Position - For the nine months ended September 30, 2025, the company reported a net loss of $3,952,000 compared to a net loss of $421,000 in the same period of 2024[20] - Operating income for the nine months ended September 30, 2025, was a loss of $7,426,000, compared to a loss of $5,891,000 in the same period of 2024[22] Stock-Based Compensation - Stock-based compensation expense for Q3 2025 was $2,207,000, down from $2,412,000 in Q3 2024[24]