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 fourth quarter and full year 2025 earnings call. During today's call, Energy Recovery may make projections and other forward-looking ...

Core Viewpoint - Jacobs has been selected as the design-build contractor for a $200 million upgrade project at the San José–Santa Clara Regional Wastewater Facility, aimed at modernizing biosolids treatment infrastructure and enhancing renewable energy production [1][2]. Group 1: Project Details - The project will replace aged mesophilic digesters, reducing the amount of solids for offsite disposal and improving biogas conversion for the facility's cogeneration system [2][3]. - A new Fats, Oils & Grease (FOG) receiving station will be established to convert high-strength waste into clean energy, thereby reducing natural gas usage and greenhouse gas emissions [2][3]. - The innovative design approach may include the Microbial Hydrolysis Process (MHP), which is expected to increase biogas output by up to 36% and decrease biosolids production by as much as 74 wet tons per day [3]. Group 2: Strategic Importance - The upgrades are essential for supporting San José's growth in housing and jobs, ensuring reliable wastewater infrastructure to protect public health and economic vitality [3][5]. - Jacobs has over 25 years of experience in water design-build projects, having completed more than 150 projects, including significant modernizations at major wastewater facilities [5]. Group 3: Company Overview - Jacobs generates approximately $12 billion in annual revenue and employs nearly 43,000 people, providing comprehensive services across various sectors including water, energy, and environmental management [6].

Core Viewpoint - The inspection results indicate that the rectification of urban sewage treatment issues in Sichuan has achieved phased results, with significant improvements in the collection rate of domestic sewage and noticeable effects in the governance of black and odorous water bodies [1][2]. Group 1: Current Status of Sewage Treatment - The inspection team found that while some infrastructure gaps have been filled, there are still unresolved issues in urban sewage treatment, particularly regarding the inadequacy of collection facilities [2]. - Many sewage treatment plants are operating at a loss or only marginally profitable, with the volume of sewage generated in rapidly growing areas exceeding planned expectations, leading to overburdened facilities [2]. Group 2: Recommendations for Improvement - It is suggested to establish a provincial sewage treatment facility project database and enhance the technical standards for sewage pipeline construction [3]. - A comprehensive provincial survey of urban sewage pipelines should be conducted to create a unified digital management platform for sewage networks [3]. - There is a call for increased innovation and reform, including the establishment of a state-controlled, commercially operated sewage treatment platform to improve operational efficiency [3].

Core Insights - The CalCompetes tax incentive program, established in 2013, has awarded tax credits to over 1,200 companies, resulting in approximately 161,000 jobs created in California [3] - Recently, California awarded $99.9 million in tax credits to nine manufacturers, which is expected to generate over $370 million in investments and support an estimated 2,752 jobs with an average annual salary of $139,000 [9] Tax Credit Program Details - The state has around $308 million in CalCompetes tax credits available, with application periods set for January 5 to January 26, 2026, and March 2 to March 16, 2026 [5] - The latest round of awards includes companies from various sectors such as aerospace, wastewater treatment, data center infrastructure, and clothing design [3][4] Economic Growth Strategy - Governor Newsom's 10-year economic growth plan, "California Jobs First Economic Blueprint," aims to streamline business and workforce development to enhance job creation, particularly in the manufacturing sector [6] - The plan includes a $52 million investment in apprenticeships for high-demand sectors like advanced manufacturing and an additional $16 million for pre-apprenticeship programs targeting youth aged 16 to 24 [7]

Core Points - Aqua Indiana has initiated the expansion of its Midwest Wastewater Treatment Plant, marking a $28 million investment, which is the largest capital improvement project in the company's history in Indiana [1] - The expansion aims to increase capacity to meet the growing demand in the region while also focusing on environmental protection and long-term reliability [1]

Core Viewpoint - Decent Holding Inc. has successfully closed an $8 million registered offering to support its business expansion and technological development in wastewater treatment services in China [1][2]. Group 1: Offering Details - The registered offering consisted of 13,333,333 Class A ordinary shares priced at $0.60 per share, along with warrants to purchase 26,666,666 additional Class A ordinary shares at an exercise price of $0.66 [1][2]. - Total gross proceeds from the offering amounted to $8 million before expenses [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be allocated for business expansion, product research and development, promoting river water quality management services, upgrading wastewater treatment technologies, and recruiting talent [2]. Group 3: Legal and Regulatory Framework - The offering was conducted under an effective registration statement filed with the U.S. Securities and Exchange Commission (SEC) and became effective on November 6, 2025 [4]. - D. Boral Capital LLC served as the sole placement agent for the offering, with Ortoli Rosenstadt LLP and Crone Law Group, P.C. providing legal counsel [3]. Group 4: Company Overview - Decent Holding Inc. specializes in wastewater treatment, ecological river restoration, and microbial products for pollutant removal and water quality enhancement through its subsidiary, Shandong Dingxin Ecology Environmental Co., Ltd. [6].

Core Viewpoint - Decent Holding Inc. has announced a registered offering of US$8 million, consisting of 13,333,333 Class A ordinary shares priced at US$0.60 per share, along with warrants for additional shares, aimed at funding various business initiatives [1][2]. Group 1: Offering Details - The registered offering includes 13,333,333 Class A ordinary shares at a public offering price of US$0.60 per share, and warrants to purchase 26,666,666 Class A ordinary shares [1]. - The gross proceeds from the offering are expected to be approximately US$8 million before deducting commissions and offering expenses [1]. - The offering is expected to close on or about November 12, 2025, subject to customary closing conditions [1]. Group 2: Use of Proceeds - The net proceeds from the offering will be utilized for business expansion and launching additional offices [2]. - Funds will also be allocated for product research and development, promoting river water quality management services, and expanding river water treatment services [2]. - The company plans to invest in the development and upgrade of wastewater treatment technologies and recruit talents in research, development, and management [2]. Group 3: Legal and Regulatory Information - The offering is being conducted under an effective registration statement on Form F-1, which became effective on November 6, 2025 [4]. - The offering is made only by means of a prospectus that is part of the effective registration statement [4]. - D. Boral Capital LLC is acting as the sole placement agent for the offering, with Ortoli Rosenstadt LLP and Crone Law Group, P.C. serving as U.S. counsel [3].

Core Insights - The small cap growth market performed well in Q3, with significant gains driven by speculative companies with weak fundamentals, indicating a potential broadening of the rally in the future [2][4][20] Market Performance - The Russell 2000 Growth Index returned 12.2% in Q3, marking its second consecutive quarter of 12% returns, outperforming the S&P 500's 8.1% [5] - The majority of gains in the Russell 2000 Growth Index were attributed to speculative companies lacking profitability, particularly those with high P/E ratios [5][6] Fund Performance - The Osterweis Opportunity Fund gained 5.14% in Q3 but underperformed the index due to a focus on avoiding speculative stocks [6] - The fund's long-term performance has outpaced the index since its inception and over the past decade, emphasizing a valuation discipline approach [6] Sector Analysis - Underperformance in Q3 was primarily due to security selection in Health Care, Consumer Discretionary, and Information Technology sectors [7] - Health Care stocks, particularly PROCEPT BioRobotics, faced challenges due to management changes, while Artivion saw strong growth driven by its Onyx heart valve product [8][9] - In Consumer Discretionary, Duolingo's user growth stagnated, leading to an exit from the stock, while Boot Barn performed well but was exited due to valuation concerns [10][11] - Information Technology saw mixed results, with semiconductors performing well while traditional software companies faced negative sentiment [12][13] - Rambus was a standout in IT, reporting a 43% year-over-year growth in product revenue, driven by demand for its memory interface chips [14][15] Sector Allocation - Sector allocation had a minor negative impact on relative performance, with underweights in Financials and Communication Services being beneficial, while underweights in Industrials and Materials detracted from returns [19] Future Outlook - The expectation is for a shift away from speculative stocks towards companies demonstrating sales and earnings growth, with a favorable environment for small cap stocks due to accommodative Fed policies [20][21]

Core Insights - The Jiangbian Wastewater Treatment Plant Phase V project in Changzhou has been selected as one of the benchmark green low-carbon wastewater treatment facilities by the National Development and Reform Commission, positioning it among 41 nationwide projects [1] - Upon completion and third-party evaluation, it will become the second batch of green low-carbon benchmark plants in China, potentially making it the first dual-benchmark facility in Jiangsu Province [1] Group 1 - The green low-carbon benchmark plants initiative is a joint effort by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development, focusing on efficient pollution reduction, energy conservation, resource recycling, and innovative management [1] - Changzhou has been proactive in implementing green low-carbon concepts since the end of 2021, initiating the Phase V project to expand its wastewater treatment capacity by 200,000 tons per day and sludge treatment capacity by 600 tons per day [1] Group 2 - The project features multiple resource utilization aspects, including high-quality reclaimed water reuse, photovoltaic green electricity, biogas power generation, and sludge resource utilization for gas supply [2] - It is constructing the largest ecological safety buffer zone in the province, utilizing surrounding rivers to enhance water conservation and biodiversity, contributing to urban ecological civilization [2] - The construction of the Jiangbian Phase V project is progressing smoothly, with over 400 workers actively engaged, and various construction phases are closely coordinated [2]

Core Insights - Decent Holding Inc. reported a significant increase in total revenue, which rose by 147.3% to approximately $5.5 million for the first half of fiscal year 2025, compared to approximately $2.2 million in the prior-year period [4][5] - The company experienced substantial growth in river water quality management revenue, which surged by 187.4% to approximately $4.7 million, and product sales, which increased by 220.6% to $277,081 [6][5] - Despite the revenue growth, the company reported a net loss of approximately $0.5 million for the first half of 2025, compared to a net loss of $0.02 million in the same period of 2024 [5][9] Financial Performance - Total revenue increased by approximately $3.3 million, reflecting the company's resilience in a fluctuating economic environment [4] - Gross profit rose by 170.5% to approximately $1.5 million, with gross margin improving to 27.5% from 25.1% in the prior year [5][7] - Operating expenses jumped by 227.8% to approximately $2.0 million, primarily due to increased marketing fees and general administrative expenses [8] Revenue Breakdown - Revenue from wastewater treatment services increased slightly by 0.2% to $493,123, while associated costs rose by 19.2% [6] - Revenue from river water quality management climbed significantly, driven by successful project completions, with a gross profit margin of 27.6% [6][7] - Product sales revenue saw a substantial increase, with a gross profit margin of 41.7%, benefiting from local river water quality projects [6][7] Cash Position - As of April 30, 2025, the company had cash of $838,415, a decrease from $909,765 as of April 30, 2024 [10] - The net change in cash for the period was an increase of $431,384, despite cash used in operating and investing activities [20] Future Outlook - The company plans to accelerate the deployment of integrated treatment solutions across wider regions in China and deepen academic collaborations for next-generation technologies [3]