On July 31, 2024, Energy Recovery Inc (ERII, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. Energy Recovery Inc is an engineering-driven technology company engaged in designing, manufacturing, and supplying solutions that enhance industrial process efficiency and sustainability. The company operates in three segments: Water, Emerging Technologies, and Corporate, with the majority of its revenue derived from the Water segment.
Performance Overview
Energy Recovery Inc (ERII, Financial) reported a revenue of $27.2 million for Q2 2024, exceeding the upper end of its guidance range of $20-$25 million and surpassing analyst estimates of $22.88 million. Despite this revenue growth, the company faced challenges with increased manufacturing costs, leading to a gross margin of 64.6%, a decrease of 80 basis points compared to Q2 2023.
Financial Achievements and Challenges
Energy Recovery Inc (ERII, Financial) achieved several financial milestones in Q2 2024:
- Revenue increased by 31% year-over-year, from $20.7 million in Q2 2023 to $27.2 million in Q2 2024.
- Operating expenses rose by 21.4% to $19.6 million, driven by investments in corporate growth strategy, sales and marketing, and executive transition costs.
- Net loss improved to $0.6 million from $1.7 million in Q2 2023.
- Adjusted EBITDA reached $5.2 million, a significant improvement from $0.2 million in Q2 2023.
Despite these achievements, the company reported a loss from operations of $2.0 million due to lower gross margins and higher operating expenses. The net loss per share was $0.01, better than the estimated loss of $0.11 per share.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Revenue | $27.2 million | $20.7 million | +31% |
| Gross Margin | 64.6% | 65.4% | -80 bps |
| Net Loss | ($0.6) million | ($1.7) million | +65% |
| Adjusted EBITDA | $5.2 million | $0.2 million | NM |
Commentary and Strategic Outlook
"Operationally, the second quarter played out as we expected and second quarter revenue of $27 million exceeded the top-end of our guidance of $20–$25 million. As we have stated since the beginning of the year, this year’s revenue cadence is heavily weighted to the third and fourth quarters, and we reaffirm our full-year revenue guidance of $140–$150 million." - David Moon, President and CEO
David Moon also highlighted the progress in the company's CO2 business, with nine second-generation PX G1300 deployments commissioned at both existing and new customer sites. The company is collecting crucial runtime data over the summer to drive commercial adoption of the PX G1300.
Financial Statements Summary
Energy Recovery Inc (ERII, Financial) reported total assets of $249.0 million as of June 30, 2024, with cash and investments amounting to $138.0 million. The company maintained a strong balance sheet with total liabilities of $30.5 million and stockholders' equity of $218.5 million.
In summary, Energy Recovery Inc (ERII, Financial) demonstrated robust revenue growth in Q2 2024, surpassing analyst estimates despite facing higher manufacturing costs. The company's strategic investments and operational improvements position it well for continued growth in the latter half of the year.
Explore the complete 8-K earnings release (here) from Energy Recovery Inc for further details.
