Energy Recovery (ERII) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 31% year-over-year to $27.2 million, driven by strong Water segment performance and higher shipments in the Middle East, Africa, and Asia.

• Gross margin was 64.6% in Q2 2024, slightly down from Q2 2023 due to higher manufacturing costs.

• Operating expenses rose 21.4% year-over-year, primarily from consulting, compensation, and executive transition costs.

• Net loss narrowed to $0.6 million in Q2 2024, a significant improvement from $1.7 million in Q2 2023.

• Appointment of Michael Mancini as new CFO, effective August 5, to support expansion and strategic planning.

Financial highlights

• Q2 2024 revenue: $27.2 million (up from $20.7 million in Q2 2023); six-month revenue: $39.3 million.

• Gross margin: 64.6% in Q2 2024; full-year guidance remains at 64%-67%.

• Q2 2024 net loss: $0.6 million; adjusted EBITDA: $5.2 million; free cash flow: $7.9 million.

• Operating expenses for Q2 2024: $19.6 million, up 21.4% year-over-year.

• Cash and investments totaled $138.0 million at quarter end.

Outlook and guidance

• Full-year 2024 revenue guidance reaffirmed at $140–$150 million.

• Q3 water revenue projected at $35–$39 million; Q4 at $66–$72 million.

• Operating expense guidance maintained at $78–$80 million, including $7 million in one-time costs.

• Management expects cash, investments, and operating cash flow to meet liquidity needs for at least 12 months.

• Commercial adoption of PX G1300 in CO2 business depends on summer runtime data.