Energy Recovery (ERII) Q2 2025 earnings summary

Executive summary

• 2025 guidance reiterated on all metrics, with wastewater guidance reinstated due to improved tariff outlook.

• Q2 2025 revenue was $28.1 million, with net income of $2.1 million, a significant increase from a net loss in Q2 2024.

• Core desalination business remains resilient, with multiple large deals signed and strong revenue visibility for the year.

• Operating expenses decreased 15.8% year-over-year, driven by lower employee and consulting costs.

• Long-term growth conviction is increasing, driven by expanding desalination, water reuse, and CO2 refrigeration markets.

Financial highlights

• Q2 2025 net income was $2.1 million, or $0.04 per diluted share, compared to a net loss of $0.6 million in Q2 2024.

• Gross margin for Q2 2025 was 64.0%, down from 64.6% in Q2 2024, mainly due to product mix and tariffs.

• Operating margin improved to 5.3% from -7.4% in Q2 2024.

• Cash and investments at quarter end were $93.7 million.

• Announced an additional share repurchase program, bringing total authorizations in the past 10 months to $105 million, targeting over 10% of shares.

Outlook and guidance

• 2025 guidance maintained across all metrics, with wastewater guidance reinstated due to better-than-expected tariff impacts.

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

• Confident in 2026 outlook, with more specific guidance expected in the next quarter.

• Management reaffirmed expectations for quarterly revenue cadence in 2025.

• Long-term trends in water scarcity and regulatory drivers support continued growth.