Energy Recovery (ERII) Q4 2025 earnings summary

Executive summary

• Focus has shifted fully to the water business, a large and profitable market with strong technology and market position.

• Q4 2025 revenue was $66.9 million, down $0.2 million from Q4 2024, mainly due to timing of contracted project revenue.

• CO2 retail grocery business is being wound down due to lack of scalable adoption and high risk, resulting in $7 million annual savings.

• Management is prioritizing performance optimization, cost control, and shareholder value.

• Operating expenses dropped 36.5% to $13.6 million in Q4 2025, driven by lower employee, consulting, and restructuring costs.

Outlook and guidance

• Revenue guidance for 2026 is $45 million at the midpoint, with three major projects expected to slip into 2027.

• Additional $15–$25 million in projects are considered at risk of delay, setting the lower end of guidance.

• Growth is expected to resume in 2027 based on pipeline and demand trends.

• Revenue cadence for 2026 is expected to be heavily back-end weighted, similar to 2025.

• Management released a shareholder letter discussing business and financial updates and the outlook for 2026.

Segment performance

• Water business remains the core focus, with continued investment in innovation and wastewater growth.

• Water segment generated $134.7 million in revenue for 2025, with Emerging Technologies contributing $285,000.

• Wastewater segment expected to grow, with recent sales hires and a focus on building reference cases in key regions.

• CO2 business wind-down includes a reduction of about 20 employees and is expected to yield cost savings.

• Water segment operating income was $67.4 million for 2025, while Emerging Technologies and Corporate segments posted operating losses.