Energy Recovery Exceeds Q2 Expectations, Analyst Questions Focus on Growth and Expansion

Energy Recovery's Q2 earnings call exceeded expectations, with sales and profitability surpassing Wall Street forecasts. Management attributed the performance to continued strength in the core desalination business and resilience to the macro environment. Analyst questions focused on contracted desalination capacity growth, pricing strategy for the next-generation PX product, CO2 refrigeration partnerships, entering the data center market, and the impact of lower tariffs in China.

Energy Recovery, Inc. (Nasdaq: ERII) announced its financial results for the second quarter and six months ended June 30, 2025, with revenue of $28.1 million, an increase of $0.9 million compared to the same period in 2024. This performance was driven by the timing of revenue from contracted projects and a decrease in operating expenses, leading to an income from operations of $1.5 million, an increase of 173.2% over the previous year. The company also reported a net income of $2.1 million and adjusted EBITDA of $4.4 million, reflecting strong operational efficiency [1].

The company's gross margin decreased to 64.0% from 64.6% in the same period last year, primarily due to costs related to product mix and tariffs. Operating expenses were $16.5 million, a decrease of 15.8% compared to the previous year, driven by lower employee and consulting costs. Management attributed the strong performance to continued strength in the core desalination business and resilience to the macro environment [1].

During the earnings call, analysts questioned Energy Recovery on various aspects of its business, including contracted desalination capacity growth, pricing strategy for the next-generation PX product, CO2 refrigeration partnerships, entering the data center market, and the impact of lower tariffs in China. Management responded by emphasizing the company's focus on expanding its desalination capacity and the potential for growth in the data center market [1].

Energy Recovery's forward-looking statements highlighted potential risks and uncertainties, including future demand for its products, performance by customers and third-party partners, and the timing of revenue. Despite these risks, the company's strong Q2 performance indicates a promising outlook for the remainder of 2025 [1].

References:
[1] https://www.businesswire.com/news/home/20250806026707/en/Energy-Recovery-Reports-its-Second-Quarter-2025-Financial-Results