Energy Recovery (ERII) Q3 Earnings call transcript Oct 30, 2024
2min read Energy Recovery reported a record third quarter with total revenue of $38.6 million, exceeding guidance and highlighting the company's strong position in the mega projects desalination space. The company's strategic focus on the Middle East and Africa continues to drive growth, with over 70% of revenue for the quarter coming from this region. Energy Recovery's new Chief Financial Officer, Mike Mancini, expressed confidence in the company's ability to create value for shareholders and drive financial results. The company's water revenue increased by 4% compared to the third quarter of 2023, driven by strong demand in the Middle East and North Africa, as well as in India. Notable desalination projects include the Perur project in Chennai, India, and the Hassyan IPP project in Dubai, UAE. Energy Recovery's CO2 business is also making progress, with the successful completion of lab testing for the second generation PX G and the installation of 11 sites across the U.S. and Europe. The company is on track to meet its goal of installing 30 to 50 sites by the end of the year. The company is hosting a live investor webinar on November 18, 2024, where members of the senior leadership team will present the company's strategic plans for desalination, wastewater, and CO2, including 2025 and 2026 guidance and long-term 2029 financial targets. Energy Recovery's operating expenses for the third quarter were below guidance, and the company is reducing its full-year operating expense guidance to $76 million to $78 million. The company is maintaining its revenue guidance of $140 million to $150 million for the year. Key shareholders and investors expressed interest in the competitive landscape in CO2 and the potential for share repurchases, to which Energy Recovery responded that they will discuss capital allocation strategies and growth plans during the upcoming investor webinar. Energy Recovery's strong financial position, with a cash balance of $140 million, positions the company well for continued growth and investment in its strategic initiatives. The company's focus on cost efficiency and strategic partnerships, particularly in the refrigeration market, is expected to drive further growth and innovation in the desalination and CO2 sectors. Energy Recovery's strategic plans for wastewater and its diversification strategy are also underway, with a significant increase in signed wastewater contracts and a focus on offsetting the impact of the NEOM project in Saudi Arabia. Despite concerns around the global economic activity and geopolitical issues, Energy Recovery remains optimistic about the long-term trends for fresh water demand and continues to see solid growth ahead. In conclusion, Energy Recovery's solid third quarter performance and strategic plans for growth highlight the company's strong position in the mega projects desalination space and its commitment to innovation and growth in the CO2 and wastewater sectors. The company's financial strength, coupled with its strategic partnerships and focus on cost efficiency, position it well for continued success in the coming years.
