Energy Recovery Exceeds Expectations in Q2, Revenue Up 3.1% YoY

Energy Recovery reported Q2 CY2025 results with revenue up 3.1% YoY to $28.05 million, exceeding analyst estimates. Non-GAAP profit was $0.07 per share, significantly above consensus estimates. The company's revenue growth has been tepid at 5.3% annually over the last five years, but its 15.2% growth over the last two years suggests accelerating demand. Analysts expect a 17.2% revenue growth over the next 12 months.

Energy Recovery Inc. (NASDAQ: ERII), a manufacturer of energy recovery devices for water treatment, oil and gas, and chemical processing sectors, reported its Q2 CY2025 results with revenue up 3.1% year-over-year (YoY) to $28.05 million, exceeding analyst estimates of $25.44 million. The company's non-GAAP profit per share of $0.07 significantly surpassed consensus estimates of $0.02.

Over the past five years, Energy Recovery's annualized revenue growth was relatively tepid at 5.3%, but this quarter's 3.1% YoY growth marked a 10.3% beat over analyst estimates. This performance is a positive sign, especially considering the company's accelerating demand, with a 15.2% growth rate over the last two years. Analysts expect a 17.2% revenue growth over the next 12 months, indicating a potential surge in top-line performance driven by newer products and services.

Operating margin for Energy Recovery improved to 5.3% from -7.4% in the same quarter last year, while adjusted EBITDA climbed to $4.4 million, up from $1 million, and operating margin margin increased by 12.7 percentage points year-on-year. These gains suggest the company is becoming more efficient with expenses.

Earnings per share (EPS) grew at an 8.6% compounded annual growth rate over the last five years, higher than its revenue growth rate. This quarter, Energy Recovery reported adjusted EPS of $0.07, down from $0.09 in the same quarter last year, but still above analyst estimates. Over the next 12 months, analysts expect Energy Recovery's full-year EPS to grow 16%.

The stock traded up 5% to $14.29 immediately after the report, reflecting investor confidence in the company's strong earnings and growth prospects.

Key Takeaways:
- Energy Recovery reported strong Q2 CY2025 results with revenue up 3.1% YoY, beating analyst estimates.
- The company's accelerating demand and revenue growth expectations indicate potential for significant top-line performance.
- Improving operating margins and EPS growth suggest the company is becoming more efficient and profitable.

References:
[1] https://finance.yahoo.com/news/energy-recovery-nasdaq-erii-surprises-214944500.html