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Energy Recovery Reports Third Quarter Financial Results

·14-min read


San Leandro, 10/29/2020 / 16:02, EST/EDT - EQS Newswire - Energy Recovery


SAN LEANDRO, CA / ACCESSWIRE / October 29, 2020 / Energy Recovery Inc. (Nasdaq:ERII) ("Energy Recovery," "we," "our," or the "Company"), a leader in pressure energy technology for industrial fluid flows, today announced its financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

Year-to-Date 2020 Highlights:

"We surpassed our previous year's quarterly product revenue record by 26 percent this quarter, which is a testament to our singular focus on meeting customer demand while keeping our employees safe. We remain on pace to achieve 25 percent year-over-year revenue growth in our water division this year, and we are preparing for further growth in 2021 and beyond. The desalination industry remains robust despite global economic uncertainty because affordable desalination is critical to meet growing water demand for people around the world. We are proud of the impact our technology has in making desalination more energy efficient and sustainable and believe the time has come to introduce pressure exchanger technology to other industries where we can drive efficiency improvements," said Bob Mao, Chairman of the Board, President and Chief Executive Officer of Energy Recovery.

Mr. Mao continued, "Today we are advancing new products built on our pressure exchanger technology platform: the VorTeq, as well as incubation initiatives including a solution to improve the energy efficiency of wastewater treatment. We did not have an opportunity to go to a live well with the VorTeq last quarter, but we are ready to deploy and continue to pursue live well opportunities. While we remain confident in our ability to clear the hurdles that remain before full commercial deployment of the VorTeq, we have not lost sight of the need to produce results or stop investing. This same principle holds for all of our incubation initiatives, and I believe this disciplined approach will allow us to more rapidly achieve our profit and ROI objectives and deliver shareholder value."

COVID-19 Pandemic

The Company's production remained strong during the third quarter, with minimal impacts on production outputs due to the COVID-19 pandemic ("COVID-19"). COVID-19 has similarly had a limited effect on Energy Recovery's financials; however, the Company's gross margin for the nine months of 2020 was negatively affected due to reduced production output while its San Leandro facility was underutilized due to temporary suspension of manufacturing activities at the beginning of the COVID-19 pandemic. Enhanced safety measures for employees remain in effect today in the Company's facilities, including staggered shifts to ensure social distancing between workers, personal safety equipment for each worker, including masks and gloves, cleanings and disinfections between and during shifts, and, starting in July 2020, weekly COVID-19 testing of employees working on-site.

The Company successfully overcame challenges posed by COVID-19 to commission its Tracy, California production facility in July 2020, which further strengthens the Company's ability to fulfill its strong backlog of orders through the remainder of fiscal year 2020 and beyond.

Third Quarter 2020

Revenues

For the third quarter ended September 30, 2020, the Water segment generated total product revenue of $27.4 million, an all-time quarterly record, and an increase of $5.7 million, or 26%, compared to $21.8 million in the third quarter ended September 30, 2019. This increase was due primarily to higher Mega-Project Development ("MPD") shipments, offset by lower Original Equipment Manufacturer ("OEM") and Aftermarket ("AM") shipments.

For the third quarter ended September 30, 2020, there was no license and development revenue recognized as a result of the termination of the license agreement between the Company and Schlumberger.

Product Gross Margin

For the third quarter ended September 30, 2020, product gross margin was 71.5%, a decrease of 360 basis points from 75.1% in the third quarter ended September 30, 2019. The decrease in gross margin was due primarily to lower average selling prices due to higher MPD channel mix and costs related to reduced utilization of our manufacturing facilities related to COVID-19, partially offset by product mix.

Operating Expenses

For the third quarter ended September 30, 2020, operating expenses were $13.5 million, a decrease of $1.3 million, or (9%), compared to $14.9 million for the third quarter ended September 30, 2019. This decrease was due primarily to lower Oil & Gas testing expenditures as we reduce VorTeq related testing activities, lower depreciation expense related to long-lived assets, and lower travel expenses, partially offset by higher personnel-related costs and other R&D costs to support our incubation initiatives.

COVID-19 did not have a material effect on operating expenditures during the three months ended September 30, 2020.

Bottom Line Summary

To summarize the Company's financial performance, on a quarterly basis, the Company reported a net income of $5.4 million, or $0.10 per diluted share for the third quarter ended September 30, 2020, compared to a net income of $5.1 million, or $0.09 per diluted share for the third quarter ended September 30, 2019.

Cash Flow Highlights

The Company finished the third quarter ended September 30, 2020 with cash and cash equivalents of $80.1 million, and short-term and long-term investments of $25.8 million, which represents a combined total of $105.9 million.

Forward-Looking Statements

Certain matters discussed in this press release and on the conference call are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the Company's belief that the Company will achieve 25 percent year-over-year revenue growth in its water division in 2020; that the Company will achieve further growth in 2021 and beyond; and that the Company will be able to clear the hurdles that remain before full commercial deployment of the VorTeq. These forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. Potential risks and uncertainties include any other factors that may have been discussed herein regarding the risks and uncertainties of the Company's business, and the risks discussed under "Risk Factors" in the Company's Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") for the year ended December 31, 2019 as well as other reports filed by the Company with the SEC from time to time. Because such forward-looking statements involve risks and uncertainties, the Company's actual results may differ materially from the predictions in these forward-looking statements. All forward-looking statements are made as of today, and the Company assumes no obligation to update such statements.

Conference Call to Discuss Third Quarter 2020 Financial Results

LIVE CONFERENCE CALL:

Thursday, October 29, 2020, 2:00 PM PDT / 5:00 PM EDT
Listen-only, US / Canada Toll-Free: +1 (877) 709-8150
Listen-only, Local / International Toll: +1 (201) 689-8354
Access code: 13710080

CONFERENCE CALL REPLAY:

Expiration: Sunday, November 29, 2020
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13710080

Investors may also access the live call or the replay over the internet at ir.energyrecovery.com. The replay will be available approximately three hours after the live call concludes.

Disclosure Information

Energy Recovery uses the investor relations section on its website as means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Energy Recovery's investor relations website in addition to following Energy Recovery's press releases, SEC filings, and public conference calls and webcasts.

About Energy Recovery Inc.

For more than 20 years, Energy Recovery, Inc. (NASDAQ: ERII) has created technologies that solve complex challenges in industrial fluid-flow markets. We design and manufacture solutions that reduce waste, improve operational efficiencies, and lower the production costs of clean water and oil and gas. What began as a game-changing invention for water desalination has grown into a global business delivering solutions that enable more affordable access to these critical resources. Headquartered in the San Francisco Bay Area, Energy Recovery has manufacturing, research and development facilities across California and Texas. In addition, our worldwide sales and technical service organization provides on-site support for our line of water solutions. For more information, please visit www.energyrecovery.com.

Contact

Investor Relations
ir@energyrecovery.com
(281) 962-8105

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

SOURCE: Energy Recovery Inc. via EQS Newswire



10/29/2020 EQS Newswire / EQS Group AG


 

 

September 30,2020

 

 

December 31,2019

 

 

 

(In thousands)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

80,149

 

 

26,387

 

Short-term investments

 

 

24,373

 

 

 

58,736

 

Accounts receivable, net

 

 

11,055

 

 

 

12,979

 

Inventories, net

 

 

10,662

 

 

 

10,317

 

Prepaid expenses and other current assets

 

 

4,959

 

 

 

4,548

 

Total current assets

 

 

131,198

 

 

 

112,967

 

Long-term investments

 

 

1,418

 

 

 

15,419

 

Deferred tax assets, non-current

 

 

11,454

 

 

 

16,897

 

Property and equipment, net

 

 

20,535

 

 

 

18,843

 

Operating lease, right of use asset

 

 

16,444

 

 

 

11,195

 

Goodwill

 

 

12,790

 

 

 

12,790

 

Other intangible assets, net

 

 

53

 

 

 

65

 

Other assets, non-current

 

 

645

 

 

 

598

 

Total assets

 

194,537

 

 

188,774

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

1,951

 

 

1,192

 

Accrued expenses and other current liabilities

 

 

8,654

 

 

 

9,869

 

Lease liabilities

 

 

1,209

 

 

 

1,023

 

Contract liabilities

 

 

1,160

 

 

 

15,746

 

Total current liabilities

 

 

12,974

 

 

 

27,830

 

Lease liabilities, non-current

 

 

16,802

 

 

 

11,533

 

Contract liabilities, non-current

 

 

104

 

 

 

13,120

 

Other non-current liabilities

 

 

672

 

 

 

278

 

Total liabilities

 

 

30,552

 

 

 

52,761

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

61

 

 

 

61

 

Additional paid-in capital

 

 

174,929

 

 

 

170,028

 

Accumulated other comprehensive income (loss)

 

 

100

 

 

 

(37

)

Treasury stock

 

 

(30,486

)

 

 

(30,486

)

Accumulated earnings (deficit)

 

 

19,381

 

 

 

(3,553

)

Total stockholders' equity

 

 

163,985

 

 

 

136,013

 

Total liabilities and stockholders' equity

 

194,537

 

 

188,774

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(In thousands, except per share data)

 

Product revenue

 

27,408

 

 

21,752

 

 

65,665

 

 

57,050

 

Product cost of revenue

 

 

7,816

 

 

 

5,425

 

 

 

20,049

 

 

 

15,843

 

Product gross profit

 

 

19,592

 

 

 

16,327

 

 

 

45,616

 

 

 

41,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

3,098

 

 

 

26,895

 

 

 

10,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

6,271

 

 

 

5,711

 

 

 

18,751

 

 

 

16,790

 

Sales and marketing

 

 

2,141

 

 

 

2,367

 

 

 

5,776

 

 

 

6,710

 

Research and development

 

 

5,098

 

 

 

6,620

 

 

 

18,159

 

 

 

16,354

 

Amortization of intangible assets

 

 

4

 

 

 

156

 

 

 

12

 

 

 

469

 

Impairment of long-lived assets

 

 

-

 

 

 

-

 

 

 

2,332

 

 

 

-

 

Total operating expenses

 

 

13,514

 

 

 

14,854

 

 

 

45,030

 

 

 

40,323

 

Income from operations

 

 

6,078

 

 

 

4,571

 

 

 

27,481

 

 

 

11,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

134

 

 

 

500

 

 

 

809

 

 

 

1,551

 

Other non-operating expense, net

 

 

(29

)

 

 

(5

)

 

 

(59

)

 

 

(77

)

Total other income, net

 

 

105

 

 

 

495

 

 

 

750

 

 

 

1,474

 

Income before income taxes

 

 

6,183

 

 

 

5,066

 

 

 

28,231

 

 

 

12,749

 

Provision for (benefit from) income taxes

 

 

796

 

 

 

(83

)

 

 

5,297

 

 

 

1,227

 

Net income

 

5,387

 

 

5,149

 

 

22,934

 

 

11,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.10

 

 

0.09

 

 

0.41

 

 

0.21

 

Diluted

 

0.10

 

 

0.09

 

 

0.41

 

 

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,692

 

 

 

54,975

 

 

 

55,573

 

 

 

54,594

 

Diluted

 

 

56,471

 

 

 

56,384

 

 

 

56,443

 

 

 

55,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

22,934

 

 

11,522

 

Adjustments to reconcile net income to cash provided by operating activities

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

3,672

 

 

 

4,425

 

Depreciation and amortization

 

 

3,963

 

 

 

3,440

 

Amortization (accretion) of premiums and discounts on investments

 

 

311

 

 

 

(37

)

Deferred income taxes

 

 

5,443

 

 

 

1,198

 

Provision for warranty claims

 

 

316

 

 

 

339

 

Impairment of long-lived assets

 

 

2,332

 

 

 

-

 

Other non-cash adjustments

 

 

-

 

 

 

197

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

1,862

 

 

 

(10,617

)

Contract assets

 

 

(747

)

 

 

2,993

 

Inventories, net

 

 

(506

)

 

 

(1,885

)

Prepaid and other assets

 

 

295

 

 

 

383

 

Accounts payable

 

 

656

 

 

 

(94

)

Accrued expenses and other liabilities

 

 

(2,561

)

 

 

(1,264

)

Income taxes

 

 

(18

)

 

 

30

 

Contract liabilities

 

 

(27,602

)

 

 

(10,127

)

Net cash provided by operating activities

 

 

10,350

 

 

 

503

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Sales of marketable securities

 

 

10,573

 

 

 

3,535

 

Maturities of marketable securities

 

 

50,467

 

 

 

70,040

 

Purchases of marketable securities

 

 

(12,855

)

 

 

(66,253

)

Capital expenditures

 

 

(6,019

)

 

 

(5,501

)

Net cash provided by investing activities

 

 

42,166

 

 

 

1,821

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

1,260

 

 

 

5,424

 

Tax payment for employee shares withheld

 

 

(23

)

 

 

(89

)

Net cash provided by financing activities

 

 

1,237

 

 

 

5,335

 

Effect of exchange rate differences on cash and cash equivalents

 

 

11

 

 

 

-

 

Net change in cash, cash equivalents and restricted cash

 

 

53,764

 

 

 

7,659

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

26,488

 

 

 

22,138

 

Cash, cash equivalents and restricted cash, end of period

 

80,252

 

 

29,797

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

Three Months Ended September 30, 2019

 

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

 

(In thousands)

 

Product revenue

 

27,408

 

 

-

 

 

-

 

 

27,408

 

 

21,752

 

 

-

 

 

-

 

 

21,752

 

Product cost of revenue

 

 

7,816

 

 

 

-

 

 

 

-

 

 

 

7,816

 

 

 

5,425

 

 

 

-

 

 

 

-

 

 

 

5,425

 

Product gross profit

 

 

19,592

 

 

 

-

 

 

 

-

 

 

 

19,592

 

 

 

16,327

 

 

 

-

 

 

 

-

 

 

 

16,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,098

 

 

 

-

 

 

 

3,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

606

 

 

 

439

 

 

 

5,226

 

 

 

6,271

 

 

 

359

 

 

 

431

 

 

 

4,921

 

 

 

5,711

 

Sales and marketing

 

 

1,507

 

 

 

30

 

 

 

604

 

 

 

2,141

 

 

 

1,850

 

 

 

92

 

 

 

425

 

 

 

2,367

 

Research and development

 

 

723

 

 

 

2,956

 

 

 

1,419

 

 

 

5,098

 

 

 

886

 

 

 

5,667

 

 

 

67

 

 

 

6,620

 

Amortization of intangible assets

 

 

4

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

156

 

 

 

-

 

 

 

-

 

 

 

156

 

Total operating expenses

 

 

2,840

 

 

 

3,425

 

 

 

7,249

 

 

 

13,514

 

 

 

3,251

 

 

 

6,190

 

 

 

5,413

 

 

 

14,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

16,752

 

 

(3,425

)

 

(7,249

)

 

 

6,078

 

 

13,076

 

 

(3,092

)

 

(5,413

)

 

 

4,571

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

495

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

6,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

 

(In thousands)

 

Product revenue

 

65,665

 

 

-

 

 

-

 

 

65,665

 

 

56,946

 

 

104

 

 

-

 

 

57,050

 

Product cost of revenue

 

 

20,049

 

 

 

-

 

 

 

-

 

 

 

20,049

 

 

 

15,655

 

 

 

188

 

 

 

-

 

 

 

15,843

 

Product gross profit (loss)

 

 

45,616

 

 

 

-

 

 

 

-

 

 

 

45,616

 

 

 

41,291

 

 

 

(84

)

 

 

-

 

 

 

41,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

26,895

 

 

 

-

 

 

 

26,895

 

 

 

-

 

 

 

10,391

 

 

 

-

 

 

 

10,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

1,467

 

 

 

1,601

 

 

 

15,683

 

 

 

18,751

 

 

 

1,456

 

 

 

1,207

 

 

 

14,127

 

 

 

16,790

 

Sales and marketing

 

 

4,307

 

 

 

106

 

 

 

1,363

 

 

 

5,776

 

 

 

5,058

 

 

 

674

 

 

 

978

 

 

 

6,710

 

Research and development

 

 

2,585

 

 

 

12,720

 

 

 

2,854

 

 

 

18,159

 

 

 

2,794

 

 

 

13,335

 

 

 

225

 

 

 

16,354

 

Amortization of intangible assets

 

 

12

 

 

 

-

 

 

 

-

 

 

 

12

 

 

 

469

 

 

 

-

 

 

 

-

 

 

 

469

 

Impairment of long-lived assets

 

 

-

 

 

 

2,332

 

 

 

-

 

 

 

2,332

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total operating expenses

 

 

8,371

 

 

 

16,759

 

 

 

19,900

 

 

 

45,030

 

 

 

9,777

 

 

 

15,216

 

 

 

15,330

 

 

 

40,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

37,245

 

 

10,136

 

 

(19,900

)

 

 

27,481

 

 

31,514

 

 

(4,909

)

 

(15,330

)

 

 

11,275

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,474

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

28,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,749

 

 

 

September 30,2020

 

 

December 31,2019

 

 

 

(In thousands)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

80,149

 

 

26,387

 

Short-term investments

 

 

24,373

 

 

 

58,736

 

Accounts receivable, net

 

 

11,055

 

 

 

12,979

 

Inventories, net

 

 

10,662

 

 

 

10,317

 

Prepaid expenses and other current assets

 

 

4,959

 

 

 

4,548

 

Total current assets

 

 

131,198

 

 

 

112,967

 

Long-term investments

 

 

1,418

 

 

 

15,419

 

Deferred tax assets, non-current

 

 

11,454

 

 

 

16,897

 

Property and equipment, net

 

 

20,535

 

 

 

18,843

 

Operating lease, right of use asset

 

 

16,444

 

 

 

11,195

 

Goodwill

 

 

12,790

 

 

 

12,790

 

Other intangible assets, net

 

 

53

 

 

 

65

 

Other assets, non-current

 

 

645

 

 

 

598

 

Total assets

 

194,537

 

 

188,774

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

1,951

 

 

1,192

 

Accrued expenses and other current liabilities

 

 

8,654

 

 

 

9,869

 

Lease liabilities

 

 

1,209

 

 

 

1,023

 

Contract liabilities

 

 

1,160

 

 

 

15,746

 

Total current liabilities

 

 

12,974

 

 

 

27,830

 

Lease liabilities, non-current

 

 

16,802

 

 

 

11,533

 

Contract liabilities, non-current

 

 

104

 

 

 

13,120

 

Other non-current liabilities

 

 

672

 

 

 

278

 

Total liabilities

 

 

30,552

 

 

 

52,761

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock

 

 

61

 

 

 

61

 

Additional paid-in capital

 

 

174,929

 

 

 

170,028

 

Accumulated other comprehensive income (loss)

 

 

100

 

 

 

(37

)

Treasury stock

 

 

(30,486

)

 

 

(30,486

)

Accumulated earnings (deficit)

 

 

19,381

 

 

 

(3,553

)

Total stockholders' equity

 

 

163,985

 

 

 

136,013

 

Total liabilities and stockholders' equity

 

194,537

 

 

188,774

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(In thousands, except per share data)

 

Product revenue

 

27,408

 

 

21,752

 

 

65,665

 

 

57,050

 

Product cost of revenue

 

 

7,816

 

 

 

5,425

 

 

 

20,049

 

 

 

15,843

 

Product gross profit

 

 

19,592

 

 

 

16,327

 

 

 

45,616

 

 

 

41,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

3,098

 

 

 

26,895

 

 

 

10,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

6,271

 

 

 

5,711

 

 

 

18,751

 

 

 

16,790

 

Sales and marketing

 

 

2,141

 

 

 

2,367

 

 

 

5,776

 

 

 

6,710

 

Research and development

 

 

5,098

 

 

 

6,620

 

 

 

18,159

 

 

 

16,354

 

Amortization of intangible assets

 

 

4

 

 

 

156

 

 

 

12

 

 

 

469

 

Impairment of long-lived assets

 

 

-

 

 

 

-

 

 

 

2,332

 

 

 

-

 

Total operating expenses

 

 

13,514

 

 

 

14,854

 

 

 

45,030

 

 

 

40,323

 

Income from operations

 

 

6,078

 

 

 

4,571

 

 

 

27,481

 

 

 

11,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

134

 

 

 

500

 

 

 

809

 

 

 

1,551

 

Other non-operating expense, net

 

 

(29

)

 

 

(5

)

 

 

(59

)

 

 

(77

)

Total other income, net

 

 

105

 

 

 

495

 

 

 

750

 

 

 

1,474

 

Income before income taxes

 

 

6,183

 

 

 

5,066

 

 

 

28,231

 

 

 

12,749

 

Provision for (benefit from) income taxes

 

 

796

 

 

 

(83

)

 

 

5,297

 

 

 

1,227

 

Net income

 

5,387

 

 

5,149

 

 

22,934

 

 

11,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.10

 

 

0.09

 

 

0.41

 

 

0.21

 

Diluted

 

0.10

 

 

0.09

 

 

0.41

 

 

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,692

 

 

 

54,975

 

 

 

55,573

 

 

 

54,594

 

Diluted

 

 

56,471

 

 

 

56,384

 

 

 

56,443

 

 

 

55,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

22,934

 

 

11,522

 

Adjustments to reconcile net income to cash provided by operating activities

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

3,672

 

 

 

4,425

 

Depreciation and amortization

 

 

3,963

 

 

 

3,440

 

Amortization (accretion) of premiums and discounts on investments

 

 

311

 

 

 

(37

)

Deferred income taxes

 

 

5,443

 

 

 

1,198

 

Provision for warranty claims

 

 

316

 

 

 

339

 

Impairment of long-lived assets

 

 

2,332

 

 

 

-

 

Other non-cash adjustments

 

 

-

 

 

 

197

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

1,862

 

 

 

(10,617

)

Contract assets

 

 

(747

)

 

 

2,993

 

Inventories, net

 

 

(506

)

 

 

(1,885

)

Prepaid and other assets

 

 

295

 

 

 

383

 

Accounts payable

 

 

656

 

 

 

(94

)

Accrued expenses and other liabilities

 

 

(2,561

)

 

 

(1,264

)

Income taxes

 

 

(18

)

 

 

30

 

Contract liabilities

 

 

(27,602

)

 

 

(10,127

)

Net cash provided by operating activities

 

 

10,350

 

 

 

503

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Sales of marketable securities

 

 

10,573

 

 

 

3,535

 

Maturities of marketable securities

 

 

50,467

 

 

 

70,040

 

Purchases of marketable securities

 

 

(12,855

)

 

 

(66,253

)

Capital expenditures

 

 

(6,019

)

 

 

(5,501

)

Net cash provided by investing activities

 

 

42,166

 

 

 

1,821

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

 

1,260

 

 

 

5,424

 

Tax payment for employee shares withheld

 

 

(23

)

 

 

(89

)

Net cash provided by financing activities

 

 

1,237

 

 

 

5,335

 

Effect of exchange rate differences on cash and cash equivalents

 

 

11

 

 

 

-

 

Net change in cash, cash equivalents and restricted cash

 

 

53,764

 

 

 

7,659

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

26,488

 

 

 

22,138

 

Cash, cash equivalents and restricted cash, end of period

 

80,252

 

 

29,797

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

Three Months Ended September 30, 2019

 

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

 

(In thousands)

 

Product revenue

 

27,408

 

 

-

 

 

-

 

 

27,408

 

 

21,752

 

 

-

 

 

-

 

 

21,752

 

Product cost of revenue

 

 

7,816

 

 

 

-

 

 

 

-

 

 

 

7,816

 

 

 

5,425

 

 

 

-

 

 

 

-

 

 

 

5,425

 

Product gross profit

 

 

19,592

 

 

 

-

 

 

 

-

 

 

 

19,592

 

 

 

16,327

 

 

 

-

 

 

 

-

 

 

 

16,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,098

 

 

 

-

 

 

 

3,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

606

 

 

 

439

 

 

 

5,226

 

 

 

6,271

 

 

 

359

 

 

 

431

 

 

 

4,921

 

 

 

5,711

 

Sales and marketing

 

 

1,507

 

 

 

30

 

 

 

604

 

 

 

2,141

 

 

 

1,850

 

 

 

92

 

 

 

425

 

 

 

2,367

 

Research and development

 

 

723

 

 

 

2,956

 

 

 

1,419

 

 

 

5,098

 

 

 

886

 

 

 

5,667

 

 

 

67

 

 

 

6,620

 

Amortization of intangible assets

 

 

4

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

156

 

 

 

-

 

 

 

-

 

 

 

156

 

Total operating expenses

 

 

2,840

 

 

 

3,425

 

 

 

7,249

 

 

 

13,514

 

 

 

3,251

 

 

 

6,190

 

 

 

5,413

 

 

 

14,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

16,752

 

 

(3,425

)

 

(7,249

)

 

 

6,078

 

 

13,076

 

 

(3,092

)

 

(5,413

)

 

 

4,571

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

495

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

6,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

Water

 

 

Oil & Gas

 

 

Corporate

 

 

Total

 

 

 

(In thousands)

 

Product revenue

 

65,665

 

 

-

 

 

-

 

 

65,665

 

 

56,946

 

 

104

 

 

-

 

 

57,050

 

Product cost of revenue

 

 

20,049

 

 

 

-

 

 

 

-

 

 

 

20,049

 

 

 

15,655

 

 

 

188

 

 

 

-

 

 

 

15,843

 

Product gross profit (loss)

 

 

45,616

 

 

 

-

 

 

 

-

 

 

 

45,616

 

 

 

41,291

 

 

 

(84

)

 

 

-

 

 

 

41,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License and development revenue

 

 

-

 

 

 

26,895

 

 

 

-

 

 

 

26,895

 

 

 

-

 

 

 

10,391

 

 

 

-

 

 

 

10,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

1,467

 

 

 

1,601

 

 

 

15,683

 

 

 

18,751

 

 

 

1,456

 

 

 

1,207

 

 

 

14,127

 

 

 

16,790

 

Sales and marketing

 

 

4,307

 

 

 

106

 

 

 

1,363

 

 

 

5,776

 

 

 

5,058

 

 

 

674

 

 

 

978

 

 

 

6,710

 

Research and development

 

 

2,585

 

 

 

12,720

 

 

 

2,854

 

 

 

18,159

 

 

 

2,794

 

 

 

13,335

 

 

 

225

 

 

 

16,354

 

Amortization of intangible assets

 

 

12

 

 

 

-

 

 

 

-

 

 

 

12

 

 

 

469

 

 

 

-

 

 

 

-

 

 

 

469

 

Impairment of long-lived assets

 

 

-

 

 

 

2,332

 

 

 

-

 

 

 

2,332

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total operating expenses

 

 

8,371

 

 

 

16,759

 

 

 

19,900

 

 

 

45,030

 

 

 

9,777

 

 

 

15,216

 

 

 

15,330

 

 

 

40,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

37,245

 

 

10,136

 

 

(19,900

)

 

 

27,481

 

 

31,514

 

 

(4,909

)

 

(15,330

)

 

 

11,275

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,474

 

Income before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

28,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,749

 


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