Yahoo Finance Energy Recovery Inc (ERII) Misses Q1 Earnings Expectations Amid Rising Costs
Revenue: Reported at $12.1 million for Q1 2024, falling short of estimates of $13.5 million.
Net Loss: Increased to $8.3 million in Q1 2024 from $6.3 million in Q1 2023, above the estimated net loss of $7.8 million.
Earnings Per Share (EPS): Recorded at -$0.14, matching the estimated EPS of -$0.14.
Gross Margin: Decreased to 59.0% in Q1 2024 from 60.9% in Q1 2023, a drop of 190 basis points.
Operating Expenses: Rose by 11% to $18.1 million, driven by increased sales, marketing, and executive transition costs.
Free Cash Flow: Declined to $5.7 million from $8.4 million in the previous year.
Cash and Investments: Increased to $129.5 million, up from $122.4 million at the end of 2023.
On May 1, 2024, Energy Recovery Inc (NASDAQ:ERII) disclosed its financial outcomes for the first quarter ending March 31, 2024, through an 8-K filing. The company reported a revenue of $12.1 million, aligning with its prior guidance but falling short of the estimated $13.5 million. This represents a 10% decrease from the previous year's $13.4 million. The net loss widened to $8.3 million, or $0.14 per share, underperforming against the anticipated net loss of $7.8 million.
About Energy Recovery Inc
Energy Recovery Inc is a technology-driven company focused on creating solutions that enhance the efficiency and sustainability of industrial processes. The company operates primarily in the Water segment, offering energy recovery devices and related products to the global reverse osmosis desalination market. With its headquarters in the San Francisco Bay Area, Energy Recovery Inc serves a diverse international clientele.
Financial and Operational Highlights
The first quarter saw a decrease in gross margin to 59.0%, down by 190 basis points year-over-year, primarily due to increased manufacturing costs and higher inventory scrap. Operating expenses rose by 11% to $18.1 million, driven by heightened sales, marketing, and executive transition costs. This led to a loss from operations of $10.9 million. Despite these challenges, the company maintains a robust balance sheet with $129.5 million in cash and investments.
Management Commentary
David Moon, President and CEO of Energy Recovery, remarked on the quarter's performance, stating, "The first quarter was busy and unfolded as expected. We are on track with our full-year revenue guidance of $140-$150 million." He also highlighted progress in the CO2 business, including successful field tests and preparations for significant commercial adoption of the new PX G1300 system.
Detailed Financial Analysis
Year-over-year, the net loss per share deteriorated from $0.11 to $0.14. The adjusted net loss was slightly down by 4% to $4.6 million. The company generated $6.5 million in cash from operations, a decrease from $8.7 million in the previous year. The adjusted EBITDA also reflected a loss of $6.2 million, worsening from a $4.8 million loss in Q1 2023.
Strategic Outlook and Forward Guidance
Energy Recovery Inc remains committed to achieving its financial and operational targets for 2024. With 60% of its mid-point revenue guidance already secured through contracts, the company is optimistic about its performance for the remaining year. The focus will be on executing strategic goals and capitalizing on new opportunities in its CO2 business.
Overall, while the first quarter results did not meet analyst expectations, Energy Recovery Inc is taking strategic steps to navigate through operational challenges and position itself for future growth. Investors and stakeholders will be watching closely as the company progresses towards its stated objectives for the year.
Investor Relations and Additional Information
Investors can access more details on the financial results and listen to the earnings call replay through the investor relations section of Energy Recovery's website. This will provide further insights into the company's strategy and operational nuances.
For more detailed financial analysis and future updates on Energy Recovery Inc, stay tuned to GuruFocus.com.
Explore the complete 8-K earnings release (here) from Energy Recovery Inc for further details.
This article first appeared on GuruFocus.
