(Mark One)
|
|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2018
|
|
or
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Delaware
|
01-0616867
|
(State or Other Jurisdiction of
|
(I.R.S. Employer
|
Incorporation or Organization)
|
Identification No.)
|
Title of Each Class
|
Name of Exchange on Which Registered
|
Common stock, $0.001 par value
|
The NASDAQ Stock Market LLC
|
Large accelerated filer ☐
|
Accelerated filer
þ
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
Emerging growth company ☐
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|
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|
|
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|
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Page
|
•
|
our belief that levels of gross profit margin are sustainable to the extent that volume grows, we experience a favorable product mix, pricing remains stable, and we continue to realize cost savings through production efficiencies and enhanced yields;
|
•
|
our plan to improve our existing energy recovery devices and to develop and manufacture new and enhanced versions of these devices;
|
•
|
our belief that our PX
®
energy recovery devices are the most cost-effective energy recovery devices over time and will result in low life-cycle costs;
|
•
|
our belief that our turbocharger devices have long operating lives;
|
•
|
our objective of finding new applications for our technology and developing new products for use outside of desalination, including oil & gas applications;
|
•
|
our expectation that our expenses for research and development
and sales and marketing
may increase as a result of diversification into markets outside of desalination;
|
•
|
our expectation that we will continue to rely on sales of our energy recovery devices in the desalination market for a substantial portion of our revenue and that new desalination markets, including the United States, will provide revenue opportunities to us;
|
•
|
our ability to meet projected new product development dates, anticipated cost reduction targets, or revenue growth objectives for new products;
|
•
|
our belief that we can commercialize the VorTeq
™
hydraulic fracturing system;
|
•
|
our belief that the VorTeq enables
oilfield service (“OFS”)
companies to migrate to more efficient pumping technology;
|
•
|
our belief that we will be able to enter into a long-term licensing agreement to bring the MTeq solution to market;
|
•
|
our belief that customers will accept and adopt our new products;
|
•
|
our belief that our current facilities will be adequate for the foreseeable future;
|
•
|
our expectation that sales outside of the United States will remain a
significant portion of our revenue;
|
•
|
the timing of our receipt of payment for products or services from our customers;
|
•
|
our belief that our existing cash balances and cash generated from our operations will be sufficient to meet our anticipated liquidity needs for the foreseeable future, with the exception of a decision to enter into an acquisition and/or fund investments in our latest technology arising from rapid market adoption that could require us to seek additional equity or debt financing;
|
•
|
our expectation that, as we expand our international sales, a portion of our revenue could be denominated in foreign currencies;
|
•
|
our expectations of the impact of the Tax Cuts and Jobs Act of 2017;
|
•
|
our belief that new markets will grow in the water desalination market;
|
•
|
our expectation that we will be able to enforce our intellectual property rights; and
|
•
|
other factors disclosed under Item 1 – Business, Item 1A – Risk Factors, Item 2 – Properties, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation, Item 7A – Quantitative and Qualitative Disclosures about Market Risks and elsewhere in this Form 10-K.
|
•
|
the necessity of coordinating geographically disparate organizations;
|
•
|
implementing common systems and controls;
|
•
|
integrating personnel with diverse business and cultural backgrounds;
|
•
|
integrating acquired research and manufacturing facilities, technology and products;
|
•
|
combining different corporate cultures and legal systems;
|
•
|
unanticipated expenses related to integration, including technical and operational integration;
|
•
|
increased costs and unanticipated liabilities, including with respect to registration, environmental, health and safety matters, that may affect sales and operating results;
|
•
|
retaining key employees;
|
•
|
obtaining required government and third-party approvals;
|
•
|
legal limitations in new jurisdictions;
|
•
|
installing effective internal controls and audit procedures;
|
•
|
issuing common stock that could dilute the interests of our existing stockholders;
|
•
|
spending cash and incurring debt;
|
•
|
assuming contingent liabilities; and
|
•
|
creating additional expenses.
|
•
|
authorize our Board of Directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock;
|
•
|
require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;
|
•
|
specify that special meetings of our stockholders can be called only by our Board of Directors, the chairman of the board, the chief executive officer, or the president;
|
•
|
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors;
|
•
|
establish that our Board of Directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered terms;
|
•
|
provide that our directors may be removed only for cause;
|
•
|
provide that vacancies on our Board of Directors may be filled only by a majority vote of directors then in office, even though less than a quorum;
|
•
|
specify that no stockholder is permitted to cumulate votes at any election of directors; and
|
•
|
require a super-majority of votes to amend certain of the above-mentioned provisions.
|
*
|
Graph represents the value of $100 invested on
December 31, 2013
in stock or index, including reinvestment of dividends as of the year ending December 31.
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
||||||||||||
Energy Recovery, Inc.
|
$
|
100.00
|
|
|
$
|
94.95
|
|
|
$
|
127.39
|
|
|
$
|
186.49
|
|
|
$
|
157.66
|
|
|
$
|
121.26
|
|
NASDAQ Composite Index
|
100.00
|
|
|
114.62
|
|
|
122.81
|
|
|
133.19
|
|
|
172.11
|
|
|
165.84
|
|
||||||
Peer Group
|
100.00
|
|
|
84.98
|
|
|
67.02
|
|
|
79.31
|
|
|
92.57
|
|
|
79.84
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017 (1)
|
|
2016 (1)
|
|
2015 (2)
|
|
2014 (2)
|
||||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
$
|
61,025
|
|
|
$
|
58,023
|
|
|
$
|
49,715
|
|
|
$
|
43,671
|
|
|
$
|
30,426
|
|
Product cost of revenue
|
17,873
|
|
|
19,061
|
|
|
17,849
|
|
|
19,111
|
|
|
13,713
|
|
|||||
Product gross profit
|
43,152
|
|
|
38,962
|
|
|
31,866
|
|
|
24,560
|
|
|
16,713
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
License and development revenue
|
13,490
|
|
|
11,106
|
|
|
8,069
|
|
|
1,042
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
General and administrative
|
21,476
|
|
|
17,354
|
|
|
16,626
|
|
|
19,773
|
|
|
14,139
|
|
|||||
Sales and marketing
|
7,546
|
|
|
9,391
|
|
|
9,116
|
|
|
9,326
|
|
|
10,525
|
|
|||||
Research and development
|
17,012
|
|
|
13,443
|
|
|
10,136
|
|
|
7,659
|
|
|
9,690
|
|
|||||
Amortization of intangible assets
|
630
|
|
|
631
|
|
|
631
|
|
|
635
|
|
|
842
|
|
|||||
Total operating expenses
|
46,664
|
|
|
40,819
|
|
|
36,509
|
|
|
37,393
|
|
|
35,196
|
|
|||||
Income (loss) from operations
|
9,978
|
|
|
9,249
|
|
|
3,426
|
|
|
(11,791
|
)
|
|
(18,483
|
)
|
|||||
Other income (expense), net
|
1,462
|
|
|
680
|
|
|
287
|
|
|
(181
|
)
|
|
69
|
|
|||||
Income (loss) before income taxes
|
11,440
|
|
|
9,929
|
|
|
3,713
|
|
|
(11,972
|
)
|
|
(18,414
|
)
|
|||||
(Benefit from) provision for income taxes
|
(10,653
|
)
|
|
(8,425
|
)
|
|
(6
|
)
|
|
(334
|
)
|
|
291
|
|
|||||
Net income (loss)
|
$
|
22,093
|
|
|
$
|
18,354
|
|
|
$
|
3,719
|
|
|
$
|
(11,638
|
)
|
|
$
|
(18,705
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.07
|
|
|
$
|
(0.22
|
)
|
|
$
|
(0.36
|
)
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.33
|
|
|
$
|
0.07
|
|
|
$
|
(0.22
|
)
|
|
$
|
(0.36
|
)
|
Number of shares used in per share calculation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
53,764
|
|
|
53,701
|
|
|
52,341
|
|
|
52,151
|
|
|
51,675
|
|
|||||
Diluted
|
55,338
|
|
|
55,612
|
|
|
55,451
|
|
|
52,151
|
|
|
51,675
|
|
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017 (1) (3)
|
|
2016 (2)
|
|
2015 (4)
|
|
2014 (4)
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Consolidated Balance Sheets
Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
21,955
|
|
|
$
|
27,780
|
|
|
$
|
61,364
|
|
|
$
|
99,931
|
|
|
$
|
15,501
|
|
Short-term investments
|
73,338
|
|
|
70,020
|
|
|
39,073
|
|
|
257
|
|
|
13,072
|
|
|||||
Long-term investments
|
1,269
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|||||
Total assets
|
179,841
|
|
|
164,485
|
|
|
$
|
148,679
|
|
|
151,799
|
|
|
85,941
|
|
||||
Long-term liabilities
|
39,331
|
|
|
42,231
|
|
|
57,307
|
|
|
72,116
|
|
|
4,501
|
|
|||||
Total liabilities
|
66,463
|
|
|
72,591
|
|
|
80,571
|
|
|
88,140
|
|
|
16,023
|
|
|||||
Total stockholders’ equity
|
113,378
|
|
|
91,894
|
|
|
68,108
|
|
|
63,659
|
|
|
69,918
|
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Product revenue
|
$
|
61,025
|
|
|
82
|
%
|
|
$
|
58,023
|
|
|
84
|
%
|
|
$
|
3,002
|
|
|
5
|
%
|
License and development revenue
|
13,490
|
|
|
18
|
%
|
|
11,106
|
|
|
16
|
%
|
|
2,384
|
|
|
21
|
%
|
|||
Total revenue
|
$
|
74,515
|
|
|
100
|
%
|
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
5,386
|
|
|
8
|
%
|
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(In thousands, except for percentages)
|
|||||||||||||
Water
|
|
$
|
60,512
|
|
|
$
|
54,301
|
|
|
$
|
6,211
|
|
|
11
|
%
|
Oil & Gas
|
|
513
|
|
|
3,722
|
|
|
(3,209
|
)
|
|
(86
|
%)
|
|||
Total product revenue
|
|
$
|
61,025
|
|
|
$
|
58,023
|
|
|
$
|
3,002
|
|
|
5
|
%
|
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(In thousands, except for percentages)
|
|||||||||||||
License and development revenue
|
|
$
|
13,490
|
|
|
$
|
11,106
|
|
|
$
|
2,384
|
|
|
21
|
%
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
||||||||||||||||||||
|
Water
|
|
Oil & Gas
|
|
Total
|
|
Water
|
|
Oil & Gas
|
|
Total
|
||||||||||||
|
(In thousands, except for percentages)
|
||||||||||||||||||||||
Product gross profit
|
$
|
43,301
|
|
|
$
|
(149
|
)
|
|
$
|
43,152
|
|
|
$
|
38,269
|
|
|
$
|
693
|
|
|
$
|
38,962
|
|
Product gross margin
|
71.6
|
%
|
|
(29.0
|
%)
|
|
70.7
|
%
|
|
70.5
|
%
|
|
18.6
|
%
|
|
67.1
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Total revenue
|
$
|
74,515
|
|
|
100
|
%
|
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
5,386
|
|
|
8
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
General and administrative
|
$
|
21,476
|
|
|
29
|
%
|
|
$
|
17,354
|
|
|
25
|
%
|
|
$
|
4,122
|
|
|
24
|
%
|
Sales and marketing
|
7,546
|
|
|
10
|
%
|
|
9,391
|
|
|
14
|
%
|
|
(1,845
|
)
|
|
(20
|
%)
|
|||
Research and development
|
17,012
|
|
|
23
|
%
|
|
13,443
|
|
|
19
|
%
|
|
3,569
|
|
|
27
|
%
|
|||
Amortization of intangible assets
|
630
|
|
|
1
|
%
|
|
631
|
|
|
1
|
%
|
|
(1
|
)
|
|
—
|
%
|
|||
Total operating expenses
|
$
|
46,664
|
|
|
63
|
%
|
|
$
|
40,819
|
|
|
59
|
%
|
|
$
|
5,845
|
|
|
14
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Total revenue
|
$
|
74,515
|
|
|
100
|
%
|
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
5,386
|
|
|
8
|
%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
1,543
|
|
|
2
|
%
|
|
$
|
870
|
|
|
1
|
%
|
|
$
|
673
|
|
|
77
|
%
|
Interest expense
|
(1
|
)
|
|
—
|
%
|
|
(2
|
)
|
|
—
|
%
|
|
1
|
|
|
(50
|
%)
|
|||
Other non-operating expense, net
|
(80
|
)
|
|
—
|
%
|
|
(188
|
)
|
|
—
|
%
|
|
108
|
|
|
(57
|
%)
|
|||
Total other income, net
|
$
|
1,462
|
|
|
2
|
%
|
|
$
|
680
|
|
|
1
|
%
|
|
$
|
782
|
|
|
115
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Product revenue
|
$
|
58,023
|
|
|
84
|
%
|
|
$
|
49,715
|
|
|
86
|
%
|
|
$
|
8,308
|
|
|
17
|
%
|
License and development revenue
|
11,106
|
|
|
16
|
%
|
|
8,069
|
|
|
14
|
%
|
|
3,037
|
|
|
38
|
%
|
|||
Total revenue
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
57,784
|
|
|
100
|
%
|
|
$
|
11,345
|
|
|
20
|
%
|
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(In thousands, except for percentages)
|
|||||||||||||
Water
|
|
$
|
54,301
|
|
|
$
|
47,545
|
|
|
$
|
6,756
|
|
|
14
|
%
|
Oil & Gas
|
|
3,722
|
|
|
2,170
|
|
|
1,552
|
|
|
72
|
%
|
|||
Total product revenue
|
|
$
|
58,023
|
|
|
$
|
49,715
|
|
|
$
|
8,308
|
|
|
17
|
%
|
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(In thousands, except for percentages)
|
|||||||||||||
License and development revenue
|
|
$
|
11,106
|
|
|
$
|
8,069
|
|
|
$
|
3,037
|
|
|
38
|
%
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
|
Water
|
|
Oil & Gas
|
|
Total
|
|
Water
|
|
Oil & Gas
|
|
Total
|
||||||||||||
|
(In thousands, except for percentages)
|
||||||||||||||||||||||
Product gross profit
|
$
|
38,269
|
|
|
$
|
693
|
|
|
$
|
38,962
|
|
|
$
|
31,192
|
|
|
$
|
674
|
|
|
$
|
31,866
|
|
Product gross margin
|
70.5
|
%
|
|
18.6
|
%
|
|
67.2
|
%
|
|
65.6
|
%
|
|
31.1
|
%
|
|
64.1
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Total revenue
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
57,784
|
|
|
100
|
%
|
|
$
|
11,345
|
|
|
20
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
General and administrative
|
$
|
17,354
|
|
|
25
|
%
|
|
$
|
16,626
|
|
|
29
|
%
|
|
$
|
728
|
|
|
4
|
%
|
Sales and marketing
|
9,391
|
|
|
14
|
%
|
|
9,116
|
|
|
16
|
%
|
|
275
|
|
|
3
|
%
|
|||
Research and development
|
13,443
|
|
|
19
|
%
|
|
10,136
|
|
|
18
|
%
|
|
3,307
|
|
|
33
|
%
|
|||
Amortization of intangible assets
|
631
|
|
|
1
|
%
|
|
631
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|||
Total operating expenses
|
$
|
40,819
|
|
|
59
|
%
|
|
$
|
36,509
|
|
|
64
|
%
|
|
$
|
4,310
|
|
|
12
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Total revenue
|
$
|
69,129
|
|
|
100
|
%
|
|
$
|
57,784
|
|
|
100
|
%
|
|
$
|
11,345
|
|
|
20
|
%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
870
|
|
|
1
|
%
|
|
$
|
309
|
|
|
1
|
%
|
|
$
|
561
|
|
|
182
|
%
|
Interest expense
|
(2
|
)
|
|
—
|
%
|
|
(3
|
)
|
|
—
|
%
|
|
1
|
|
|
(33
|
%)
|
|||
Other non-operating expense, net
|
(188
|
)
|
|
—
|
%
|
|
(19
|
)
|
|
—
|
%
|
|
(169
|
)
|
|
889
|
%
|
|||
Total other income (expense), net
|
$
|
680
|
|
|
1
|
%
|
|
$
|
287
|
|
|
1
|
%
|
|
$
|
393
|
|
|
137
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
7,565
|
|
|
$
|
2,895
|
|
|
$
|
4,965
|
|
Net cash used in investing activities
|
(10,159
|
)
|
|
(38,911
|
)
|
|
(40,129
|
)
|
|||
Net cash (used in) provided by financing activities
|
(5,886
|
)
|
|
951
|
|
|
(2,785
|
)
|
|||
Effect of exchange rate differences on cash and cash equivalents
|
(8
|
)
|
|
(57
|
)
|
|
(41
|
)
|
|||
Net change in cash and cash equivalents and restricted cash
|
$
|
(8,488
|
)
|
|
$
|
(35,122
|
)
|
|
$
|
(37,990
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
|
1 Year
|
|
2-3 Years
|
|
4-5 Years
|
|
5+ Years
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Operating leases
|
$
|
1,855
|
|
|
$
|
3,464
|
|
|
$
|
3,636
|
|
|
$
|
8,122
|
|
|
$
|
17,077
|
|
Purchase obligations
(1)
|
7,983
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,983
|
|
|||||
|
$
|
9,838
|
|
|
$
|
3,464
|
|
|
$
|
3,636
|
|
|
$
|
8,122
|
|
|
$
|
25,060
|
|
|
|
(1)
|
Purchase obligations are related to open purchase orders for materials and supplies.
|
|
Page No.
|
Consolidated Financial Statements:
|
|
Reports of Independent Registered Public Accounting Firms
|
|
Consolidated Balance Sheets — December 31, 2018 and 2017
|
|
Consolidated Statements of Operations — Years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Comprehensive Income (Loss) — Years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows — Years ended December 31, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands, except share data and par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
21,955
|
|
|
$
|
27,780
|
|
Restricted cash
|
97
|
|
|
2,664
|
|
||
Short-term investments
|
73,338
|
|
|
70,020
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $396 and $103 at December 31, 2018 and 2017, respectively
|
10,212
|
|
|
12,465
|
|
||
Contract Assets
|
4,083
|
|
|
6,278
|
|
||
Inventories
|
7,138
|
|
|
5,514
|
|
||
Income tax receivable
|
15
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
2,810
|
|
|
1,342
|
|
||
Total current assets
|
119,648
|
|
|
126,063
|
|
||
Restricted cash, non-current
|
86
|
|
|
182
|
|
||
Long-term investments
|
1,269
|
|
|
—
|
|
||
Deferred tax assets, non-current
|
18,318
|
|
|
7,933
|
|
||
Property and equipment, net
|
14,619
|
|
|
13,393
|
|
||
Operating lease, right of use asset
|
12,189
|
|
|
2,843
|
|
||
Goodwill
|
12,790
|
|
|
12,790
|
|
||
Other intangible assets, net
|
640
|
|
|
1,269
|
|
||
Other assets, non-current
|
282
|
|
|
12
|
|
||
Total assets
|
$
|
179,841
|
|
|
$
|
164,485
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,439
|
|
|
$
|
4,091
|
|
Accrued expenses and other current liabilities
|
8,019
|
|
|
7,948
|
|
||
Lease liability
|
926
|
|
|
1,603
|
|
||
Income taxes payable
|
—
|
|
|
432
|
|
||
Accrued warranty reserve
|
478
|
|
|
366
|
|
||
Contract liabilities
|
16,270
|
|
|
15,909
|
|
||
Current portion of long-term debt
|
—
|
|
|
11
|
|
||
Total current liabilities
|
27,132
|
|
|
30,360
|
|
||
Long-term debt, less current portion
|
—
|
|
|
16
|
|
||
Lease liabilities, non-current
|
12,556
|
|
|
1,698
|
|
||
Contract liabilities, non-current
|
26,539
|
|
|
40,517
|
|
||
Other non-current liabilities
|
236
|
|
|
—
|
|
||
Total liabilities
|
66,463
|
|
|
72,591
|
|
||
Commitments and Contingencies (Note 9)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 200,000,000 shares authorized; 59,396,020 shares issued and 53,940,085 shares outstanding at December 31, 2018 and 58,168,433 shares issued and 53,905,600 shares outstanding at December 31, 2017
|
59
|
|
|
58
|
|
||
Additional paid-in capital
|
158,404
|
|
|
149,006
|
|
||
Accumulated comprehensive loss
|
(133
|
)
|
|
(125
|
)
|
||
Treasury stock, at cost, 5,455,935 shares repurchased at December 31, 2018 and 4,262,833 shares repurchased at December 31, 2017
|
(30,486
|
)
|
|
(20,486
|
)
|
||
Accumulated deficit
|
(14,466
|
)
|
|
(36,559
|
)
|
||
Total stockholders’ equity
|
113,378
|
|
|
91,894
|
|
||
Total liabilities and stockholders’ equity
|
$
|
179,841
|
|
|
$
|
164,485
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except per share data)
|
||||||||||
Product revenue
|
$
|
61,025
|
|
|
$
|
58,023
|
|
|
$
|
49,715
|
|
Product cost of revenue
|
17,873
|
|
|
19,061
|
|
|
17,849
|
|
|||
Product gross profit
|
43,152
|
|
|
38,962
|
|
|
31,866
|
|
|||
|
|
|
|
|
|
||||||
License and development revenue
|
13,490
|
|
|
11,106
|
|
|
8,069
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
21,476
|
|
|
17,354
|
|
|
16,626
|
|
|||
Sales and marketing
|
7,546
|
|
|
9,391
|
|
|
9,116
|
|
|||
Research and development
|
17,012
|
|
|
13,443
|
|
|
10,136
|
|
|||
Amortization of intangible assets
|
630
|
|
|
631
|
|
|
631
|
|
|||
Total operating expenses
|
46,664
|
|
|
40,819
|
|
|
36,509
|
|
|||
Income from operations
|
9,978
|
|
|
9,249
|
|
|
3,426
|
|
|||
|
|
|
|
|
|
||||||
Other income (expense):
|
|
|
|
|
|
||||||
Interest income
|
1,543
|
|
|
870
|
|
|
309
|
|
|||
Interest expense
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Other non-operating expense, net
|
(80
|
)
|
|
(188
|
)
|
|
(19
|
)
|
|||
Total other income, net
|
1,462
|
|
|
680
|
|
|
287
|
|
|||
Income before income taxes
|
11,440
|
|
|
9,929
|
|
|
3,713
|
|
|||
Benefit from income taxes
|
(10,653
|
)
|
|
(8,425
|
)
|
|
(6
|
)
|
|||
Net income
|
$
|
22,093
|
|
|
$
|
18,354
|
|
|
$
|
3,719
|
|
|
|
|
|
|
|
||||||
Income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.07
|
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.33
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
||||||
Number of shares used in per share calculations:
|
|
|
|
|
|
||||||
Basic
|
53,764
|
|
|
53,701
|
|
|
52,341
|
|
|||
Diluted
|
55,338
|
|
|
55,612
|
|
|
55,451
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
22,093
|
|
|
$
|
18,354
|
|
|
$
|
3,719
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(12
|
)
|
|
57
|
|
|
(27
|
)
|
|||
Unrealized income (loss) on investments
|
4
|
|
|
(64
|
)
|
|
(27
|
)
|
|||
Other comprehensive loss, net of tax
|
(8
|
)
|
|
(7
|
)
|
|
(54
|
)
|
|||
Comprehensive income
|
$
|
22,085
|
|
|
$
|
18,347
|
|
|
$
|
3,665
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated
Deficit (1)
|
|
Total
Stockholders’
Equity (1)
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2015
|
54,948
|
|
|
$
|
55
|
|
|
(2,479
|
)
|
|
$
|
(6,835
|
)
|
|
$
|
129,809
|
|
|
$
|
(64
|
)
|
|
$
|
(58,632
|
)
|
|
$
|
64,333
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,719
|
|
|
3,719
|
|
||||||
Unrealized loss on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
||||||
Issuance of common stock
|
1,936
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6,598
|
|
|
—
|
|
|
—
|
|
|
6,600
|
|
||||||
Repurchase of common stock for treasury
|
—
|
|
|
—
|
|
|
(1,243
|
)
|
|
(9,375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,375
|
)
|
||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,269
|
|
|
—
|
|
|
—
|
|
|
3,269
|
|
||||||
Balance at December 31, 2016
|
56,884
|
|
|
$
|
57
|
|
|
(3,722
|
)
|
|
$
|
(16,210
|
)
|
|
$
|
139,676
|
|
|
$
|
(118
|
)
|
|
$
|
(54,913
|
)
|
|
$
|
68,492
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
18,354
|
|
|
18,354
|
|
|||||
Unrealized loss on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|
—
|
|
|
(64
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||||
Issuance of common stock
|
1,284
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
5,237
|
|
|
—
|
|
|
—
|
|
|
5,238
|
|
||||||
Repurchase of common stock for treasury
|
—
|
|
|
—
|
|
|
(541
|
)
|
|
(4,276
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,276
|
)
|
||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,093
|
|
|
—
|
|
|
—
|
|
|
4,093
|
|
||||||
Balance at December 31, 2017
|
58,168
|
|
|
$
|
58
|
|
|
(4,263
|
)
|
|
$
|
(20,486
|
)
|
|
$
|
149,006
|
|
|
$
|
(125
|
)
|
|
$
|
(36,559
|
)
|
|
$
|
91,894
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
22,093
|
|
|
22,093
|
|
|||||
Unrealized gain on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
||||||
Issuance of common stock
|
1,228
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4,138
|
|
|
—
|
|
|
—
|
|
|
4,139
|
|
||||||
Repurchase of common stock for treasury
|
—
|
|
|
—
|
|
|
(1,193
|
)
|
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,260
|
|
|
—
|
|
|
—
|
|
|
5,260
|
|
||||||
Balance at December 31, 2018
|
59,396
|
|
|
$
|
59
|
|
|
(5,456
|
)
|
|
$
|
(30,486
|
)
|
|
$
|
158,404
|
|
|
$
|
(133
|
)
|
|
$
|
(14,466
|
)
|
|
$
|
113,378
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
22,093
|
|
|
$
|
18,354
|
|
|
$
|
3,719
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation
|
5,240
|
|
|
4,087
|
|
|
3,263
|
|
|||
Depreciation and amortization
|
3,869
|
|
|
3,666
|
|
|
3,680
|
|
|||
Amortization of premiums on investments
|
362
|
|
|
460
|
|
|
174
|
|
|||
Provision for warranty claims
|
326
|
|
|
246
|
|
|
208
|
|
|||
Reversal of accruals related to expired warranties
|
(180
|
)
|
|
(200
|
)
|
|
(236
|
)
|
|||
Unrealized (gain) loss on foreign currency translation
|
(10
|
)
|
|
144
|
|
|
13
|
|
|||
Provision for doubtful accounts
|
336
|
|
|
55
|
|
|
76
|
|
|||
Adjustments for excess or obsolete inventory
|
197
|
|
|
201
|
|
|
(361
|
)
|
|||
Deferred income taxes
|
(10,385
|
)
|
|
(8,865
|
)
|
|
(459
|
)
|
|||
Loss on disposal of fixed assets
|
408
|
|
|
—
|
|
|
—
|
|
|||
Other non-cash adjustments
|
—
|
|
|
(196
|
)
|
|
(131
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
1,917
|
|
|
(761
|
)
|
|
(244
|
)
|
|||
Contract assets
|
2,196
|
|
|
(4,263
|
)
|
|
(130
|
)
|
|||
Inventories
|
(1,872
|
)
|
|
(1,250
|
)
|
|
2,287
|
|
|||
Prepaid and other assets
|
(682
|
)
|
|
(39
|
)
|
|
(402
|
)
|
|||
Accounts payable
|
(2,274
|
)
|
|
2,118
|
|
|
(360
|
)
|
|||
Accrued expenses and other liabilities
|
87
|
|
|
611
|
|
|
(262
|
)
|
|||
Income taxes payable
|
(447
|
)
|
|
385
|
|
|
398
|
|
|||
Contract Liabilities
|
(13,616
|
)
|
|
(11,858
|
)
|
|
(6,268
|
)
|
|||
Net cash provided by operating activities
|
7,565
|
|
|
2,895
|
|
|
4,965
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Maturities of marketable securities
|
81,268
|
|
|
49,106
|
|
|
7,535
|
|
|||
Purchases of marketable securities
|
(86,192
|
)
|
|
(80,641
|
)
|
|
(46,552
|
)
|
|||
Capital expenditures
|
(5,235
|
)
|
|
(7,376
|
)
|
|
(1,112
|
)
|
|||
Net cash used in investing activities
|
(10,159
|
)
|
|
(38,911
|
)
|
|
(40,129
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock
|
4,291
|
|
|
5,508
|
|
|
6,600
|
|
|||
Tax payment for employee shares withheld
|
(150
|
)
|
|
(270
|
)
|
|
—
|
|
|||
Repayment of long-term debt
|
(27
|
)
|
|
(11
|
)
|
|
(10
|
)
|
|||
Repurchase of common stock
|
(10,000
|
)
|
|
(4,276
|
)
|
|
(9,375
|
)
|
|||
Net cash (used in) provided by financing activities
|
(5,886
|
)
|
|
951
|
|
|
(2,785
|
)
|
|||
Effect of exchange rate differences on cash and cash equivalents
|
(8
|
)
|
|
(57
|
)
|
|
(41
|
)
|
|||
Net change in cash and cash equivalents and restricted cash
|
(8,488
|
)
|
|
(35,122
|
)
|
|
(37,990
|
)
|
|||
Cash and cash equivalents and restricted cash, beginning of year
|
30,626
|
|
|
65,748
|
|
|
103,738
|
|
|||
Cash and cash equivalents and restricted cash, end of year
|
$
|
22,138
|
|
|
$
|
30,626
|
|
|
$
|
65,748
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
3
|
|
Cash received for income tax refunds
|
$
|
13
|
|
|
$
|
16
|
|
|
$
|
2
|
|
Cash paid for income taxes
|
$
|
610
|
|
|
$
|
57
|
|
|
$
|
51
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
|
|
|
||||||
Purchases of property and equipment in trade accounts payable and accrued expenses and other liabilities
|
$
|
30
|
|
|
$
|
475
|
|
|
$
|
66
|
|
Non-cash lease liabilities arising from obtaining right of use assets
|
$
|
10,411
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
revenue recognition over time based on an input measure of progress based on a cost driver, which management has determined is the best estimate of the progress made on the project during the period from inception until full commercialization, for the amount allocated to the exclusive Missile (as defined in Note 15, “VorTeq Partnership and License Agreement”) license, and research and development services, and
|
•
|
revenue recognition related to stand-ready, when and if available, upgrades subsequent to full commercialization, recognized over time ratably over the period, which matches the transfer of benefit to the customer on a daily basis, commencing after full commercial launch until the expiration of the contract.
|
|
Years Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
||||
|
(In thousands)
|
|||||||
License and development revenue, as previously reported
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
Increase in revenue due to adoption of the New Revenue Standard
|
6,106
|
|
|
3,069
|
|
|
||
License and development revenue, as adjusted
|
$
|
11,106
|
|
|
$
|
8,069
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
License and development contract liability, as previously reported
|
$
|
63,958
|
|
|
$
|
68,958
|
|
Decrease in contract liability due to adoption of the New Revenue Standard
|
9,465
|
|
|
3,359
|
|
||
License and development contract liability, as adjusted
|
$
|
54,493
|
|
|
$
|
65,599
|
|
|
December 31, 2017
|
||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
Adoption of New Lease Standard
|
|
As Adjusted
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Contract assets
|
$
|
6,411
|
|
|
$
|
(133
|
)
|
|
$
|
—
|
|
|
$
|
6,278
|
|
Total current assets
|
126,196
|
|
|
(133
|
)
|
|
—
|
|
|
126,063
|
|
||||
Non-current assets
|
|
|
|
|
|
|
|
||||||||
Deferred tax assets, non-current
|
7,902
|
|
|
31
|
|
|
—
|
|
|
7,933
|
|
||||
Operating lease, right of use asset
|
—
|
|
|
—
|
|
|
2,843
|
|
|
2,843
|
|
||||
Total assets
|
161,744
|
|
|
(102
|
)
|
|
2,843
|
|
|
164,485
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued expenses and other current liabilities
|
8,517
|
|
|
(469
|
)
|
|
(100
|
)
|
|
7,948
|
|
||||
Lease liabilities
|
—
|
|
|
—
|
|
|
1,603
|
|
|
1,603
|
|
||||
Contract liabilities
|
6,416
|
|
|
9,493
|
|
|
—
|
|
|
15,909
|
|
||||
Total current liabilities
|
19,833
|
|
|
9,024
|
|
|
1,503
|
|
|
30,360
|
|
||||
Non-current liabilities
|
|
|
|
|
|
|
|
||||||||
Lease liabilities, non-current
|
—
|
|
|
—
|
|
|
1,698
|
|
|
1,698
|
|
||||
Contract liabilities, non-current
|
59,006
|
|
|
(18,489
|
)
|
|
—
|
|
|
40,517
|
|
||||
Other non-current liabilities
|
358
|
|
|
—
|
|
|
(358
|
)
|
|
—
|
|
||||
Total liabilities
|
79,213
|
|
|
(9,465
|
)
|
|
2,843
|
|
|
72,591
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
|
||||||||
Accumulated deficit
|
(45,922
|
)
|
|
9,363
|
|
|
—
|
|
|
(36,559
|
)
|
||||
Total stockholders’ equity
|
82,531
|
|
|
9,363
|
|
|
—
|
|
|
91,894
|
|
||||
Total liabilities and stockholders’ equity
|
161,744
|
|
|
(102
|
)
|
|
2,843
|
|
|
164,485
|
|
|
Twelve Months Ended December 31, 2017
|
|
Twelve Months Ended December 31, 2016
|
||||||||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
||||||||||||
|
(In thousands, except for per share data)
|
||||||||||||||||||||||
Product revenue
|
$
|
58,156
|
|
|
$
|
(133
|
)
|
|
$
|
58,023
|
|
|
$
|
49,715
|
|
|
$
|
—
|
|
|
$
|
49,715
|
|
Product cost of revenue
|
19,061
|
|
|
—
|
|
|
19,061
|
|
|
17,849
|
|
|
—
|
|
|
17,849
|
|
||||||
Product gross profit
|
$
|
39,095
|
|
|
$
|
(133
|
)
|
|
$
|
38,962
|
|
|
$
|
31,866
|
|
|
$
|
—
|
|
|
$
|
31,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License and development revenue
|
$
|
5,000
|
|
|
$
|
6,106
|
|
|
$
|
11,106
|
|
|
$
|
5,000
|
|
|
$
|
3,069
|
|
|
$
|
8,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from operations
|
3,276
|
|
|
5,973
|
|
|
9,249
|
|
|
357
|
|
|
3,069
|
|
|
3,426
|
|
||||||
Income before income taxes
|
3,956
|
|
|
5,973
|
|
|
9,929
|
|
|
644
|
|
|
3,069
|
|
|
3,713
|
|
||||||
(Benefit from) provision for income taxes
|
(8,394
|
)
|
|
(31
|
)
|
|
(8,425
|
)
|
|
(390
|
)
|
|
384
|
|
|
(6
|
)
|
||||||
Net income
|
12,350
|
|
|
6,004
|
|
|
18,354
|
|
|
1,034
|
|
|
2,685
|
|
|
3,719
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
0.23
|
|
|
$
|
0.11
|
|
|
$
|
0.34
|
|
|
$
|
0.02
|
|
|
0.05
|
|
|
$
|
0.07
|
|
|
Diluted
|
$
|
0.22
|
|
|
$
|
0.11
|
|
|
$
|
0.33
|
|
|
$
|
0.02
|
|
|
0.05
|
|
|
$
|
0.07
|
|
|
Number of shares used in per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
53,701
|
|
|
—
|
|
|
53,701
|
|
|
52,341
|
|
|
—
|
|
|
52,341
|
|
||||||
Diluted
|
55,612
|
|
|
—
|
|
|
55,612
|
|
|
55,451
|
|
|
—
|
|
|
55,451
|
|
|
Twelve Months Ended December 31, 2017
|
|
Twelve Months Ended December 31, 2016
|
||||||||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Water
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
$
|
54,301
|
|
|
$
|
—
|
|
|
$
|
54,301
|
|
|
$
|
47,545
|
|
|
$
|
—
|
|
|
$
|
47,545
|
|
Product cost of revenue
|
16,032
|
|
|
—
|
|
|
16,032
|
|
|
16,353
|
|
|
—
|
|
|
16,353
|
|
||||||
Product gross profit
|
$
|
38,269
|
|
|
$
|
—
|
|
|
$
|
38,269
|
|
|
$
|
31,192
|
|
|
$
|
—
|
|
|
$
|
31,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from operations
|
$
|
29,386
|
|
|
$
|
—
|
|
|
$
|
29,386
|
|
|
$
|
23,073
|
|
|
$
|
—
|
|
|
$
|
23,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oil & Gas
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product revenue
|
$
|
3,855
|
|
|
$
|
(133
|
)
|
|
$
|
3,722
|
|
|
$
|
2,170
|
|
|
$
|
—
|
|
|
$
|
2,170
|
|
Product cost of revenue
|
3,029
|
|
|
|
|
3,029
|
|
|
1,496
|
|
|
—
|
|
|
1,496
|
|
|||||||
Product gross profit
|
$
|
826
|
|
|
$
|
(133
|
)
|
|
$
|
693
|
|
|
$
|
674
|
|
|
$
|
—
|
|
|
$
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License and development revenue
|
$
|
5,000
|
|
|
$
|
6,106
|
|
|
$
|
11,106
|
|
|
$
|
5,000
|
|
|
$
|
3,069
|
|
|
$
|
8,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from operations
|
(10,184
|
)
|
|
5,973
|
|
|
(4,211
|
)
|
|
(7,016
|
)
|
|
3,069
|
|
|
(3,947
|
)
|
|
Twelve Months Ended December 31, 2017
|
|
Twelve Months Ended December 31, 2016
|
||||||||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Net income
|
$
|
12,350
|
|
|
$
|
6,004
|
|
|
$
|
18,354
|
|
|
$
|
1,034
|
|
|
$
|
2,685
|
|
|
$
|
3,719
|
|
Comprehensive income
|
12,343
|
|
|
6,004
|
|
|
18,347
|
|
|
980
|
|
|
2,685
|
|
|
3,665
|
|
|
Twelve Months Ended December 31, 2017
|
||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
Adoption of New Cash Flow Presentation Standard
|
|
As Adjusted
|
||||||||
|
(In thousands)
|
||||||||||||||
Net income
|
$
|
12,350
|
|
|
$
|
6,004
|
|
|
$
|
—
|
|
|
$
|
18,354
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(761
|
)
|
|
—
|
|
|
—
|
|
|
(761
|
)
|
||||
Contract assets
|
(4,396
|
)
|
|
133
|
|
|
—
|
|
|
(4,263
|
)
|
||||
Inventories
|
(1,250
|
)
|
|
—
|
|
|
—
|
|
|
(1,250
|
)
|
||||
Prepaid and other assets
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
||||
Accounts payable
|
2,118
|
|
|
|
|
|
|
2,118
|
|
||||||
Accrued expenses and other liabilities
|
364
|
|
|
247
|
|
|
—
|
|
|
611
|
|
||||
Income taxes
|
416
|
|
|
(31
|
)
|
|
—
|
|
|
385
|
|
||||
Contract liabilities
|
(5,505
|
)
|
|
(6,353
|
)
|
|
—
|
|
|
(11,858
|
)
|
||||
Net cash used in operating activities
|
2,895
|
|
|
—
|
|
|
—
|
|
|
2,895
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
1,538
|
|
|
—
|
|
|
(1,538
|
)
|
|
—
|
|
||||
Net cash used in investing activities
|
(37,373
|
)
|
|
—
|
|
|
(1,538
|
)
|
|
(38,911
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in cash, cash equivalents and restricted cash
|
(33,584
|
)
|
|
—
|
|
|
(1,538
|
)
|
|
(35,122
|
)
|
||||
Cash, cash equivalents and restricted cash, beginning of year
|
61,364
|
|
|
—
|
|
|
4,384
|
|
|
65,748
|
|
||||
Cash, cash equivalents and restricted cash, end of period
|
27,780
|
|
|
—
|
|
|
2,846
|
|
|
30,626
|
|
|
Twelve Months Ended December 31, 2016
|
||||||||||||||
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
Adoption of New Cash Flow Presentation Standard
|
|
As Adjusted
|
||||||||
|
(In thousands)
|
||||||||||||||
Net income
|
$
|
1,034
|
|
|
$
|
2,685
|
|
|
$
|
—
|
|
|
$
|
3,719
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(244
|
)
|
|
—
|
|
|
—
|
|
|
(244
|
)
|
||||
Contract assets
|
(130
|
)
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
||||
Inventories
|
2,287
|
|
|
—
|
|
|
—
|
|
|
2,287
|
|
||||
Prepaid and other assets
|
(402
|
)
|
|
—
|
|
|
—
|
|
|
(402
|
)
|
||||
Accounts payable
|
(360
|
)
|
|
—
|
|
|
—
|
|
|
(360
|
)
|
||||
Accrued expenses and other liabilities
|
1,259
|
|
|
(1,521
|
)
|
|
—
|
|
|
(262
|
)
|
||||
Income taxes
|
14
|
|
|
384
|
|
|
—
|
|
|
398
|
|
||||
Contract liabilities
|
(4,720
|
)
|
|
(1,548
|
)
|
|
—
|
|
|
(6,268
|
)
|
||||
Net cash used in operating activities
|
4,965
|
|
|
—
|
|
|
—
|
|
|
4,965
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Restricted cash
|
(577
|
)
|
|
—
|
|
|
577
|
|
|
—
|
|
||||
Net cash used in investing activities
|
(40,706
|
)
|
|
—
|
|
|
577
|
|
|
(40,129
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in cash, cash equivalents and restricted cash
|
(38,567
|
)
|
|
—
|
|
|
577
|
|
|
(37,990
|
)
|
||||
Cash, cash equivalents and restricted cash, beginning of year
|
99,931
|
|
|
—
|
|
|
3,807
|
|
|
103,738
|
|
||||
Cash, cash equivalents and restricted cash, end of period
|
61,364
|
|
|
—
|
|
|
4,384
|
|
|
65,748
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
|
Water
|
|
Oil and Gas
|
|
Total
|
||||||
|
(In thousands)
|
|||||||||||
Primary geographical market
|
|
|
|
|
|
|
||||||
Middle East and Africa
|
|
$
|
35,593
|
|
|
$
|
514
|
|
|
$
|
36,107
|
|
Americas
|
|
6,388
|
|
|
13,490
|
|
|
19,878
|
|
|||
Asia
|
|
11,955
|
|
|
—
|
|
|
11,955
|
|
|||
Europe
|
|
6,575
|
|
|
—
|
|
|
6,575
|
|
|||
Total
|
|
$
|
60,511
|
|
|
$
|
14,004
|
|
|
$
|
74,515
|
|
|
|
|
|
|
|
|
||||||
Major product/service line
|
|
|
|
|
|
|
||||||
PX, pumps and turbo devices
|
|
$
|
60,511
|
|
|
$
|
6
|
|
|
$
|
60,517
|
|
License and development
|
|
—
|
|
|
13,490
|
|
|
13,490
|
|
|||
Oil & gas products
|
|
—
|
|
|
508
|
|
|
508
|
|
|||
Total
|
|
$
|
60,511
|
|
|
$
|
14,004
|
|
|
$
|
74,515
|
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
|
Water
|
|
Oil and Gas
|
|
Total
|
|
Water
|
|
Oil and Gas
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Primary geographical market
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Middle East and Africa
|
$
|
26,190
|
|
|
$
|
3,708
|
|
|
$
|
29,898
|
|
|
$
|
19,436
|
|
|
$
|
2,170
|
|
|
$
|
21,606
|
|
Americas
|
7,023
|
|
|
11,120
|
|
|
18,143
|
|
|
5,419
|
|
|
8,069
|
|
|
13,488
|
|
||||||
Asia
|
12,974
|
|
|
—
|
|
|
12,974
|
|
|
17,397
|
|
|
—
|
|
|
17,397
|
|
||||||
Europe
|
8,114
|
|
|
—
|
|
|
8,114
|
|
|
5,293
|
|
|
—
|
|
|
5,293
|
|
||||||
Total
|
$
|
54,301
|
|
|
$
|
14,828
|
|
|
$
|
69,129
|
|
|
$
|
47,545
|
|
|
$
|
10,239
|
|
|
$
|
57,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Major product/service line
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PX, pumps and turbo devices
|
$
|
54,301
|
|
|
$
|
15
|
|
|
$
|
54,316
|
|
|
$
|
47,545
|
|
|
$
|
10
|
|
|
$
|
47,555
|
|
License and development
|
—
|
|
|
11,106
|
|
|
11,106
|
|
|
—
|
|
|
8,069
|
|
|
8,069
|
|
||||||
Oil & gas products
|
—
|
|
|
3,707
|
|
|
3,707
|
|
|
—
|
|
|
2,160
|
|
|
2,160
|
|
||||||
Total
|
$
|
54,301
|
|
|
$
|
14,828
|
|
|
$
|
69,129
|
|
|
$
|
47,545
|
|
|
$
|
10,239
|
|
|
$
|
57,784
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Trade Receivable
|
$
|
10,212
|
|
|
$
|
12,465
|
|
Contract assets:
|
|
|
|
||||
Current contract assets
|
4,083
|
|
|
6,278
|
|
||
Total contract assets
|
$
|
4,083
|
|
|
$
|
6,278
|
|
|
|
|
|
||||
Current contract liabilities:
|
|
|
|
||||
Customer deposits
|
$
|
706
|
|
|
$
|
414
|
|
Deferred revenue:
|
|
|
|
||||
Cost and estimated earnings in excess of billings
|
264
|
|
|
805
|
|
||
License and development
|
14,518
|
|
|
14,024
|
|
||
Product
|
548
|
|
|
550
|
|
||
Service
|
234
|
|
|
116
|
|
||
Total current contract liability
|
16,270
|
|
|
15,909
|
|
||
Non-current contract liabilities, deferred revenue
|
|
|
|
||||
License and development
|
26,485
|
|
|
40,469
|
|
||
Product
|
54
|
|
|
48
|
|
||
Total non-current contract liability
|
26,539
|
|
|
40,517
|
|
||
Total contract liability
|
$
|
42,809
|
|
|
$
|
56,426
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
6,278
|
|
|
$
|
2,015
|
|
Transferred to receivables
|
(8,865
|
)
|
|
(2,909
|
)
|
||
Additional unbilled receivables
|
6,670
|
|
|
7,172
|
|
||
Balance, end of period
|
$
|
4,083
|
|
|
$
|
6,278
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
56,426
|
|
|
$
|
62,232
|
|
Revenue recognized
|
(13,493
|
)
|
|
(5,892
|
)
|
||
Cash received
|
(124
|
)
|
|
86
|
|
||
Balance, end of period
|
$
|
42,809
|
|
|
$
|
56,426
|
|
|
December 31,
2018 |
||
|
(In thousands)
|
||
Year:
|
|
||
2019
|
$
|
14,544
|
|
2020
|
14,480
|
|
|
2021
|
6,328
|
|
|
2022 and thereafter
|
5,677
|
|
|
Total
|
$
|
41,029
|
|
|
|
|
December 31, 2017
|
||||||||||||
|
December 31,
2018 |
|
As Previously Reported
|
|
Adoption of New Revenue Standard
|
|
As Adjusted
|
||||||||
|
(In thousands)
|
||||||||||||||
Estimated earnings to date
|
$
|
6,477
|
|
|
$
|
6,000
|
|
|
$
|
(133
|
)
|
|
$
|
5,867
|
|
Estimated costs to date
|
(5,289
|
)
|
|
(4,525
|
)
|
|
—
|
|
|
(4,525
|
)
|
||||
Subtotal
|
1,188
|
|
|
1,475
|
|
|
(133
|
)
|
|
1,342
|
|
||||
Net billings to date
|
(108
|
)
|
|
2,718
|
|
|
—
|
|
|
2,718
|
|
||||
Total
|
$
|
1,080
|
|
|
$
|
4,193
|
|
|
$
|
(133
|
)
|
|
$
|
4,060
|
|
|
|
|
|
|
|
|
|
||||||||
Included in accompanying balance sheets:
|
|
|
|
|
|
|
|
||||||||
Unbilled project costs
|
$
|
1,343
|
|
|
$
|
4,998
|
|
|
$
|
(133
|
)
|
|
$
|
4,865
|
|
Cost and estimated earnings in excess of billings
|
(263
|
)
|
|
(805
|
)
|
|
—
|
|
|
(805
|
)
|
||||
Total
|
$
|
1,080
|
|
|
$
|
4,193
|
|
|
$
|
(133
|
)
|
|
$
|
4,060
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
22,093
|
|
|
$
|
18,354
|
|
|
$
|
3,719
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
53,764
|
|
|
53,701
|
|
|
52,341
|
|
|||
Weighted average effect of dilutive stock awards
|
1,574
|
|
|
1,911
|
|
|
3,110
|
|
|||
Diluted weighted average common shares outstanding
|
55,338
|
|
|
55,612
|
|
|
55,451
|
|
|||
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.07
|
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.33
|
|
|
$
|
0.07
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
|
(In thousands)
|
|||||||
Anti-dilutive shares excluded from net income per share calculation
|
2,176
|
|
|
1,810
|
|
|
2,987
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
21,955
|
|
|
$
|
27,780
|
|
Restricted cash
|
183
|
|
|
2,846
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
22,138
|
|
|
$
|
30,626
|
|
|
|
Allowance for Doubtful Accounts
|
||
|
|
(In thousands)
|
||
As of December 31, 2015
|
|
166
|
|
|
Additions
|
|
76
|
|
|
Changes in Estimates
|
|
(112
|
)
|
|
Deductions
|
|
—
|
|
|
As of December 31, 2016
|
|
$
|
130
|
|
Additions
|
|
55
|
|
|
Changes in Estimates
(1)
|
|
(77
|
)
|
|
Deductions
(2)
|
|
(5
|
)
|
|
As of December 31, 2017
|
|
103
|
|
|
Additions
|
|
336
|
|
|
Changes in Estimates
(1)
|
|
(43
|
)
|
|
As of December 31, 2018
|
|
$
|
396
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
2,238
|
|
|
$
|
1,899
|
|
Work in process
|
2,689
|
|
|
2,191
|
|
||
Finished goods
|
2,211
|
|
|
1,424
|
|
||
Inventories, net
|
$
|
7,138
|
|
|
$
|
5,514
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Interest receivable
|
$
|
478
|
|
|
$
|
439
|
|
Supplier advances
|
591
|
|
|
124
|
|
||
Insurance
|
238
|
|
|
256
|
|
||
Software license
|
161
|
|
|
193
|
|
||
Prepaid and refundable VAT and import duty
|
289
|
|
|
—
|
|
||
Income tax refund
|
465
|
|
|
—
|
|
||
Other prepaid expenses and current assets
|
588
|
|
|
330
|
|
||
Total prepaid and other current assets
|
$
|
2,810
|
|
|
$
|
1,342
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Machinery and equipment
|
$
|
23,675
|
|
|
$
|
20,813
|
|
Leasehold improvements
|
10,458
|
|
|
10,458
|
|
||
Software
|
3,013
|
|
|
2,985
|
|
||
Office equipment, furniture, and fixtures
|
2,970
|
|
|
2,699
|
|
||
Automobiles
|
199
|
|
|
114
|
|
||
Construction in progress
|
945
|
|
|
466
|
|
||
Total property and equipment
|
41,260
|
|
|
37,535
|
|
||
Less: accumulated depreciation and amortization
|
(26,641
|
)
|
|
(24,142
|
)
|
||
Property and equipment, net
|
$
|
14,619
|
|
|
$
|
13,393
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Depreciation expense
|
$
|
3,228
|
|
|
$
|
3,035
|
|
|
$
|
3,049
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Payroll and commissions payable
|
$
|
5,843
|
|
|
$
|
6,071
|
|
Other accrued expenses and current liabilities
|
2,176
|
|
|
1,877
|
|
||
Total accrued expenses and other current liabilities
|
$
|
8,019
|
|
|
$
|
7,948
|
|
|
December 31, 2018
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Holding Gains
|
|
Gross
Unrealized
Holding Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
8,102
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
8,101
|
|
Corporate notes and bonds
|
65,324
|
|
|
1
|
|
|
(88
|
)
|
|
65,237
|
|
||||
Total short-term investments
|
$
|
73,426
|
|
|
$
|
2
|
|
|
$
|
(90
|
)
|
|
$
|
73,338
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term investments
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
$
|
1,269
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,269
|
|
Total long-term investments
|
$
|
1,269
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,269
|
|
Total available-for-sale investments
|
$
|
74,695
|
|
|
$
|
2
|
|
|
$
|
(90
|
)
|
|
$
|
74,607
|
|
|
December 31, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Holding Gains
|
|
Gross
Unrealized
Holding Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury securities
|
$
|
16,755
|
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
|
$
|
16,741
|
|
Corporate notes and bonds *
|
53,367
|
|
|
—
|
|
|
(77
|
)
|
|
53,290
|
|
||||
Municipal notes and bonds
|
247
|
|
|
—
|
|
|
—
|
|
|
247
|
|
||||
Total available-for-sale investments
|
$
|
70,369
|
|
|
$
|
—
|
|
|
$
|
(91
|
)
|
|
$
|
70,278
|
|
|
December 31, 2018
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
73,426
|
|
|
$
|
73,338
|
|
Due in greater than one year
|
1,269
|
|
|
1,269
|
|
||
|
$
|
74,695
|
|
|
$
|
74,607
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
December 31,
2018 |
|
Level 1
Inputs
|
|
Level 2
Inputs
|
|
Level 3
Inputs
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market securities
|
$
|
6,661
|
|
|
$
|
6,661
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total cash equivalents
|
6,661
|
|
|
6,661
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
8,101
|
|
|
—
|
|
|
8,101
|
|
|
—
|
|
||||
Corporate notes and bonds
|
65,237
|
|
|
—
|
|
|
65,237
|
|
|
—
|
|
||||
Total short-term investments
|
73,338
|
|
|
—
|
|
|
73,338
|
|
|
—
|
|
||||
Long-term investments
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
$
|
1,269
|
|
|
$
|
—
|
|
|
$
|
1,269
|
|
|
$
|
—
|
|
Total long-term securities
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
81,268
|
|
|
$
|
6,661
|
|
|
$
|
74,607
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
December 31,
2017 |
|
Level 1
Inputs
|
|
Level 2
Inputs
|
|
Level 3
Inputs
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
258
|
|
|
—
|
|
|
258
|
|
|
—
|
|
||||
Total cash equivalents
|
258
|
|
|
—
|
|
|
258
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
16,741
|
|
|
—
|
|
|
16,741
|
|
|
—
|
|
||||
Corporate notes and bonds
|
$
|
53,032
|
|
|
$
|
—
|
|
|
$
|
53,032
|
|
|
$
|
—
|
|
Municipal notes and bonds
|
247
|
|
|
—
|
|
|
247
|
|
|
—
|
|
||||
Total short-term investments
|
70,020
|
|
|
—
|
|
|
70,020
|
|
|
—
|
|
||||
Total assets
|
$
|
70,278
|
|
|
$
|
—
|
|
|
$
|
70,278
|
|
|
$
|
—
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||
|
(In thousands)
|
||||||||||||||
U.S. Treasury securities
|
$
|
8,101
|
|
|
$
|
(2
|
)
|
|
$
|
10,162
|
|
|
$
|
(14
|
)
|
Corporate notes and bonds
|
61,809
|
|
|
(88
|
)
|
|
53,222
|
|
|
(77
|
)
|
||||
Municipal notes and bonds
|
—
|
|
|
—
|
|
|
247
|
|
|
—
|
|
||||
Total available-for-sale investments
|
$
|
69,910
|
|
|
$
|
(90
|
)
|
|
$
|
63,631
|
|
|
$
|
(91
|
)
|
|
December 31, 2018
|
||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
Losses
|
|
Net
Carrying
Amount
|
|
Weighted
Average
Useful Life
|
||||||||
|
(In thousands, except for weighted average useful life)
|
||||||||||||||||
Developed technology
|
$
|
6,100
|
|
|
$
|
(5,541
|
)
|
|
$
|
—
|
|
|
$
|
559
|
|
|
10
|
Patents
|
585
|
|
|
(462
|
)
|
|
(42
|
)
|
|
81
|
|
|
18
|
||||
Total
|
$
|
6,685
|
|
|
$
|
(6,003
|
)
|
|
$
|
(42
|
)
|
|
$
|
640
|
|
|
|
|
December 31, 2017
|
||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
Losses
|
|
Net
Carrying
Amount
|
|
Weighted
Average
Useful Life
|
||||||||
|
(In thousands, except for weighted average useful life)
|
||||||||||||||||
Developed technology
|
$
|
6,100
|
|
|
$
|
(4,931
|
)
|
|
$
|
—
|
|
|
$
|
1,169
|
|
|
10
|
Patents
|
585
|
|
|
(443
|
)
|
|
(42
|
)
|
|
100
|
|
|
18
|
||||
Total
|
$
|
6,685
|
|
|
$
|
(5,374
|
)
|
|
$
|
(42
|
)
|
|
$
|
1,269
|
|
|
|
|
|
Future Amortization
|
||
|
|
(In thousands)
|
||
Year:
|
|
|
||
2019
|
|
$
|
576
|
|
2020
|
|
16
|
|
|
2021
|
|
12
|
|
|
2022
|
|
11
|
|
|
2023
|
|
11
|
|
|
Thereafter
|
|
14
|
|
|
Total
|
|
$
|
640
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
Loan payable
|
$
|
—
|
|
|
$
|
27
|
|
Less: current portion
|
—
|
|
|
(11
|
)
|
||
Total long-term debt
|
$
|
—
|
|
|
$
|
16
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
Financial Institution 1
|
$
|
92
|
|
|
$
|
1,687
|
|
Financial Institution 2
|
8,680
|
|
|
7,745
|
|
||
Financial Institution 3
|
—
|
|
|
990
|
|
||
Total
|
$
|
8,772
|
|
|
$
|
10,422
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(In thousands)
|
||||||
Financial Institution 1
|
$
|
97
|
|
|
$
|
1,771
|
|
Financial Institution 2
(1)
|
—
|
|
|
—
|
|
||
Financial Institution 3
|
—
|
|
|
990
|
|
||
Financial Institution 4
|
86
|
|
|
85
|
|
||
Total
|
$
|
183
|
|
|
$
|
2,846
|
|
|
|
|
|
Twelve Months Ended December 31, 2018
|
Twelve Months Ended December 31, 2017
|
Twelve Months Ended December 31, 2016
|
||||||
|
|
|||||||||
Operating lease cost
|
|
$
|
1,888
|
|
$
|
1,699
|
|
$
|
1,422
|
|
|
|
Twelve Months Ended December 31, 2018
|
Twelve Months Ended December 31, 2017
|
Twelve Months Ended December 31, 2016
|
||||||
|
|
|
|
|||||||
Cash payments
|
|
$
|
964
|
|
$
|
1,395
|
|
$
|
1,337
|
|
Weighted average remaining lease term
|
9.8 years
|
|
Weighted average discount rate
|
6.95
|
%
|
|
Lease Amounts
|
||
|
(In thousands)
|
||
Year:
|
|
||
2019
|
$
|
1,855
|
|
2020
|
1,653
|
|
|
2021
|
1,811
|
|
|
2022
|
1,714
|
|
|
2023
|
1,922
|
|
|
Thereafter
|
8,122
|
|
|
Imputed interest
|
(3,595
|
)
|
|
Total
|
$
|
13,482
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Balance, beginning of year
|
$
|
366
|
|
|
$
|
406
|
|
|
$
|
461
|
|
Warranty costs charged to cost of revenue
|
340
|
|
|
246
|
|
|
208
|
|
|||
Utilization charges against reserve
|
(48
|
)
|
|
(86
|
)
|
|
(27
|
)
|
|||
Release of accrual related to expired warranties
|
(180
|
)
|
|
(200
|
)
|
|
(236
|
)
|
|||
Balance, end of year
|
$
|
478
|
|
|
$
|
366
|
|
|
$
|
406
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017 (1)
|
|
2016 (1)
|
||||||
|
(In thousands)
|
||||||||||
Income (loss) before income taxes:
|
|
|
|
|
|
||||||
U.S.
|
$
|
12,139
|
|
|
$
|
11,549
|
|
|
$
|
6,158
|
|
Foreign
|
(699
|
)
|
|
(1,620
|
)
|
|
(2,445
|
)
|
|||
Total income before income taxes
|
$
|
11,440
|
|
|
$
|
9,929
|
|
|
$
|
3,713
|
|
|
|
|
|
|
|
||||||
Current tax provision (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
(297
|
)
|
|
$
|
441
|
|
|
$
|
—
|
|
State
|
(2
|
)
|
|
12
|
|
|
16
|
|
|||
Foreign
|
25
|
|
|
18
|
|
|
46
|
|
|||
Current tax provision (benefit)
|
$
|
(274
|
)
|
|
$
|
471
|
|
|
$
|
62
|
|
|
|
|
|
|
|
||||||
Deferred tax (benefit) provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
(9,773
|
)
|
|
$
|
(9,025
|
)
|
|
$
|
248
|
|
State
|
(606
|
)
|
|
(1,141
|
)
|
|
3
|
|
|||
Foreign
|
—
|
|
|
1,270
|
|
|
(319
|
)
|
|||
Total deferred tax benefit
|
$
|
(10,379
|
)
|
|
$
|
(8,896
|
)
|
|
$
|
(68
|
)
|
Total benefit for income taxes
|
$
|
(10,653
|
)
|
|
$
|
(8,425
|
)
|
|
$
|
(6
|
)
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017 (1)
|
|
2016 (1)
|
|||
U.S. federal taxes at statutory rate
|
21
|
%
|
|
34
|
%
|
|
34
|
%
|
State income tax, net of federal benefit
|
(6
|
)%
|
|
1
|
%
|
|
—
|
%
|
Deemed repatriation transition tax
|
—
|
%
|
|
71
|
%
|
|
—
|
%
|
Deferred tax re-measurement - Change in tax rates
|
1
|
%
|
|
24
|
%
|
|
—
|
%
|
Foreign rate differential
|
(1
|
)%
|
|
(10
|
)%
|
|
45
|
%
|
Change in tax status of foreign operations
|
(102
|
)%
|
|
—
|
%
|
|
—
|
%
|
Stock-based compensation
|
(3
|
)%
|
|
(6
|
)%
|
|
—
|
%
|
Non-deductible expenses
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
Federal research credits
|
(6
|
)%
|
|
(4
|
)%
|
|
(11
|
)%
|
Valuation allowance
|
3
|
%
|
|
(197
|
)%
|
|
(70
|
)%
|
Other
|
(1
|
)%
|
|
1
|
%
|
|
—
|
%
|
Effective tax rate
|
(93
|
)%
|
|
(85
|
)%
|
|
—
|
%
|
|
December 31,
2018 |
|
December 31, 2017(1)
|
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carry forwards
|
$
|
5,636
|
|
|
$
|
5,918
|
|
Accruals and reserves
|
12,157
|
|
|
2,847
|
|
||
Research and development credit carry forwards
|
4,609
|
|
|
3,957
|
|
||
Acquired intangibles
|
859
|
|
|
909
|
|
||
Charitable contributions
|
24
|
|
|
11
|
|
||
Total deferred tax assets
|
23,285
|
|
|
13,642
|
|
||
Valuation allowance
|
(2,850
|
)
|
|
(3,411
|
)
|
||
Net deferred tax assets
|
20,435
|
|
|
10,231
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation on property and equipment
|
(937
|
)
|
|
(650
|
)
|
||
Unrecognized gain on translation of foreign currency
|
(9
|
)
|
|
(5
|
)
|
||
Goodwill
|
(1,171
|
)
|
|
(1,643
|
)
|
||
Total deferred tax liabilities
|
(2,117
|
)
|
|
(2,298
|
)
|
||
Net deferred tax assets
|
$
|
18,318
|
|
|
$
|
7,933
|
|
|
|
|
|
||||
As reported on the balance sheet:
|
|
|
|
||||
Non-current assets
|
$
|
18,318
|
|
|
$
|
7,933
|
|
Non-current liabilities
|
—
|
|
|
—
|
|
||
Net deferred tax assets
|
$
|
18,318
|
|
|
$
|
7,933
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Federal
|
$
|
16,838
|
|
|
$
|
14,227
|
|
California
|
12,681
|
|
|
12,081
|
|
||
Ireland
|
9,363
|
|
|
16,644
|
|
||
Total net operating loss carryforwards
|
$
|
38,882
|
|
|
$
|
42,952
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Federal
|
$
|
2,925
|
|
|
$
|
2,572
|
|
California
|
2,132
|
|
|
1,753
|
|
||
Total credit carryforwards
|
$
|
5,057
|
|
|
$
|
4,325
|
|
|
December 31,
2018 |
|
December 31,
2017 |
|
December 31,
2016 |
|||||
|
(In thousands)
|
|||||||||
Unrecognized tax benefits as of December 31,
|
$
|
911
|
|
|
$
|
603
|
|
|
394
|
|
Increases related to prior year tax position
|
—
|
|
|
117
|
|
|
—
|
|
||
Increases related to current year tax position
|
251
|
|
|
191
|
|
|
209
|
|
||
Unrecognized tax benefits as of December 31,
|
$
|
1,162
|
|
|
$
|
911
|
|
|
603
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Stock-based compensation expense by financial line:
|
|
|
|
|
|
||||||
Cost of revenue
|
$
|
87
|
|
|
$
|
158
|
|
|
$
|
113
|
|
General and administrative
|
3,266
|
|
|
2,218
|
|
|
$
|
2,057
|
|
||
Sales and marketing
|
694
|
|
|
821
|
|
|
$
|
524
|
|
||
Research and development
|
1,193
|
|
|
890
|
|
|
$
|
569
|
|
||
Total stock-based compensation expense
|
$
|
5,240
|
|
|
$
|
4,087
|
|
|
$
|
3,263
|
|
|
|
|
|
|
|
||||||
Stock-based compensation expense by type of award:
|
|
|
|
|
|
||||||
Options
|
$
|
3,873
|
|
|
$
|
3,331
|
|
|
$
|
3,005
|
|
RSUs
|
1,367
|
|
|
756
|
|
|
$
|
258
|
|
||
Total stock-based compensation expense
|
$
|
5,240
|
|
|
$
|
4,087
|
|
|
$
|
3,263
|
|
|
Unamortized Compensation Costs
|
|
Weighted Average Service Period
|
||
|
(In thousands)
|
|
(In years)
|
||
Stock options
|
$
|
5,065
|
|
|
2.5
|
RSUs
|
2,128
|
|
|
2.2
|
|
Years Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
2016
|
|||||
|
(In thousands)
|
|||||||||
Stock options
|
$
|
3,607
|
|
|
$
|
3,375
|
|
|
2,977
|
|
RSUs
|
841
|
|
|
783
|
|
|
—
|
|
||
Total grant date fair value of stock options and RSUs vested during the period
|
$
|
4,448
|
|
|
$
|
4,158
|
|
|
2,977
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (in Years)
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(In thousands, except for weighted average exercise price and weighted average remaining contractual life)
|
|||||||||||
Balance, December 31, 2015
|
7,198
|
|
|
3.97
|
|
|
|
|
|
|
||
Granted
|
904
|
|
|
8.63
|
|
|
|
|
|
|
||
Exercised
|
(1,936
|
)
|
|
3.41
|
|
|
|
|
14,665
|
|
||
Forfeited
|
(283
|
)
|
|
5.30
|
|
|
|
|
|
|
||
Balance, December 31, 2016
|
5,883
|
|
|
4.81
|
|
|
|
|
|
|
||
Granted
|
677
|
|
|
9.57
|
|
|
|
|
|
|
||
Exercised
|
(1,226
|
)
|
|
4.49
|
|
|
|
|
6,798
|
|
||
Forfeited
|
(242
|
)
|
|
6.60
|
|
|
|
|
|
|
||
Balance, December 31, 2017
|
5,092
|
|
|
$
|
5.43
|
|
|
6.6
|
|
$
|
17,735
|
|
Granted
|
1,232
|
|
|
$
|
7.96
|
|
|
|
|
|
||
Exercised
|
(1,160
|
)
|
|
$
|
3.73
|
|
|
|
|
|
||
Forfeited
|
(183
|
)
|
|
$
|
3.98
|
|
|
|
|
|
||
Balance, December 31, 2018
|
4,982
|
|
|
$
|
6.36
|
|
|
6.56
|
|
$
|
6,572
|
|
Vested and exercisable as of December 31, 2018
|
3,193
|
|
|
$
|
5.44
|
|
|
5.39
|
|
$
|
6,124
|
|
Vested and exercisable as of December 31, 2018 and expected to vest thereafter
|
4,759
|
|
|
$
|
6.27
|
|
|
6.44
|
|
$
|
6,560
|
|
|
|
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock at the time of exercise. The aggregate intrinsic value at
December 31, 2018
is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock as of the end of the period.
|
|
Shares
|
|
Weighted
Average Grant-Date Fair Value |
||
|
(In thousands, except for weighted average grant-date fair value)
|
||||
Balance, December 31, 2015
|
—
|
|
|
—
|
|
Awarded
|
214
|
|
|
8.65
|
|
Balance, December 31, 2016
|
214
|
|
|
8.65
|
|
Awarded
|
162
|
|
|
10.14
|
|
Vested
|
(91
|
)
|
|
8.65
|
|
Forfeited
|
(11
|
)
|
|
8.52
|
|
Balance, December 31, 2017
|
274
|
|
|
9.54
|
|
Awarded
|
280
|
|
|
9.54
|
|
Vested
|
(90
|
)
|
|
9.33
|
|
Balance, December 31, 2018
|
463
|
|
|
8.49
|
|
|
For years ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Weighted average expected life (years)
|
4.19
|
|
4.50
|
|
4.38
|
Weighted average expected volatility
|
67.41%
|
|
80.22%
|
|
80.35%
|
Risk-free interest rate
|
2.48% – 3.01%
|
|
1.64% – 1.99%
|
|
1.03% – 1.32%
|
Weighted average dividend yield
|
—%
|
|
—%
|
|
—%
|
January 31, 2019 Grants
|
Shares
|
|
Exercise Price
|
|
Vesting Term
(1)
|
|
Expiration from Date of Grant
|
|||
Options
|
228,571
|
|
|
$
|
7.60
|
|
|
4 years
|
|
10 years
|
RSUs
|
136,510
|
|
|
7.60
|
|
|
4 years
|
|
**
|
|
Total
|
365,081
|
|
|
|
|
|
|
|
February 2, 2019 Grants
|
Shares
|
|
Exercise Price
|
|
Vesting Term
(1)
|
|
Expiration from Date of Grant
|
|||
Options
|
95,622
|
|
|
$
|
7.87
|
|
|
4 years
|
|
10 years
|
RSUs
|
19,059
|
|
|
$
|
7.87
|
|
|
4 years
|
|
**
|
Total
|
114,681
|
|
|
|
|
|
|
|
February 12, 2019 Grants
|
Shares
|
|
Exercise Price
|
|
Vesting Term
(1)
|
|
Expiration from Date of Grant
|
|||
Options
|
67,888
|
|
|
$
|
7.70
|
|
|
4 years
|
|
10 years
|
RSUs
|
228,228
|
|
|
$
|
7.70
|
|
|
4 years
|
|
**
|
Total
|
296,116
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
Water
|
|
Oil &Gas
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Product revenue
|
$
|
60,512
|
|
|
$
|
513
|
|
|
$
|
61,025
|
|
Product cost of revenue
|
17,211
|
|
|
662
|
|
|
17,873
|
|
|||
Product gross profit
|
43,301
|
|
|
(149
|
)
|
|
43,152
|
|
|||
|
|
|
|
|
|
||||||
License and development revenue
|
—
|
|
|
13,490
|
|
|
13,490
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
2,078
|
|
|
1,771
|
|
|
3,849
|
|
|||
Sales and marketing
|
5,783
|
|
|
1,264
|
|
|
7,047
|
|
|||
Research and development
|
1,711
|
|
|
15,276
|
|
|
16,987
|
|
|||
Amortization of intangibles
|
629
|
|
|
—
|
|
|
629
|
|
|||
Operating expenses
|
10,201
|
|
|
18,311
|
|
|
28,512
|
|
|||
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
33,100
|
|
|
$
|
(4,970
|
)
|
|
28,130
|
|
|
|
|
|
|
|
|
||||||
Less: Corporate operating expenses
|
|
|
|
|
|
|
18,152
|
|
|||
Consolidated operating income
|
|
|
|
|
|
|
9,978
|
|
|||
Non-operating income
|
|
|
|
|
|
|
1,462
|
|
|||
Income before income taxes
|
|
|
|
|
|
|
$
|
11,440
|
|
|
Year Ended December 31, 2017
|
||||||||||
|
Water
|
|
Oil &Gas
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Product revenue
|
$
|
54,301
|
|
|
$
|
3,722
|
|
|
$
|
58,023
|
|
Product cost of revenue
|
16,032
|
|
|
3,029
|
|
|
19,061
|
|
|||
Product gross profit
|
38,269
|
|
|
693
|
|
|
38,962
|
|
|||
|
|
|
|
|
|
||||||
License and development revenue
|
—
|
|
|
11,106
|
|
|
11,106
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
1,401
|
|
|
1,565
|
|
|
2,966
|
|
|||
Sales and marketing
|
5,787
|
|
|
2,228
|
|
|
8,015
|
|
|||
Research and development
|
1,064
|
|
|
12,217
|
|
|
13,281
|
|
|||
Amortization of intangibles
|
631
|
|
|
—
|
|
|
631
|
|
|||
Operating expenses
|
8,883
|
|
|
16,010
|
|
|
24,893
|
|
|||
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
29,386
|
|
|
$
|
(4,211
|
)
|
|
25,175
|
|
|
|
|
|
|
|
|
||||||
Less: Corporate operating expenses
|
|
|
|
|
|
|
15,926
|
|
|||
Consolidated operating income
|
|
|
|
|
|
|
9,249
|
|
|||
Non-operating income
|
|
|
|
|
|
|
680
|
|
|||
Income before income taxes
|
|
|
|
|
|
|
$
|
9,929
|
|
|
Year Ended December 31, 2016
|
||||||||||
|
Water
|
|
Oil &Gas
|
|
Total
|
||||||
|
(In thousand)
|
||||||||||
Product revenue
|
$
|
47,545
|
|
|
$
|
2,170
|
|
|
$
|
49,715
|
|
Product cost of revenue
|
16,353
|
|
|
1,496
|
|
|
17,849
|
|
|||
Product gross profit
|
31,192
|
|
|
674
|
|
|
31,866
|
|
|||
|
|
|
|
|
|
||||||
License and development revenue
|
—
|
|
|
8,069
|
|
|
8,069
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
1,081
|
|
|
1,000
|
|
|
2,081
|
|
|||
Sales and marketing
|
5,076
|
|
|
2,985
|
|
|
8,061
|
|
|||
Research and development
|
1,331
|
|
|
8,705
|
|
|
10,036
|
|
|||
Amortization of intangibles
|
631
|
|
|
—
|
|
|
631
|
|
|||
Operating expenses
|
8,119
|
|
|
12,690
|
|
|
20,809
|
|
|||
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
23,073
|
|
|
$
|
(3,947
|
)
|
|
19,126
|
|
|
|
|
|
|
|
|
||||||
Less: Corporate operating expenses
|
|
|
|
|
|
|
15,700
|
|
|||
Consolidated operating income
|
|
|
|
|
|
|
3,426
|
|
|||
Non-operating income
|
|
|
|
|
|
|
287
|
|
|||
Income before income taxes
|
|
|
|
|
|
|
$
|
3,713
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Water
|
$
|
2,060
|
|
|
$
|
2,723
|
|
|
$
|
3,043
|
|
Oil & Gas
|
1,377
|
|
|
448
|
|
|
244
|
|
|||
Corporate
|
432
|
|
|
495
|
|
|
393
|
|
|||
Total depreciation and amortization
|
$
|
3,869
|
|
|
$
|
3,666
|
|
|
$
|
3,680
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except for percentages)
|
||||||||||
Product revenue by geographic location:
|
|
|
|
|
|
||||||
United States
|
$
|
1,645
|
|
|
$
|
1,706
|
|
|
$
|
1,203
|
|
International
|
59,380
|
|
|
56,317
|
|
|
48,512
|
|
|||
Total product revenue
|
$
|
61,025
|
|
|
$
|
58,023
|
|
|
$
|
49,715
|
|
|
|
|
|
|
|
||||||
Product revenue by country:
|
|
|
|
|
|
||||||
Egypt
|
17
|
%
|
|
15
|
%
|
|
8
|
%
|
|||
Saudi Arabia
|
31
|
|
|
13
|
|
|
14
|
|
|||
China
|
8
|
|
|
9
|
|
|
13
|
|
|||
Others
(1)
|
44
|
%
|
|
63
|
%
|
|
65
|
%
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
(1)
|
Includes remaining countries not separately disclosed. No country in this line item individually accounted for more than 10% of the Company’s product revenue during any of the years presented.
|
|
Segment
|
|
December 31,
2018 |
|
December 31,
2017 |
||
Customer A
|
Water
|
|
**
|
|
|
16
|
%
|
Customer B
|
Water
|
|
**
|
|
|
10
|
|
Customer C
|
Water
|
|
**
|
|
|
11
|
|
Customer D
|
Water
|
|
**
|
|
|
**
|
|
Customer E
|
Water
|
|
20
|
%
|
|
**
|
|
Customer F
|
Water
|
|
11
|
%
|
|
**
|
|
Customer G
|
Oil & Gas
|
|
26
|
|
|
26
|
|
|
|
|
Segment
|
|
December 31,
2018 |
|
December 31,
2017 |
||
Vendor A
|
Oil & Gas
|
|
**
|
|
|
11
|
%
|
Vendor B
|
Oil & Gas
|
|
10
|
%
|
|
**
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31,
2018 |
|
June 30,
2018 |
|
September 30,
2018 |
|
December 31,
2018 |
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
Product revenue
|
$
|
11,058
|
|
|
$
|
17,406
|
|
|
$
|
18,578
|
|
|
$
|
13,983
|
|
Product cost of revenue
|
3,314
|
|
|
5,976
|
|
|
5,022
|
|
|
3,561
|
|
||||
Product gross profit
|
7,744
|
|
|
11,430
|
|
|
13,556
|
|
|
10,422
|
|
||||
|
|
|
|
|
|
|
|
||||||||
License and development revenue
|
2,749
|
|
|
3,358
|
|
|
3,661
|
|
|
3,723
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
5,837
|
|
|
4,927
|
|
|
5,266
|
|
|
5,446
|
|
||||
Sales and marketing
|
1,912
|
|
|
1,858
|
|
|
1,873
|
|
|
1,903
|
|
||||
Research and development
|
3,917
|
|
|
3,605
|
|
|
4,270
|
|
|
5,220
|
|
||||
Amortization of intangible assets
|
158
|
|
|
158
|
|
|
158
|
|
|
156
|
|
||||
Total operating expenses
|
$
|
11,824
|
|
|
$
|
10,548
|
|
|
$
|
11,567
|
|
|
$
|
12,725
|
|
Income (loss) from operations
|
$
|
(1,331
|
)
|
|
$
|
4,240
|
|
|
$
|
5,650
|
|
|
$
|
1,420
|
|
Provision for (benefit from) income taxes
(2)
|
$
|
(357
|
)
|
|
$
|
(11,122
|
)
|
|
$
|
1,339
|
|
|
$
|
(516
|
)
|
Net income (loss)
|
$
|
(726
|
)
|
|
$
|
15,743
|
|
|
$
|
4,658
|
|
|
$
|
2,421
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.29
|
|
|
$
|
0.09
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.28
|
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
|
(1)
|
Quarterly results may not add up to annual results due to rounding.
|
(2)
|
During second quarter of 2018, the Company recognized an income tax benefit of
$11.1 million
, which included a
$12.1 million
discrete tax benefit. This discrete tax benefit includes an
$11.9 million
tax benefit related to the income tax effects of a tax election related to a change to the Company’s international tax structure in Ireland that was effective Q2 2018.
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2017(2)
|
|
June 30, 2017(2)
|
|
September 30, 2017(2)
|
|
December 31, 2017(2)
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
Product revenue
|
$
|
12,245
|
|
|
$
|
10,864
|
|
|
$
|
13,860
|
|
|
$
|
21,054
|
|
Product cost of revenue
|
4,612
|
|
|
3,572
|
|
|
4,217
|
|
|
6,660
|
|
||||
Product gross profit
|
7,633
|
|
|
7,292
|
|
|
9,643
|
|
|
14,394
|
|
||||
|
|
|
|
|
|
|
|
||||||||
License and development revenue
|
2,248
|
|
|
3,050
|
|
|
3,197
|
|
|
2,611
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
4,408
|
|
|
3,927
|
|
|
4,034
|
|
|
4,985
|
|
||||
Sales and marketing
|
2,453
|
|
|
2,174
|
|
|
2,061
|
|
|
2,703
|
|
||||
Research and development
|
2,509
|
|
|
3,077
|
|
|
3,038
|
|
|
4,819
|
|
||||
Amortization of intangible assets
|
158
|
|
|
158
|
|
|
157
|
|
|
158
|
|
||||
Total operating expenses
|
$
|
9,528
|
|
|
$
|
9,336
|
|
|
$
|
9,290
|
|
|
$
|
12,665
|
|
Income (loss) from operations
|
$
|
353
|
|
|
$
|
1,006
|
|
|
$
|
3,550
|
|
|
$
|
4,340
|
|
Provision for (benefit from) income taxes
(2)
|
48
|
|
|
188
|
|
|
310
|
|
|
(8,971
|
)
|
||||
Net income
|
$
|
422
|
|
|
$
|
929
|
|
|
$
|
3,472
|
|
|
$
|
13,531
|
|
Income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.03
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
0.25
|
|
Diluted
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
0.24
|
|
|
|
(1)
|
Quarterly results may not add up to annual results due to rounding.
|
(2)
|
Due to the full retrospective adoption of ASC 606, period numbers for the year 2017 are recast.
|
Plan Category
|
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants,
and
Rights
|
|
Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants,
and
Rights
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
the
First
Column)
|
|||
Equity compensation plans approved by security holders
(1)
|
|
5,444,804
|
|
|
6.5
|
|
|
2,603,183
|
|
Equity compensation plans not approved by security holders
|
|
None
|
|
|
Not applicable
|
|
|
Not applicable
|
|
|
|
(1)
|
Represents shares of the Company’s common stock issuable upon exercise of options outstanding under the following equity compensation plans: the 2006 Stock Option/Stock Issuance Plan, the 2008 Equity Incentive Plan, the Amended and Restated 2008 Equity Incentive Plan, and the 2016 Incentive Plan.
|
(a)
|
The following documents are included as part of this Annual Report on Form 10-K:
|
(1)
|
Financial Statements.
The financial statements included in Part II, Item 8 of this document are filed as part of this Annual Report on Form 10‑K.
|
(2)
|
Financial Statement Schedule.
See
Note
Not Used
, “
Allowance for Doubtful Accounts
,”
of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K
. Schedules not listed have been omitted because information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.
|
(3)
|
Exhibit Index.
See Exhibit Index immediately following the Signature page for a list of Exhibits filed or incorporated by reference as a part of this Report.
|
(b)
|
Exhibit
. See Exhibits listed under Item 15(a)(3).
|
(c)
|
Financial Statement Schedules.
All financial statement schedules are omitted because they are not applicable, not required, or because the required information is included in the Consolidated Financial Statements, the Notes thereto, or in the Exhibits listed under Item 15(a)(2).
|
|
ENERGY RECOVERY, INC.
|
|
|
|
By: /s/ CHRIS GANNON
|
|
Chris Gannon
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ CHRIS GANNON
|
|
President and Chief Executive Officer
|
March 7, 2019
|
Chris Gannon
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ JOSHUA BALLARD
|
|
Chief Financial Officer
|
March 7, 2019
|
Joshua Ballard
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
/s/ HANS PETER MICHELET
|
|
Director and Chairman of the Board
|
March 7, 2019
|
Hans Peter Michelet
|
|
|
|
|
|
|
|
/s/ ALEXANDER J. BUEHLER
|
|
Director
|
March 7, 2019
|
Alexander J. Buehler
|
|
|
|
|
|
|
|
/s/ OLAV FJELL
|
|
Director
|
March 7, 2019
|
Olav Fjell
|
|
|
|
|
|
|
|
/s/ SHERIF FODA
|
|
Director
|
March 7, 2019
|
Sherif Foda
|
|
|
|
|
|
|
|
/s/ ARVE HANSTVEIT
|
|
Director
|
March 7, 2019
|
Arve Hanstveit
|
|
|
|
|
|
|
|
/s/ OLE PETER LORENTZEN
|
|
Director
|
March 7, 2019
|
Ole Peter Lorentzen
|
|
|
|
|
|
|
|
/s/ ROBERT YU LANG MAO
|
|
Director
|
March 7, 2019
|
Robert Yu Lang Mao
|
|
|
|
|
|
|
|
Exhibit Number
|
Exhibit Description
|
Incorporated by Reference
|
Filed Herewith
|
|||
Form
|
File No.
|
Exhibit
|
Filing Date
|
|||
3.1
|
Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on July 7, 2008.
|
10-K
|
001-34112
|
3.1
|
3/27/2009
|
|
3.2
|
Amended and Restated Bylaws, effective as of July 8, 2008.
|
10-K
|
001-34112
|
3.2
|
3/27/2009
|
|
10.1*
|
Form of Indemnification Agreement between the Company and its directors and officers.
|
S-1/A
|
333-150007
|
10.1
|
5/12/2008
|
|
10.2*
|
2006 Stock Option/Stock Issuance Plan of the Company and forms of Stock Option and Stock Purchase Agreements thereunder.
|
S-1
|
333-150007
|
10.5
|
4/1/2008
|
|
10.3*
|
Amendment to 2006 Stock Option/Stock Issuance Plan of the Company.
|
S-1
|
333-150007
|
10.5.1
|
4/1/2008
|
|
10.4*
|
Second Amendment to 2006 Stock Option/Stock Issuance Plan of the Company.
|
S-1
|
333-150007
|
10.5.2
|
4/1/2008
|
|
10.5*
|
2008 Equity Incentive Plan of the Company and form of Stock Option Agreement thereunder.
|
S-1/A
|
333-150007
|
10.6
|
5/12/2008
|
|
10.6*
|
Energy Recovery Inc. Amended and Restated 2008 Equity Incentive Plan.
|
DEF14A
|
001-34112
|
Appendix A
|
4/27/2012
|
|
10.7
|
Modified Industrial Gross Lease Agreement dated November 25, 2008, between the Company and Doolittle Williams, LLC.
|
10-K
|
001-34112
|
10.17
|
3/27/2009
|
|
10.8
|
First Amendment to Modified Industrial Gross Lease dated May 28, 2009, between the Company and Doolittle Williams, LLC.
|
10-Q
|
001-34112
|
10.17.1
|
8/7/2009
|
|
10.9
|
Second Amendment to Modified Industrial Gross Lease dated June 26, 2009, between the Company and Doolittle Williams, LLC.
|
10-Q
|
001-34112
|
10.17.2
|
8/7/2009
|
|
10.10
|
Third Amendment to Modified Industrial Gross Lease dated November 10, 2010 between the Company and Doolittle Williams, LLC.
|
10-K
|
001-34112
|
10.14
|
3/12/2013
|
|
10.11
|
Control Agreement dated July 7, 2011, between the Company, Citibank, N.A., Citigroup Global Markets Inc., and Morgan Stanley Smith Barney LLC.
|
10-Q
|
001-34112
|
10.43
|
8/8/2011
|
|
10.12*
|
Energy Recovery, Inc. Change in Control Severance Plan dated March 5, 2012.
|
8-K
|
001-34112
|
10.1
|
3/9/2012
|
|
10.13
|
Loan Agreement dated June 5, 2012 between Company and HSBC Bank, USA, National Association.
|
8-K
|
001-34112
|
10.1
|
6/11/2012
|
|
10.14*
|
Energy Recovery, Inc. Annual Incentive Plan dated January 1, 2014.
|
8-K
|
001-34112
|
10.1
|
4/30/2014
|
|
10.15*
|
Offer Letter dated June 26, 2014, to Mr. Joel Gay.
|
8-K/A
|
001-34112
|
99.2
|
7/8/2014
|
|
10.16*
|
Draft Consulting Agreement with Thomas S. Rooney, Jr.
|
8-K
|
001-34112
|
10.2
|
1/13/2015
|
|
10.17*
|
Energy Recovery, Inc. 2015 Annual Incentive Plan.
|
8-K
|
001-34112
|
10.1
|
4/29/2015
|
|
10.18*
|
Offer Letter dated April 22, 2015 to Mr. Joel Gay.
|
8-K
|
001-34112
|
99.2
|
4/29/2015
|
|
10.19*
|
Promotion Letter dated April 30, 2015 to Ms. Sharon Smith-Lenox.
|
8-K
|
001-34112
|
99.1
|
5/1/2015
|
|
10.20*
|
Offer Letter dated May 5, 2015 to Mr. Eric Siebert.
|
10-K
|
001-34112
|
10.25
|
3/3/2016
|
|
10.21
|
Settlement and Mutual Release Agreement.
|
8-K
|
001-34112
|
99.1
|
5/13/2015
|
|
10.22*
|
Offer Letter dated May 13, 2015 to Mr. Chris Gannon.
|
8-K
|
001-34112
|
99.1
|
5/15/2015
|
|
10.23
|
Second Amendment to Loan Agreement with HSBC Bank USA, National Association.
|
10-Q
|
001-34112
|
10.7
|
8/6/2015
|
|
10.24*
|
Offer Letter dated September 17, 2015 to Ms. Emily Smith.
|
10-K
|
001-34112
|
10.30
|
3/3/2016
|
|
10.25**
|
License Agreement by and between ERI Energy Recovery Ireland, Ltd. and Schlumberger Technology Corporation.
|
10-K
|
001-34112
|
10.31
|
3/3/2016
|
|
10.26*
|
Energy Recovery, Inc. Annual Incentive Plan effective as of January 1, 2016.
|
8-K
|
001-34112
|
10.1
|
3/1/2016
|
|
10.27*
|
Transition and Separation Agreement dated March 15, 2016 by and between Energy Recovery, Inc. and Mr. Juan Otero.
|
8-K
|
001-34112
|
99.1
|
3/18/2016
|
|
*
|
Indicates management compensatory plan, contract or arrangement.
|
**
|
Portions of this exhibit have been omitted based on a request for Confidential Treatment submitted to the Securities and Exchange Commission (the “SEC”). The omitted information has been filed separately with the SEC as a part of the confidential treatment request. In the event that the SEC should deny such request in whole or in part, the relevant, previously omitted portions of this exhibit shall be publicly filed.
|
Company Name
|
|
Country/State of Incorporation/Formation
|
ERI Energy Recovery Holdings Ireland Limited
|
|
Ireland
|
ERI Energy Recovery Ireland Limited
|
|
Ireland
|
Energy Recovery Iberia, S.L.
|
|
Spain
|
Energy Recovery Canada, Corp.
|
|
Canada
|
1.
|
I have reviewed this annual report on Form 10-K of Energy Recovery, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 7, 2019
|
/s/ CHRIS GANNON
|
|
|
|
Name:
|
Chris Gannon
|
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer) |
|
1.
|
I have reviewed this annual report on Form 10-K of Energy Recovery, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 7, 2019
|
/s/ JOSHUA BALLARD
|
|
|
|
Name:
|
Joshua Ballard
|
|
|
Title:
|
Chief Financial Officer
(Principal Financial Officer) |
|
|
|
/s/ CHRIS GANNON
|
|
|
Chris Gannon
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ JOSHUA BALLARD
|
|
|
Joshua Ballard
|
|
|
Chief Financial Officer
|