|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF
1934
|
For the quarterly period ended March 31, 2019
|
|
OR
|
|
o
|
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
|
Trading Symbol
|
Name of each exchange on which registered
|
Common
|
ERII
|
Nasdaq
|
Large accelerated filer
o
|
Accelerated filer
x
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
|
Page No.
|
PART I.
FINANCIAL INFORMATION
|
||
Item 1.
|
|
|
|
Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018
|
|
|
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018
|
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018
|
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018
|
|
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II.
OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
||
|
Exhibit List
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands, except share data and par value)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
16,992
|
|
|
$
|
21,955
|
|
Restricted cash
|
97
|
|
|
97
|
|
||
Short-term investments
|
71,771
|
|
|
73,338
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $362 and $396 at March 31, 2019 and December 31, 2018, respectively
|
17,408
|
|
|
10,212
|
|
||
Contract assets
|
1,107
|
|
|
4,083
|
|
||
Inventories
|
7,307
|
|
|
7,138
|
|
||
Income Tax Receivable
|
4
|
|
|
15
|
|
||
Prepaid expenses and other current assets
|
3,170
|
|
|
2,810
|
|
||
Total current assets
|
117,856
|
|
|
119,648
|
|
||
Restricted cash, non-current
|
86
|
|
|
86
|
|
||
Long-term investments
|
2,548
|
|
|
1,269
|
|
||
Deferred tax assets, non-current
|
17,769
|
|
|
18,318
|
|
||
Property and equipment, net
|
16,239
|
|
|
14,619
|
|
||
Operating lease, right of use asset
|
11,946
|
|
|
12,189
|
|
||
Goodwill
|
12,790
|
|
|
12,790
|
|
||
Other intangible assets, net
|
484
|
|
|
640
|
|
||
Other assets, non-current
|
304
|
|
|
282
|
|
||
Total assets
|
$
|
180,022
|
|
|
$
|
179,841
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,989
|
|
|
$
|
1,439
|
|
Accrued expenses and other current liabilities
|
5,112
|
|
|
8,019
|
|
||
Lease liabilities
|
954
|
|
|
926
|
|
||
Accrued warranty reserve
|
571
|
|
|
478
|
|
||
Contract liabilities
|
15,656
|
|
|
16,270
|
|
||
Total current liabilities
|
24,282
|
|
|
27,132
|
|
||
Lease liabilities, non-current
|
12,311
|
|
|
12,556
|
|
||
Contract liabilities, non-current
|
23,231
|
|
|
26,539
|
|
||
Other non-current liabilities
|
278
|
|
|
236
|
|
||
Total liabilities
|
60,102
|
|
|
66,463
|
|
||
Commitments and Contingencies (Note 8)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 200,000,000 shares authorized; 59,934,601 shares issued and 54,478,666 shares outstanding at March 31, 2019 and 59,396,020 shares issued and 53,940,085 shares outstanding at December 31, 2018
|
60
|
|
|
59
|
|
||
Additional paid-in capital
|
162,231
|
|
|
158,404
|
|
||
Accumulated other comprehensive loss
|
(73
|
)
|
|
(133
|
)
|
||
Treasury Stock at cost, 5,455,935 shares repurchased at March 31, 2019 and December 31, 2018.
|
(30,486
|
)
|
|
(30,486
|
)
|
||
Accumulated deficit
|
(11,812
|
)
|
|
(14,466
|
)
|
||
Total stockholders’ equity
|
119,920
|
|
|
113,378
|
|
||
Total liabilities and stockholders’ equity
|
$
|
180,022
|
|
|
$
|
179,841
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands, except per share data)
|
||||||
Product revenue
|
$
|
16,072
|
|
|
$
|
11,058
|
|
Product cost of revenue
|
4,935
|
|
|
3,314
|
|
||
Product gross profit
|
11,137
|
|
|
7,744
|
|
||
|
|
|
|
||||
License and development revenue
|
3,723
|
|
|
2,749
|
|
||
|
|
|
|
||||
Operating expenses:
|
|
|
|
||||
General and administrative
|
5,579
|
|
|
5,837
|
|
||
Sales and marketing
|
2,162
|
|
|
1,912
|
|
||
Research and development
|
4,254
|
|
|
3,917
|
|
||
Amortization of intangible assets
|
156
|
|
|
158
|
|
||
Total operating expenses
|
12,151
|
|
|
11,824
|
|
||
Income (loss) from operations
|
2,709
|
|
|
(1,331
|
)
|
||
|
|
|
|
||||
Other income (expense):
|
|
|
|
||||
Interest income
|
523
|
|
|
301
|
|
||
Other non-operating expense, net
|
(24
|
)
|
|
(53
|
)
|
||
Total other income, net
|
499
|
|
|
248
|
|
||
Income (loss) before income taxes
|
3,208
|
|
|
(1,083
|
)
|
||
Provision for (benefit from) income taxes
|
554
|
|
|
(357
|
)
|
||
Net income (loss)
|
$
|
2,654
|
|
|
$
|
(726
|
)
|
|
|
|
|
||||
Income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.05
|
|
|
$
|
(0.01
|
)
|
Diluted
|
$
|
0.05
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
||||
Number of shares used in per share calculations:
|
|
|
|
||||
Basic
|
54,116
|
|
|
53,987
|
|
||
Diluted
|
55,368
|
|
|
53,987
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net income (loss)
|
$
|
2,654
|
|
|
$
|
(726
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(24
|
)
|
|
21
|
|
||
Unrealized gain (loss) on investments
|
84
|
|
|
(64
|
)
|
||
Other comprehensive income (loss), net of tax
|
60
|
|
|
(43
|
)
|
||
Comprehensive income (loss)
|
$
|
2,714
|
|
|
$
|
(769
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2018
|
59,396
|
|
|
$
|
59
|
|
|
(5,456
|
)
|
|
$
|
(30,486
|
)
|
|
$
|
158,404
|
|
|
$
|
(133
|
)
|
|
$
|
(14,466
|
)
|
|
$
|
113,378
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,654
|
|
|
2,654
|
|
||||||
Unrealized gain on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
||||||
Issuance of common stock
|
523
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
2,157
|
|
||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,671
|
|
|
—
|
|
|
—
|
|
|
1,671
|
|
||||||
Balance at March 31, 2019
|
59,919
|
|
|
$
|
60
|
|
|
(5,456
|
)
|
|
$
|
(30,486
|
)
|
|
$
|
162,231
|
|
|
$
|
(73
|
)
|
|
$
|
(11,812
|
)
|
|
$
|
119,920
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance at December 31, 2017
|
58,168
|
|
|
$
|
58
|
|
|
(4,263
|
)
|
|
$
|
(20,486
|
)
|
|
$
|
149,006
|
|
|
$
|
(125
|
)
|
|
$
|
(36,559
|
)
|
|
$
|
91,894
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(726
|
)
|
|
(726
|
)
|
||||||
Unrealized loss on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|
—
|
|
|
(64
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||
Issuance of common stock
|
532
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,598
|
|
|
—
|
|
|
—
|
|
|
1,599
|
|
||||||
Repurchase of common stock for treasury *
|
—
|
|
|
—
|
|
|
(410
|
)
|
|
(3,495
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,495
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,246
|
|
|
—
|
|
|
—
|
|
|
2,246
|
|
||||||
Balance at March 31, 2018
|
58,700
|
|
|
$
|
59
|
|
|
(4,673
|
)
|
|
$
|
(23,981
|
)
|
|
$
|
152,850
|
|
|
$
|
(168
|
)
|
|
$
|
(37,286
|
)
|
|
$
|
91,474
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
2,654
|
|
|
$
|
(726
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Stock-based compensation
|
1,678
|
|
|
2,242
|
|
||
Depreciation and amortization
|
900
|
|
|
1,124
|
|
||
Amortization of premiums on investments
|
(26
|
)
|
|
90
|
|
||
Provision for warranty claims
|
152
|
|
|
48
|
|
||
Reversal of accruals related to expired warranties
|
(47
|
)
|
|
(50
|
)
|
||
Unrealized (gain) loss on foreign currency translation
|
(56
|
)
|
|
113
|
|
||
Provision for doubtful accounts
|
(34
|
)
|
|
8
|
|
||
Adjustments for excess or obsolete inventory
|
38
|
|
|
4
|
|
||
Deferred income taxes
|
549
|
|
|
(376
|
)
|
||
Loss on disposal of fixed assets
|
—
|
|
|
21
|
|
||
Other non-cash adjustments
|
31
|
|
|
3
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(7,162
|
)
|
|
(297
|
)
|
||
Contract assets
|
2,977
|
|
|
1,330
|
|
||
Inventories
|
(218
|
)
|
|
(1,824
|
)
|
||
Prepaid and other assets
|
(140
|
)
|
|
(127
|
)
|
||
Accounts payable
|
18
|
|
|
(1,467
|
)
|
||
Accrued expenses and other liabilities
|
(3,353
|
)
|
|
(4,092
|
)
|
||
Income taxes
|
10
|
|
|
(3
|
)
|
||
Contract liabilities
|
(3,922
|
)
|
|
(2,354
|
)
|
||
Net cash used in operating activities
|
(5,951
|
)
|
|
(6,333
|
)
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Maturities of marketable securities
|
19,599
|
|
|
25,623
|
|
||
Purchases of marketable securities
|
(19,198
|
)
|
|
(13,935
|
)
|
||
Capital expenditures
|
(1,566
|
)
|
|
(626
|
)
|
||
Net cash (used in) provided by investing activities
|
(1,165
|
)
|
|
11,062
|
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Net proceeds from issuance of common stock
|
2,191
|
|
|
1,636
|
|
||
Tax payment for employee shares withheld
|
(34
|
)
|
|
(37
|
)
|
||
Repayment of long-term debt
|
—
|
|
|
(2
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(3,495
|
)
|
||
Net cash provided by (used in) financing activities
|
2,157
|
|
|
(1,898
|
)
|
||
Effect of exchange rate differences on cash and cash equivalents
|
(4
|
)
|
|
(14
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
(4,963
|
)
|
|
2,817
|
|
||
Cash, cash equivalents and restricted cash, beginning of year
|
22,138
|
|
|
30,626
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
17,175
|
|
|
$
|
33,443
|
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||
|
Water
|
|
Oil and Gas
|
|
Total
|
|
Water
|
|
Oil and Gas
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Primary geographical market
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Middle East and Africa
|
$
|
8,698
|
|
|
$
|
104
|
|
|
$
|
8,802
|
|
|
$
|
6,102
|
|
|
$
|
10
|
|
|
$
|
6,112
|
|
Americas
|
4,023
|
|
|
3,723
|
|
|
7,746
|
|
|
1,101
|
|
|
2,749
|
|
|
3,850
|
|
||||||
Asia
|
2,134
|
|
|
—
|
|
|
2,134
|
|
|
2,673
|
|
|
—
|
|
|
2,673
|
|
||||||
Europe
|
1,113
|
|
|
—
|
|
|
1,113
|
|
|
1,172
|
|
|
—
|
|
|
1,172
|
|
||||||
Total
|
$
|
15,968
|
|
|
$
|
3,827
|
|
|
$
|
19,795
|
|
|
$
|
11,048
|
|
|
$
|
2,759
|
|
|
$
|
13,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Major product/service line
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PX, pumps and turbo devices
|
$
|
15,968
|
|
|
$
|
—
|
|
|
$
|
15,968
|
|
|
$
|
11,048
|
|
|
$
|
—
|
|
|
$
|
11,048
|
|
License and development
|
—
|
|
|
3,723
|
|
|
3,723
|
|
|
—
|
|
|
2,749
|
|
|
2,749
|
|
||||||
Oil & gas products
|
—
|
|
|
104
|
|
|
104
|
|
|
—
|
|
|
10
|
|
|
10
|
|
||||||
Total
|
$
|
15,968
|
|
|
$
|
3,827
|
|
|
$
|
19,795
|
|
|
$
|
11,048
|
|
|
$
|
2,759
|
|
|
$
|
13,807
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
4,083
|
|
|
$
|
6,278
|
|
Transferred to receivables
|
(3,598
|
)
|
|
(8,865
|
)
|
||
Additional unbilled receivables
|
622
|
|
|
6,670
|
|
||
Balance, end of period
|
$
|
1,107
|
|
|
$
|
4,083
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
42,809
|
|
|
$
|
56,426
|
|
Revenue recognized
|
(3,736
|
)
|
|
(13,493
|
)
|
||
Cash received
|
(186
|
)
|
|
(124
|
)
|
||
Balance, end of period
|
$
|
38,887
|
|
|
$
|
42,809
|
|
|
March 31,
2019 |
||
|
(In thousands)
|
||
Year:
|
|
||
2019 (remaining nine months)
|
$
|
10,821
|
|
2020
|
14,119
|
|
|
2021
|
6,794
|
|
|
2022
|
661
|
|
|
2023 and thereafter
|
5,031
|
|
|
Total
|
$
|
37,426
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands, except per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
2,654
|
|
|
$
|
(726
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Basic weighted average common shares outstanding
|
54,116
|
|
|
53,987
|
|
||
Weighted average effect of dilutive stock awards
|
1,252
|
|
|
—
|
|
||
Diluted weighted average common shares outstanding
|
55,368
|
|
|
53,987
|
|
||
|
|
|
|
||||
Net income (loss) per share:
|
|
|
|
||||
Basic
|
$
|
0.05
|
|
|
$
|
(0.01
|
)
|
Diluted
|
$
|
0.05
|
|
|
$
|
(0.01
|
)
|
|
Three Months Ended March 31,
|
|
||||
|
2019
|
|
2018
|
|
||
|
(In thousands)
|
|||||
Anti-dilutive shares excluded from net income (loss) per share calculation
|
2,461
|
|
|
5,414
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
16,992
|
|
|
$
|
21,955
|
|
Restricted cash
|
183
|
|
|
183
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
17,175
|
|
|
$
|
22,138
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
2,387
|
|
|
$
|
2,238
|
|
Work in process
|
2,139
|
|
|
2,689
|
|
||
Finished goods
|
2,781
|
|
|
2,211
|
|
||
Inventories, net
|
$
|
7,307
|
|
|
$
|
7,138
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Payroll and commissions payable
|
$
|
3,315
|
|
|
$
|
5,843
|
|
Other accrued expenses and current liabilities
|
1,797
|
|
|
2,176
|
|
||
Total accrued expenses and other current liabilities
|
$
|
5,112
|
|
|
$
|
8,019
|
|
|
Foreign Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Investments
|
|
Total Accumulated Other Comprehensive Gain (Loss)
|
||||||
|
(In thousands)
|
||||||||||
Balance, December 31, 2018
|
$
|
(45
|
)
|
|
$
|
(88
|
)
|
|
$
|
(133
|
)
|
Other comprehensive gain (loss), net
|
(24
|
)
|
|
84
|
|
|
60
|
|
|||
Balance, March 31, 2019
|
$
|
(69
|
)
|
|
$
|
(4
|
)
|
|
$
|
(73
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
16,992
|
|
|
$
|
21,955
|
|
Short-term investments
|
71,771
|
|
|
73,338
|
|
||
Long-term investments
|
2,548
|
|
|
1,269
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
91,311
|
|
|
$
|
96,562
|
|
|
March 31, 2019
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Holding Gains
|
|
Gross
Unrealized
Holding Losses
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
5,126
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
5,129
|
|
Corporate notes and bonds
|
66,645
|
|
|
19
|
|
|
(22
|
)
|
|
66,642
|
|
||||
Total short-term investments
|
71,771
|
|
|
22
|
|
|
(22
|
)
|
|
71,771
|
|
||||
Long-term investments
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
2,549
|
|
|
—
|
|
|
(1
|
)
|
|
2,548
|
|
||||
Total long-term investments
|
2,549
|
|
|
—
|
|
|
(1
|
)
|
|
2,548
|
|
||||
Total available-for-sale investments
|
$
|
74,320
|
|
|
$
|
22
|
|
|
$
|
(23
|
)
|
|
$
|
74,319
|
|
|
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
|
|
|
March 31, 2019
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
|
(In thousands)
|
||||||
Due in one year or less
|
$
|
71,771
|
|
|
$
|
71,771
|
|
Due in greater than one year
|
$
|
2,549
|
|
|
$
|
2,548
|
|
|
March 31, 2019
|
||||||||||||||
|
Total
|
|
Level 1
Inputs
|
|
Level 2
Inputs
|
|
Level 3
Inputs
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market securities
|
$
|
7,533
|
|
|
$
|
7,533
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total cash equivalents
|
$
|
7,533
|
|
|
$
|
7,533
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
5,129
|
|
|
—
|
|
|
5,129
|
|
|
—
|
|
||||
Corporate notes and bonds
|
66,642
|
|
|
—
|
|
|
66,642
|
|
|
—
|
|
||||
Total short-term investments
|
71,771
|
|
|
—
|
|
|
71,771
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Long-term investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate notes and bonds
|
$
|
2,548
|
|
|
$
|
—
|
|
|
$
|
2,548
|
|
|
$
|
—
|
|
Total long-term investments
|
2,548
|
|
|
—
|
|
|
2,548
|
|
|
—
|
|
||||
Total
|
$
|
81,852
|
|
|
$
|
7,533
|
|
|
$
|
74,319
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
|
Total
|
|
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 investments
|
1,269
|
|
|
—
|
|
|
1,269
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
81,268
|
|
|
$
|
6,661
|
|
|
$
|
74,607
|
|
|
$
|
—
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||
|
|
|||||||||||||||
U.S. Treasury securities
|
|
$
|
349
|
|
|
$
|
—
|
|
|
$
|
8,101
|
|
|
$
|
(2
|
)
|
Corporate notes and bonds
|
|
41,215
|
|
|
(23
|
)
|
|
61,809
|
|
|
(88
|
)
|
||||
Total available-for-sale investments
|
|
$
|
41,564
|
|
|
$
|
(23
|
)
|
|
$
|
69,910
|
|
|
$
|
(90
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(In thousands)
|
||||||
Finite-lived intangible assets
|
$
|
6,643
|
|
|
$
|
6,643
|
|
Accumulated amortization
|
(6,159
|
)
|
|
(6,003
|
)
|
||
Intangible assets, net
|
$
|
484
|
|
|
$
|
640
|
|
|
Lease Amounts
|
||
|
(In thousands)
|
||
Year:
|
|
||
2019 (remaining nine months)
|
$
|
1,377
|
|
2020
|
1,855
|
|
|
2021
|
1,653
|
|
|
2022
|
1,812
|
|
|
2023
|
1,714
|
|
|
Thereafter
|
10,044
|
|
|
Total
|
18,455
|
|
|
Less imputed lease interest
|
(5,190
|
)
|
|
Total lease liabilities
|
$
|
13,265
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Balance, beginning of period
|
$
|
478
|
|
|
$
|
366
|
|
Warranty costs charged to cost of revenue
|
152
|
|
|
48
|
|
||
Utilization charges against reserve
|
(12
|
)
|
|
(50
|
)
|
||
Release of accrual related to expired warranties
|
(47
|
)
|
|
(5
|
)
|
||
Balance, end of period
|
$
|
571
|
|
|
$
|
359
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Stock-based compensation expense by financial line:
|
|
|
|
||||
Cost of revenue
|
$
|
34
|
|
|
$
|
24
|
|
General and administrative
(1)
|
959
|
|
|
1,676
|
|
||
Sales and marketing
|
203
|
|
|
262
|
|
||
Research and development
|
482
|
|
|
281
|
|
||
Total stock-based compensation expense
|
$
|
1,678
|
|
|
$
|
2,243
|
|
|
|
|
|
||||
Stock-based compensation expense by type of award:
|
|
|
|
||||
Options
(1)
|
$
|
1,133
|
|
|
$
|
1,664
|
|
RSUs
(1)
|
545
|
|
|
579
|
|
||
Total stock-based compensation expense
|
$
|
1,678
|
|
|
$
|
2,243
|
|
(1)
|
2018 Amounts include modifications of equity awards held by the Company’s former Chief Executive Officer.
|
|
Unamortized Compensation Costs
|
|
Weighted Average Service Period
|
||
|
(In thousands)
|
|
(In years)
|
||
Stock options
|
$
|
6,798
|
|
|
2.81
|
RSUs
|
4,823
|
|
|
3.1
|
|
Total
|
$
|
11,621
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Stock options
|
$
|
1,367
|
|
|
$
|
1,261
|
|
RSUs
|
924
|
|
|
509
|
|
||
Total grant date fair value of stock options and RSUs vested during the period
|
$
|
2,291
|
|
|
$
|
1,770
|
|
|
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, 2018
|
4,982
|
|
|
$
|
6.36
|
|
|
6.56
|
|
$
|
6,572
|
|
Granted
|
416
|
|
|
$
|
7.66
|
|
|
|
|
|
|
|
Exercised
|
(420
|
)
|
|
$
|
5.21
|
|
|
|
|
$
|
1,396
|
|
Forfeited
|
(308
|
)
|
|
$
|
8.48
|
|
|
|
|
|
|
|
Balance, March 31, 2019
|
4,670
|
|
|
$
|
6.44
|
|
|
6.68
|
|
$
|
11,442
|
|
Vested and exercisable as of March 31, 2019
|
3,057
|
|
|
$
|
5.53
|
|
|
5.51
|
|
$
|
10,156
|
|
Vested and exercisable as of March 31, 2019 and expected to vest thereafter
|
4,441
|
|
|
$
|
6.35
|
|
|
6.55
|
|
$
|
11,255
|
|
|
|
(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
March 31, 2019
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
March 31, 2019
or the last trading day prior to
March 31, 2019
. 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
December 31, 2018
or the last trading day prior to
December 31, 2018
.
|
|
Shares
|
|
Weighted
Average Grant-Date Fair Value |
|||
|
(In thousands, except for weighted average grant-date fair value)
|
|||||
Balance, December 31, 2018
|
463
|
|
|
$
|
8.49
|
|
Awarded
|
390
|
|
|
$
|
7.69
|
|
Vested
|
(107
|
)
|
|
$
|
8.62
|
|
Forfeited
|
(71
|
)
|
|
$
|
8.37
|
|
Balance, March 31, 2019
|
675
|
|
|
$
|
8.02
|
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||
|
Water
|
|
Oil & Gas
|
|
Total
|
|
Water
|
|
Oil & Gas
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Product revenue
|
$
|
15,968
|
|
|
$
|
104
|
|
|
$
|
16,072
|
|
|
$
|
11,048
|
|
|
$
|
10
|
|
|
$
|
11,058
|
|
Product cost of revenue
|
4,747
|
|
|
188
|
|
|
4,935
|
|
|
3,228
|
|
|
86
|
|
|
3,314
|
|
||||||
Product gross profit
|
11,221
|
|
|
(84
|
)
|
|
11,137
|
|
|
7,820
|
|
|
(76
|
)
|
|
7,744
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
License and development revenue
|
—
|
|
|
3,723
|
|
|
3,723
|
|
|
—
|
|
|
2,749
|
|
|
2,749
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
General and administrative
|
535
|
|
|
364
|
|
|
899
|
|
|
305
|
|
|
651
|
|
|
956
|
|
||||||
Sales and marketing
|
1,649
|
|
|
263
|
|
|
1,912
|
|
|
1,445
|
|
|
344
|
|
|
1,789
|
|
||||||
Research and development
|
804
|
|
|
3,363
|
|
|
4,167
|
|
|
244
|
|
|
3,665
|
|
|
3,909
|
|
||||||
Amortization of intangibles
|
156
|
|
|
—
|
|
|
156
|
|
|
158
|
|
|
—
|
|
|
158
|
|
||||||
Operating expenses
|
3,144
|
|
|
3,990
|
|
|
7,134
|
|
|
2,152
|
|
|
4,660
|
|
|
6,812
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
8,077
|
|
|
$
|
(351
|
)
|
|
7,726
|
|
|
5,668
|
|
|
(1,987
|
)
|
|
3,681
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Less: Corporate operating expenses
|
|
|
|
|
|
|
5,017
|
|
|
|
|
|
|
|
|
5,012
|
|
||||||
Consolidated operating income (loss)
|
|
|
|
|
|
|
2,709
|
|
|
|
|
|
|
|
|
(1,331
|
)
|
||||||
Non-operating income
|
|
|
|
|
|
|
499
|
|
|
|
|
|
|
|
|
248
|
|
||||||
Income (loss) before income taxes
|
|
|
|
|
|
|
$
|
3,208
|
|
|
|
|
|
|
|
|
(1,083
|
)
|
|
Three months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
|
(In thousands, except for percentages)
|
||||
Product revenue by geographic location:
|
|
|
|
||
United States
|
2
|
%
|
|
4
|
%
|
International
|
98
|
%
|
|
96
|
%
|
Total product revenue
|
100
|
%
|
|
100
|
%
|
|
|
|
|
||
Product revenue by country:
|
|
|
|
||
United Arab Emirates
|
30
|
%
|
|
---
|
|
Chile
|
22
|
%
|
|
---
|
|
Saudi Arabia
|
12
|
%
|
|
13
|
%
|
Egypt
|
---
|
|
|
30
|
%
|
China
|
---
|
|
|
14
|
%
|
Others
(1)
|
36
|
%
|
|
43
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended March 31,
|
||||||
|
Segment
|
|
2019
|
|
2018
|
||
Customer A
|
Water
|
|
10
|
%
|
|
34
|
%
|
Customer B
|
Water
|
|
**
|
|
|
12
|
%
|
Customer C
|
Water
|
|
29
|
%
|
|
**
|
|
Customer D
|
Water
|
|
14
|
%
|
|
**
|
|
Customer H
|
Water
|
|
12
|
%
|
|
**
|
|
|
|
|
|
|
|
|
Segment
|
|
March 31,
2019 |
|
December 31,
2018 |
Customer C
|
Water
|
|
21%
|
|
**
|
Customer E
|
Water
|
|
12%
|
|
20%
|
Customer F
|
Water
|
|
**
|
|
11%
|
Customer G
|
Oil & Gas
|
|
17%
|
|
26%
|
Customer I
|
Water
|
|
16%
|
|
**
|
|
Segment
|
|
March 31,
2019 |
|
December 31,
2018 |
||
Vendor A
|
Oil & Gas
|
|
16
|
%
|
|
**
|
|
Vendor B
|
Oil & Gas
|
|
**
|
|
10
|
%
|
|
Vendor C
|
Oil & Gas
|
|
11
|
%
|
|
**
|
|
Vendor D
|
Water
|
|
11
|
%
|
|
**
|
•
|
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 (“U.S.”), 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 services (“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
TM
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 U.S. 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 and the impact of changes in exchange rates on our cash and cash equivalents and operating results;
|
•
|
our expectations of the impact of the U.S. Tax Cuts and Jobs Act (“Tax Act”);
|
•
|
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;
|
•
|
our expectation that the adoption of new accounting standards will not have a material impact on our financial position or results of operations;
|
•
|
the outcome of proceedings, lawsuits, disputes, and claim;
|
•
|
the impact of losses due to indemnification obligations; and
|
•
|
the impact of changes in internal control over financial reporting.
|
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$
|
|
%
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Water
|
$
|
15,968
|
|
|
81
|
%
|
|
$
|
11,048
|
|
|
80
|
%
|
|
$
|
4,920
|
|
|
45
|
%
|
Oil & Gas
|
104
|
|
|
—
|
%
|
|
10
|
|
|
—
|
|
|
94
|
|
|
940
|
%
|
|||
Product revenue
|
$
|
16,072
|
|
|
81
|
%
|
|
$
|
11,058
|
|
|
80
|
%
|
|
$
|
5,014
|
|
|
45
|
%
|
License and development revenue
|
3,723
|
|
|
19
|
%
|
|
2,749
|
|
|
20
|
%
|
|
974
|
|
|
35
|
%
|
|||
Total revenue
|
$
|
19,795
|
|
|
100
|
%
|
|
$
|
13,807
|
|
|
100
|
%
|
|
$
|
5,988
|
|
|
43
|
%
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||
|
Water
|
|
Oil & Gas
|
|
Total
|
|
Water
|
|
Oil & Gas
|
|
Total
|
|
(In thousands, except for percentages)
|
||||||||||
Product gross profit
|
$11,221
|
|
$(84)
|
|
$11,137
|
|
$7,820
|
|
$(76)
|
|
$7,744
|
Product gross margin
|
70.3%
|
|
(80.8%)
|
|
69.3%
|
|
70.8%
|
|
(760.0%)
|
|
70.0%
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||
|
Water
|
|
Oil & Gas
|
|
Total
|
|
Water
|
|
Oil & Gas
|
|
Total
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Product revenue
|
$
|
15,968
|
|
|
$
|
104
|
|
|
$
|
16,072
|
|
|
$
|
11,048
|
|
|
$
|
10
|
|
|
$
|
11,058
|
|
Product cost of revenue
|
4,747
|
|
|
188
|
|
|
4,935
|
|
|
3,228
|
|
|
86
|
|
|
3,314
|
|
||||||
Product gross profit
|
11,221
|
|
|
(84
|
)
|
|
11,137
|
|
|
7,820
|
|
|
(76
|
)
|
|
7,744
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
License and development revenue
|
—
|
|
|
3,723
|
|
|
3,723
|
|
|
—
|
|
|
2,749
|
|
|
2,749
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
General and administrative
|
535
|
|
|
364
|
|
|
899
|
|
|
305
|
|
|
651
|
|
|
956
|
|
||||||
Sales and marketing
|
1,649
|
|
|
263
|
|
|
1,912
|
|
|
1,445
|
|
|
344
|
|
|
1,789
|
|
||||||
Research and development
|
804
|
|
|
3,363
|
|
|
4,167
|
|
|
244
|
|
|
3,665
|
|
|
3,909
|
|
||||||
Amortization of intangibles
|
156
|
|
|
—
|
|
|
156
|
|
|
158
|
|
|
—
|
|
|
158
|
|
||||||
Operating expenses
|
3,144
|
|
|
3,990
|
|
|
7,134
|
|
|
2,152
|
|
|
4,660
|
|
|
6,812
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
8,077
|
|
|
$
|
(351
|
)
|
|
7,726
|
|
|
5,668
|
|
|
(1,987
|
)
|
|
3,681
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Less: Corporate operating expenses
|
|
|
|
|
5,017
|
|
|
|
|
|
|
|
|
5,012
|
|
||||||||
Consolidated operating income (loss)
|
|
|
|
|
2,709
|
|
|
|
|
|
|
|
|
(1,331
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|||||||||||||||
|
$
|
|
% of Total Revenue
|
|
$
|
|
% of Total Revenue
|
|
$
|
|
%
|
|||||||||
|
(In thousands, except for percentages)
|
|||||||||||||||||||
Total revenue
|
$
|
19,795
|
|
|
100
|
%
|
|
$
|
13,807
|
|
|
100
|
%
|
|
$
|
5,988
|
|
|
43
|
%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
$
|
523
|
|
|
3
|
%
|
|
$
|
301
|
|
|
2
|
%
|
|
$
|
222
|
|
|
74
|
%
|
Interest expense
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
|
|
|||
Other non-operating expense, net
|
(24
|
)
|
|
—
|
%
|
|
(53
|
)
|
|
—
|
%
|
|
29
|
|
|
(55
|
%)
|
|||
Total other income, net
|
$
|
499
|
|
|
3
|
%
|
|
$
|
248
|
|
|
2
|
%
|
|
$
|
251
|
|
|
101
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(In thousands)
|
||||||
Net cash used in operating activities
|
$
|
(5,951
|
)
|
|
$
|
(6,333
|
)
|
Net cash (used in) provided by investing activities
|
(1,165
|
)
|
|
11,062
|
|
||
Net cash provided by (used in) financing activities
|
2,157
|
|
|
(1,898
|
)
|
||
Effect of exchange rate differences on cash and cash equivalents
|
(4
|
)
|
|
(14
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
$
|
(4,963
|
)
|
|
$
|
2,817
|
|
|
|
|
ENERGY RECOVERY, INC.
|
|
|
|
|
|
|
Dated:
|
May 2, 2019
|
|
By:
|
/s/ CHRIS GANNON
|
|
|
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Chris Gannon
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President and Chief Executive Officer
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Dated:
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May 2, 2019
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By:
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/s/ JOSHUA BALLARD
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Joshua Ballard
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Chief Financial Officer
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Exhibit Number
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Exhibit Description
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Incorporated by Reference
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Filed Herewith
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Form
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File No.
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Exhibit
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Filing Date
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10.1
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X
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10.2
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X
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31.1
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X
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31.2
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X
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32.1
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X
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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1.
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I have reviewed this
quarterly
report on Form
10-Q
of Energy Recovery, Inc.;
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2.
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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;
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3.
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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;
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4.
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I am 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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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I have disclosed, based on my 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):
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(a)
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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
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(b)
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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.
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Date: May 2, 2019
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/s/ CHRIS GANNON
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Name:
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Chris Gannon
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Title:
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President and Chief Executive Officer
(Principal Executive Officer) |
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1.
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I have reviewed this
quarterly
report on Form
10-Q
of Energy Recovery, Inc.;
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2.
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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;
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3.
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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;
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4.
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I am 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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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I have disclosed, based on my 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):
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(a)
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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
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(b)
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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.
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Date: May 2, 2019
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/s/ JOSHUA BALLARD
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Name:
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Joshua Ballard
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Title:
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Chief Financial Officer
(Principal Financial Officer) |
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/s/ CHRIS GANNON
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Chris Gannon
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President and Chief Executive Officer
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/s/JOSHUA BALLARD
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Joshua Ballard
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Chief Financial Officer
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*
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This certification accompanies the Form
10-Q
to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Energy Recovery, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form
10-Q
), irrespective of any general incorporation language contained in such filing.
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