Energy Recovery, Inc. Reports 33% Revenue Decline and Increased Net Loss in Q1 2025

Energy Recovery, Inc. reported a significant decline in financial performance for the first quarter of 2025, with total revenue of $8.1 million, down 33% from $12.1 million in the same period last year. The company experienced a net loss of $9.9 million, or $0.18 per share, compared to a net loss of $8.3 million, or $0.14 per share, in Q1 2024. The decrease in revenue was attributed primarily to a substantial drop in megaproject revenue, which fell from $4.1 million to just $36,000, largely due to lower shipments to the Middle East and Africa and the Americas.

In terms of operational metrics, Energy Recovery's gross profit also decreased to $4.5 million, resulting in a gross margin of 55.3%, down from 59.0% in the prior year. The decline in gross profit was primarily due to lower sales volume spread over fixed costs. Operating expenses totaled $17 million, a slight decrease from $18.1 million in Q1 2024, with notable increases in general and administrative expenses driven by higher consulting costs and restructuring charges related to workforce reductions.

The company reported a cash position of $49.1 million as of March 31, 2025, an increase from $29.6 million at the end of 2024. This increase was primarily due to net cash provided by operating activities, which rose to $10.7 million from $6.5 million year-over-year. Energy Recovery also noted a restructuring plan implemented in late 2024, which included workforce reductions aimed at lowering operating costs and positioning the company for future growth. The restructuring charges recorded in Q1 2025 amounted to $539,000.

Geographically, the company saw varied performance, with revenue from Asia increasing to $3.4 million, while revenue from the Americas dropped significantly to $671,000. The company continues to focus on expanding its market presence, particularly in Asia, where it generated 18% of total revenue from India alone. Looking ahead, Energy Recovery anticipates that sales outside the U.S. will remain a significant portion of its revenue, and it is committed to leveraging its pressure exchanger technology to unlock new commercial opportunities.

In summary, while Energy Recovery, Inc. faced challenges in Q1 2025 with declining revenues and increased losses, it maintains a strong cash position and is focused on strategic restructuring and geographic expansion to drive future growth. The company’s outlook remains cautious, with management indicating that existing cash balances and future cash inflows should meet liquidity needs for at least the next 12 months, although additional financing may be sought for future investments or acquisitions.