Energy Recovery (ERII) Q2 2026 earnings summary

Executive summary

• CEO search is ongoing, with strong candidates attracted by the company’s technology and market position.

• Interim leadership is focused on executing business initiatives and maintaining continuity.

• Q2 2026 revenue fell 57% year-over-year to $12.0 million, primarily due to the war in Iran impacting demand.

• Gross margin improved to 74.7% from 64.0% year-over-year, despite lower volumes.

• The company completed a restructuring, winding down its Emerging Technologies segment and incurring related charges.

Financial highlights

• Six-month revenue was $21.7 million, a 40% decrease from $36.1 million year-over-year.

• Net loss for the first half of 2026 was $15.4 million, compared to a $7.8 million loss in the prior year.

• Operating cash flow for the first half was $37.3 million, up from $14.8 million year-over-year.

• Cash and investments totaled $98.1 million at quarter end.

• Q2 2026 diluted loss per share was $0.06, down from $0.04 earnings per share in Q2 2025.

Outlook and guidance

• Long-term pipeline remains robust, with forward visibility extending up to five years.

• Management expects existing resources and cash from operations to be sufficient for at least the next 12 months.

• Market recovery is anticipated, but timing remains uncertain due to ongoing geopolitical risks and project delays.

• Backlog strength is emphasized for 2027 and beyond, with limited ability to project near-term results.

• Additional capital may be needed for acquisitions or rapid technology adoption.