Energy Recovery (ERII) Q4 2023 earnings summary

Executive summary

• FY23 revenue reached a record $128.3 million, up 2% YoY and marking nine consecutive years of growth; Q4 revenue set a record at $57.2 million, up 35% YoY.

• A single project shipment worth $8 million shifted from Q4 into 2024; the delay had been identified as a potential risk during the Q3 earnings call.

Financial highlights

• FY23 net income was $21.5 million, down 11% YoY; Q4 net income was $19.8 million, up 44% YoY.

• FY23 adjusted EBITDA was $31.2 million versus $36.8 million in 2022; Q4 adjusted EBITDA was $23.9 million versus $17.0 million.

• FY23 operating expenses were $68.0 million, within expectations; income from operations was $19.1 million.

• FY23 cash provided by operations was $26.1 million versus $12.6 million in 2022, supported by customer collections and improved raw-inventory turnover.

Outlook and guidance

• The PX Q400 is expected to account for roughly 50% of sales in the megaproject channel in 2024.

• Wastewater could reach up to 10% of Water revenue within three years; efforts continue to place PX G1300 in multiple supermarket chains in the U.S. and Europe.

• 2024 priorities include defending the desalination position, investing in CO₂ and wastewater opportunities, and managing expenses and cash with discipline.