Energy Recovery Inc (ERII) Reports 22% YoY Quarterly Revenue Growth in Q3 2023
Energy Recovery Inc (NASDAQ:ERII) reports a 22% YoY increase in Q3 2023 revenue, reaching $37.0 million.
Net income for the quarter stood at $9.7 million, a 102% increase from Q3 2022.
Company's gross margin improved to 69.9%, attributed to a change in product mix and increased sales.
Operating expenses remained consistent with prior quarters at $16.7 million.
On November 1, 2023, Energy Recovery Inc (NASDAQ:ERII) released its financial results for the third quarter and nine months ended September 30, 2023. The company reported a 22% year-on-year increase in quarterly revenue, beating its guidance. This growth was primarily attributed to an increase in megaproject revenues.
Financial Highlights
The company's revenue for Q3 2023 was $37.0 million, exceeding the upper end of its guidance. The gross margin for the quarter stood at 69.9%, higher than estimates due to a change in product mix and an increase in sales of the company's PX. Operating expenses were in line with prior quarters at $16.7 million. The company reported income from operations of $9.1 million and a net income of $9.7 million. Adjusted EBITDA for the quarter was $12.0 million.
Energy Recovery Inc (NASDAQ:ERII) also reported cash and investments of $105.9 million, which include cash, cash equivalents, and short-term and long-term investments. The company issued its annual Sustainability Report, which includes a commitment to reduce emissions in relation to revenue by 65% by 2026.
CEO Commentary
David Moon, Interim Chief Executive Officer, commented on the financial results, We delivered strong third quarter results, beating the upper end of our guidance for the quarter and we remain well-positioned to deliver on our overall Water guidance for the full year. As we look to 2024, we see growth in desalination for the 10th consecutive year despite a challenging macroeconomic environment and project to potentially double wastewater revenue in 2024. Further, we continue to see a path to our 2026 water revenue targets.
Financial Tables Summary
The financial tables provided in the earnings report show a detailed breakdown of the company's performance. The company's revenue for Q3 2023 was up 22% compared to Q3 2022. The gross margin improved by 80 basis points, while the operating margin increased by 860 basis points. Net income for the quarter was up 102%, and net income per share increased by 113%. The effective tax rate was not provided for the current period.
For the year-to-date period, the company's revenue was down 15% compared to the same period in 2022. The gross margin decreased by 210 basis points, and the operating margin was not material. Net income for the period was down 84%, and net income per share decreased by 83%. The effective tax rate for the period was -114.2%.
Overall, Energy Recovery Inc (NASDAQ:ERII) demonstrated strong performance in Q3 2023, with significant growth in revenue and net income. The company remains well-positioned for future growth, with a strong focus on sustainability and continued investment in its core business.
Explore the complete 8-K earnings release (here) from Energy Recovery Inc for further details.
This article first appeared on GuruFocus.
