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美国
证券交易委员会
华盛顿特区20549
表格 10-Q
（标记一）
☑根据1934年证券交易所法案第13或15(d)条的规定提交的季度报告
截至季度结束日期的财务报告2024年9月30日
或者
☐根据1934年证券交易所法案第13或15(d)条的规定提交的转型报告
在从____________过渡到__________的过渡期间
委员会档案号码: 001-34112
ER_Logo_Primary_Horiz_RGB-titlepage.jpg
Energy Recovery公司。
（依据其宪章指定的注册名称）
特拉华州
01-0616867
1-8344
（纳税人识别号码）
1717 Doolittle Drive, 圣雷安德罗, 加利福尼亚州  94577
（总部地址）（邮政编码）
(510) 483-7370
(注册人电话号码，包括区号)
在法案第12(b)条的规定下注册的证券：
每一类的名称
交易代码
在其上注册的交易所的名称
普通股，每股0.001美元面值
ERII
纳斯达克证券交易所 LLC
用复选标记表示注册者是否已根据1934年证券交易法第13或15(d)条的要求提交了所有必须提交的报告
在过去的12个月内（或公司被要求提交这些报告的更短时间内）进行了文件提交，并且（2）已经受到了这些提交要求的约束
过去90天内的要求。是 þ  不 ¨
请通过勾选符号表示，申报人是否已根据第405条规定提交了所有要求根据第405规定提交的互动数据文件
Regulation S-t（本章第232.405条）规定的规则，申报人在过去12个月内（或申报人要求提交和发帖这些的较短时间内）是否已提交并发表了这些互动数据文件
文件）。 是 þ  不 ¨
通过勾选的方式表示注册人是大型加速提交者、加速提交者、非加速提交者、较小的报告公司或新兴增长公司
新兴增长公司。请参阅《交易所法》第120亿.2条中对“大型加速提交者”、“加速器”、“较小报告公司”和“新兴增长公司”的定义。
纳斯达克法120亿.2条规定。
大型加速报告人  ☑加速文件提交人  ☐非加速文件提交人  ☐较小的报告公司  ☐新兴成长公司  ☐
如果是新兴成长型公司，请在选项中勾选，表明注册申请人已选择不使用延长过渡期来符合任何新的或
根据证券交易法第13(a)节提供的修订财务会计准则。¨
请在选项中勾选，指示注册申请人是否是壳公司（根据交易所法规120亿.2的定义）。是 ☐  不 ☑
截至 2024年10月24日 57,893,899 股。
Energy Recovery, Inc. | 2024年第三季度10-Q表格
目录
ENERGY RECOVERY, INC.
目录
页码。
简明合并资产负债表 — 2024年9月30日和2023年12月31日
简明合并利润表 — 截至2024年9月30日和2023年的三个和九个月
简明汇编的综合情况表 收益（损失） — 截至2024年9月30日的三个和九个月
和2023年
股东权益压缩综合报表 股权 — 2024年和2023年9月30日止三个和九个月
基本报表 — 2024年和2023年9月30日止九个月
Energy Recovery, Inc. | 2024 年第三季度表格 10-Q | FLS 1
目录
前瞻性信息
这个 每季度 表格上的报告 10-Q 对于 三九个月 已结束 2024 年 9 月 30 日, 包括 第一部分，第 2项，
“管理层对财务状况和经营业绩的讨论和分析” （“MD&A”），包含前瞻性
符合1995年《私人证券诉讼改革法》“安全港” 条款的声明。本文中的前瞻性陈述
报告包括但不限于关于我们的期望、目标、预期、计划、希望、信念、意图的陈述或
关于未来的策略。
前瞻性陈述代表我们当前对未来事件的预期，基于假设，涉及风险和
不确定性。如果风险或不确定性发生或假设被证明不正确，那么我们的结果可能与设定的结果存在重大差异
或前瞻性陈述所暗示。我们的前瞻性陈述不能保证未来的业绩或事件。
诸如 “期望”、“预期”、“目标”、“项目”、“打算”、“计划”、“相信”、“估计”、“寻求”、“继续”、“可能” 等词语
“可能”、“潜在”、“应该”、“将”、“将”、这些词语的变体和类似表述也旨在识别这种前瞻性
声明。这些前瞻性陈述受难以预测的风险、不确定性和假设的影响；因此，
实际结果可能与任何前瞻性陈述中表达的结果存在重大和不利的差异。读者被引导到风险和
下方确定的不确定性 第二部分，第 1A 项，“风险因素”， 以及本报告其他部分中可能导致实际结果变化的因素
与这些前瞻性陈述中表达的不同。除非法律要求，否则我们没有义务修改或
出于任何原因公开更新任何前瞻性陈述。
本报告中的前瞻性陈述包括但不限于有关以下内容的陈述：
•我们相信我们的 PX 提供市场领先的价值和最高的技术和经济效益；
•我们相信，利用我们的压力交换器技术将在未来开启新的商业机会；
•我们相信我们的 PX G1300™ 可以做出贡献 CO2以经济为基础的制冷在更广泛的范围内具有经济可行性
气候；
•我们相信我们的技术可以帮助客户实现环境可持续的运营；
•我们期望以外的销售 美国 仍将占我们收入的很大一部分；
•使用我们的解决方案对环境造成的影响规模；
•我们相信我们的可持续发展目标对我们的业务成功具有重大影响；
•我们从客户那里收到产品或服务付款的时间；
•我们相信我们现有的现金和现金等价物，我们的 短期和/或长期投资，以及持续产生的现金
我们的业务将足以满足我们在可预见的将来的预期流动性需求，但以下情况除外
决定收购和/或资助投资我们因市场迅速采用而产生的最新技术
可能要求我们寻求额外的股权或债务融资；
•我们对项目确认收入金额和时间安排的期望；
•我们对开支的期望；
•我们期望我们将继续获得与美国联邦外国衍生的无形收入相关的税收优惠，以及
研究与开发税收抵免;
•诉讼、诉讼、争议和索赔的结果；
•赔偿义务造成的损失的影响；
•以下披露的其他因素 MD&A 和第一部分第 3 项 “关于市场风险的定量和定性披露”，以及
在本表格 10-Q 的其他地方。
您不应过分依赖这些前瞻性陈述。这些前瞻性陈述反映了管理层的
仅在提交本文件之日发表意见 每季度 表格上的报告 10-Q。本文档中包含的所有前瞻性陈述均为
可能存在其他风险和不确定性，将在下文中进一步讨论 第二部分，第 1A 项，“风险因素”， 并以现有信息为基础
截至目前的我们 2024 年 10 月 30 日。我们认为没有义务更新任何此类前瞻性陈述。某些风险和不确定性可能
导致实际业绩与前瞻性陈述中的预测存在重大差异。这些前瞻性陈述是
我们不时披露 10-k 表格的年度报告， 提交了 10‑Q 表格的季度报告和 8‑k 表格的当前报告
与美国证券交易委员会（“SEC”）合作或提供给美国证券交易委员会（“SEC”），以及 第二部分，第 1A 项，“风险因素”， 在这其中 每季度
表格上的报告 10-Q.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | FLS 2
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It is important to note that our actual results could differ materially from the results set forth or implied by our forward-looking
statements.  The factors that could cause our actual results to differ from those included in such forward-looking statements are set forth
under the heading Item 1A, “Risk Factors,” in our Quarterly Reports on Form 10-Q, in our Annual Reports on Form 10-K, and from time-to-
time, in our results disclosed in our Current Reports on Form 8-K.  In addition, when preparing the MD&A below, we presume the readers
have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of
Regulation S-K.
We provide our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, Proxy Statements on
Schedule 14A, Forms 3, 4 and 5 filed by, or on behalf of, directors, executive officers and certain large shareholders, and any amendments to
those documents filed or furnished pursuant to the Securities Exchange Act of 1934, free of charge on the Investor Relations section of our
website, www.energyrecovery.com.  These filings will become available as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC.  From time to time, we may use our website as a channel of distribution of material company
information.
We also make available in the Investor Relations section of our website our corporate governance documents including our code of
business conduct and ethics and the charters of the audit, compensation and nominating and governance committees.  These documents, as
well as the information on the website, are not intended to be part of this Quarterly Report on Form 10-Q.  We use the Investor Relations
section of our website as a means of complying with our disclosure obligations under Regulation FD.  Accordingly, you should monitor the
Investor Relations section of our website in addition to following our press releases, SEC filings and public conference calls and webcasts.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 1
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PART I — FINANCIAL INFORMATION
Item 1 — Financial Statements (unaudited)
ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2024
December 31,
2023
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$63,261
$68,098
Short-term investments
55,364
40,445
Accounts receivable, net
31,845
46,937
Inventories, net
33,464
26,149
Prepaid expenses and other assets
5,980
3,843
Total current assets
189,914
185,472
Long-term investments
21,286
13,832
Deferred tax assets, net
11,029
10,324
Property and equipment, net
16,352
18,699
Operating lease, right of use asset
10,152
11,469
Goodwill
12,790
12,790
Other assets, non-current
1,182
388
Total assets
$262,705
$252,974
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$3,414
$3,000
Accrued expenses and other liabilities
10,524
15,583
Lease liabilities
1,964
1,791
Contract liabilities
2,969
1,097
Total current liabilities
18,871
21,471
Lease liabilities, non-current
9,861
11,488
Other liabilities, non-current
100
207
Total liabilities
28,832
33,166
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock
66
65
Additional paid-in capital
231,909
217,617
Accumulated other comprehensive income (loss)
149
(44)
Treasury stock
(80,486)
(80,486)
Retained earnings
82,235
82,656
Total stockholders’ equity
233,873
219,808
Total liabilities and stockholders’ equity
$262,705
$252,974
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 2
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ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
 
(In thousands, except per share data)
Revenue
$38,584
$37,036
$77,873
$71,160
Cost of revenue
13,472
11,154
28,060
23,580
Gross profit
25,112
25,882
49,813
47,580
Operating expenses:
General and administrative
7,673
7,369
24,771
21,704
Sales and marketing
6,413
5,411
18,669
15,397
Research and development
3,969
3,969
12,264
12,043
Total operating expenses
18,055
16,749
55,704
49,144
Income (loss) from operations
7,057
9,133
(5,891)
(1,564)
Other income (expense):
Interest income
1,711
1,083
4,816
2,486
Other non-operating income (expense), net
57
(38)
(45)
(129)
Total other income, net
1,768
1,045
4,771
2,357
Income (loss) before income taxes
8,825
10,178
(1,120)
793
Provision for (benefit from) income taxes
344
518
(699)
(906)
Net income (loss)
$8,481
$9,660
$(421)
$1,699
Net income (loss) per share:
Basic
$ 0.15
$ 0.17
$ (0.01)
$ 0.03
Diluted
$ 0.15
$ 0.17
$ (0.01)
$ 0.03
Number of shares used in per share calculations:
Basic
57,756
56,443
57,409
56,346
Diluted
58,290
57,969
57,409
57,761
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 3
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ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
 
(In thousands)
Net income (loss)
$8,481
$9,660
$(421)
$1,699
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
(94)
(2)
(57)
95
Unrealized gain (loss) on investments
304
(54)
250
71
Total other comprehensive income (loss), net of tax
210
(56)
193
166
Comprehensive income (loss)
$8,691
$9,604
$(228)
$1,865
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 4
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ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
 
(In thousands, except shares)
Common stock
Beginning balance
$66
$65
$65
$64
Issuance of common stock, net
—
—
1
1
Ending balance
66
65
66
65
Additional paid-in capital
Beginning balance
225,240
209,139
217,617
204,957
Issuance of common stock, net
4,293
805
5,794
1,183
Stock-based compensation
2,376
1,838
8,498
5,642
Ending balance
231,909
211,782
231,909
211,782
Accumulated other comprehensive income (loss)
Beginning balance
(61)
(127)
(44)
(349)
Other comprehensive income (loss)
Foreign currency translation adjustments
(94)
(2)
(57)
95
Unrealized gain (loss) on investments
304
(54)
250
71
Total other comprehensive income (loss), net
210
(56)
193
166
Ending balance
149
(183)
149
(183)
Treasury stock
Beginning and ending balance
(80,486)
(80,486)
(80,486)
(80,486)
Retained earnings
Beginning balance
73,754
53,191
82,656
61,152
Net (loss) income
8,481
9,660
(421)
1,699
Ending balance
82,235
62,851
82,235
62,851
Total stockholders’ equity
$233,873
$194,029
$233,873
$194,029
Common stock issued (shares)
Beginning balance
65,571,275
64,553,969
65,029,459
64,225,391
Issuance of common stock, net
459,312
99,091
1,001,128
427,669
Ending balance
66,030,587
64,653,060
66,030,587
64,653,060
Treasury stock (shares)
Beginning and ending balance
8,148,512
8,148,512
8,148,512
8,148,512
Total common stock outstanding (shares)
57,882,075
56,504,548
57,882,075
56,504,548
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 5
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ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
2024
2023
(In thousands)
Cash flows from operating activities:
Net (loss) income
$(421)
$1,699
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities
Stock-based compensation
8,512
5,811
Depreciation and amortization
3,050
3,075
Right of use asset amortization
1,317
1,223
Accretion (amortization) of discounts (premiums) on investments
(1,049)
(613)
Deferred income taxes
(705)
(920)
Other non-cash adjustments
307
241
Changes in operating assets and liabilities:
Accounts receivable, net
15,060
10,756
Contract assets
(882)
1,720
Inventories, net
(7,686)
(5,745)
Prepaid and other assets
(2,159)
(1,292)
Accounts payable
879
1,043
Accrued expenses and other liabilities
(6,467)
(4,966)
Contract liabilities
1,811
240
Net cash provided by operating activities
11,567
12,272
Cash flows from investing activities:
Sales of marketable securities
—
2,966
Maturities of marketable securities
59,423
58,705
Purchases of marketable securities
(80,490)
(78,949)
Capital expenditures
(1,194)
(1,179)
Proceeds from sales of fixed assets
90
82
Net cash used in investing activities
(22,171)
(18,375)
Cash flows from financing activities:
Net proceeds from issuance of common stock
5,795
1,184
Net cash provided by financing activities
5,795
1,184
Effect of exchange rate differences on cash and cash equivalents
(23)
27
Net change in cash, cash equivalents and restricted cash
(4,832)
(4,892)
Cash, cash equivalents and restricted cash, beginning of year
68,225
56,458
Cash, cash equivalents and restricted cash, end of period
$63,393
$51,566
See Accompanying Notes to Condensed Consolidated Financial Statements
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 6
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Description of Business and Significant Accounting Policies
Energy Recovery, Inc. and its wholly-owned subsidiaries (the “Company” or “Energy Recovery”) designs and manufactures reliable,
high-performance solutions that provide cost savings through improved energy efficiency in commercial and industrial processes, with
applications across several industries.  Leveraging the Company’s pressure exchanger technology, which generates little to no emissions
when operating, the Company believes its solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a
variety of commercial and industrial processes.  As the world coalesces around the urgent need to address climate change and its impacts,
the Company is helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon
footprint.  The Company believes that its customers do not have to sacrifice quality and cost savings for sustainability and the Company is
committed to developing solutions that drive long-term value – both financial and environmental.  The Company’s solutions are marketed,
sold in, and developed for, the fluid-flow and gas markets, such as seawater and wastewater desalination, natural gas, chemical processing
and CO2-based refrigeration systems, under the trademarks ERI®, PX®, Pressure Exchanger®, PX® Pressure Exchanger® (“PX”), Ultra PX™,
PX G™, PX G1300™, PX PowerTrain™, AT™, and Aquabold™.  The Company owns, manufactures and/or develops its solutions, in whole or in
part, in the United States of America (the “U.S.”).
Basis of Presentation
The Condensed Consolidated Financial Statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries. 
All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in the financial statements
prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules
and regulations.  The December 31, 2023 Condensed Consolidated Balance Sheet was derived from audited financial statements and may
not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information
presented not misleading.
The September 30, 2024 unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited
Consolidated Financial Statements and the notes thereto for the fiscal year ended December 31, 2023 included in the Company’s Annual
Report on Form 10-K filed with the SEC on February 21, 2024 (the “2023 Annual Report”).
The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any
future periods.
Reclassifications
Certain prior period amounts have been reclassified in certain notes to the Condensed Consolidated Financial Statements to conform
to the current period presentation.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 7
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Use of Estimates
The preparation of Condensed Consolidated Financial Statements, in conformity with GAAP, requires the Company’s management to
make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and
accompanying notes.
The accounting policies that reflect the Company’s significant estimates and judgments and that the Company believes are the most
critical to aid in fully understanding and evaluating its reported financial results are revenue recognition; granted equity award valuations;
equipment useful life and valuation; goodwill valuation and impairment; deferred taxes and valuation allowances on deferred tax assets; and
evaluation and measurement of contingencies. Those estimates could change, and as a result, actual results could differ materially from
those estimates.
The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a
revision of the carrying value of its assets or liabilities as of October 30, 2024, the date of issuance of this Quarterly Report on Form 10-Q. 
These estimates may change, as new events occur and additional information is obtained.  Actual results could differ materially from these
estimates under different assumptions or conditions.  The Company undertakes no obligation to publicly update these estimates for any
reason after the date of this Quarterly Report on Form 10-Q, except as required by law.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies in Note 1, “Description of Business and
Significant Accounting Policies - Significant Accounting Policies,” of the Notes to Consolidated Financial Statements included in Item 8,
“Financial Statements and Supplementary Data,” of the 2023 Annual Report.
Recently Issued Accounting Pronouncement Not Yet Adopted
There have been no issued accounting pronouncements that have not yet been adopted during the nine months ended
September 30, 2024 that apply to the Company other than the pronouncements disclosed in Note 1, “Description of Business and Significant
Accounting Policies - Recently Issued Accounting Pronouncement Not Yet Adopted,” of the Notes to Consolidated Financial Statements
included in Item 8, “Financial Statements and Supplementary Data,” of the 2023 Annual Report.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 8
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 — Revenue
Disaggregation of Revenue
The following tables present the disaggregated revenues by segment, and within each segment, by geographical market based on the
customer “shipped to” address, and by channel customers.  Sales and usage-based taxes are excluded from revenues.  See Note 9,
“Segment Reporting,” for further discussion related to the Company’s segments.
Three Months Ended September 30, 2024
Nine Months Ended September 30, 2024
Water
Emerging
Technologies
Total
Water
Emerging
Technologies
Total
(In thousands)
Geographical market
Middle East and Africa
$28,043
$153
$28,196
$47,295
$399
$47,694
Asia
6,829
—
6,829
16,770
36
16,806
Americas
1,051
—
1,051
6,957
—
6,957
Europe
2,421
87
2,508
6,329
87
6,416
Total revenue
$38,344
$240
$38,584
$77,351
$522
$77,873
Channel
Megaproject
$29,009
$—
$29,009
$48,924
$—
$48,924
Original equipment manufacturer
4,832
87
4,919
15,087
123
15,210
Aftermarket
4,503
153
4,656
13,340
399
13,739
Total revenue
$38,344
$240
$38,584
$77,351
$522
$77,873
Three Months Ended September 30, 2023
Nine Months Ended September 30, 2023
Water
Emerging
Technologies
Total
Water
Emerging
Technologies
Total
(In thousands)
Geographical market
Middle East and Africa
$24,543
$—
$24,543
$38,272
$108
$38,380
Asia
5,688
—
5,688
19,180
—
19,180
Americas
5,091
123
5,214
9,628
153
9,781
Europe
1,490
101
1,591
3,542
277
3,819
Total revenue
$36,812
$224
$37,036
$70,622
$538
$71,160
Channel
Megaproject
$26,829
$—
$26,829
$42,283
$—
$42,283
Original equipment manufacturer
5,083
224
5,307
16,415
430
16,845
Aftermarket
4,900
—
4,900
11,924
108
12,032
Total revenue
$36,812
$224
$37,036
$70,622
$538
$71,160
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 9
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Contract Balances
The following table presents contract balances by category.
September 30,
2024
December 31,
2023
(In thousands)
Accounts receivable, net
$31,845
$46,937
Contract assets:
Contract assets, current (included in prepaid expenses and other assets)
$685
$592
Contract assets, non-current (included in other assets, non-current)
789
—
Total contract assets
$1,474
$592
Contract liabilities:
Contract liabilities, current
$2,969
$1,097
Contract liabilities, non-current (included in other liabilities, non-current)
29
90
Total contract liabilities
$2,998
$1,187
Contract Liabilities
The Company records contract liabilities, which consist of customer deposits and deferred revenue, when cash payments are
received in advance of the Company’s performance.  The following table presents changes in contract liabilities during the period.
September 30,
2024
December 31,
2023
(In thousands)
Contract liabilities, beginning of year
$1,187
$1,316
Revenue recognized
(1,063)
(1,254)
Cash received, excluding amounts recognized as revenue during the period
2,874
1,125
Contract liabilities, end of period
$2,998
$1,187
Remaining Performance Obligations
As of September 30, 2024, the following table presents the revenue that is expected to be recognized related to performance
obligations that are unsatisfied or partially unsatisfied.
Period
Remaining
Performance
Obligations
(In thousands)
2024 (remaining three months)
$198
2025
6,957
2026
3,419
Total
$10,574
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 10
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ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 — Net Income (Loss) Per Share
Net income (loss) for the reported period is divided by the weighted average number of basic and diluted common shares outstanding
during the reported period to calculate the basic and diluted net income (loss) per share, respectively.  Outstanding stock options to purchase
common shares and unvested restricted stock units (“RSUs”) are collectively referred to as “equity awards.”
•Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the
period. 
•Diluted net income (loss) per share is computed using the weighted average number of common and potentially dilutive shares
outstanding during the period, using the treasury stock method.  Any anti-dilutive effect of equity awards outstanding is not
included in the computation of diluted net income (loss) per share.
The following tables present the computation of basic and diluted net income (loss) per share.
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(In thousands, except per share amounts)
Numerator
Net income (loss)
$8,481
$9,660
$(421)
$1,699
Denominator (weighted average shares)
Basic common shares outstanding
57,756
56,443
57,409
56,346
Options
316
1,236
—
1,155
RSUs
218
290
—
260
Diluted common shares outstanding
58,290
57,969
57,409
57,761
Net income (loss) per share
Basic
$ 0.15
$ 0.17
$ (0.01)
$ 0.03
Diluted
$ 0.15
$ 0.17
$ (0.01)
$ 0.03
The following tables present the equity awards that are excluded from diluted net income (loss) per share because their effect would
have been anti-dilutive.
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
(In thousands)
Anti-dilutive equity award shares
1,077
125
2,876
126
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 11
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 — Other Financial Information
Cash, Cash Equivalents and Restricted Cash
The Condensed Consolidated Statements of Cash Flows explain the changes in the total of cash, cash equivalents and restricted
cash, such as cash amounts deposited in restricted cash accounts in connection with the Company’s credit cards.  The following table
presents a reconciliation of cash, cash equivalents and restricted cash, reported for each period within the Condensed Consolidated Balance
Sheets and the Condensed Consolidated Statements of Cash Flows that sum to the total of such amounts.
September 30,
2024
December 31,
2023
September 30,
2023
(In thousands)
Cash and cash equivalents
$63,261
$68,098
$51,440
Restricted cash, non-current (included in other assets, non-current)
132
127
126
Total cash, cash equivalents and restricted cash
$63,393
$68,225
$51,566
Accounts Receivable, net
 
September 30,
2024
December 31,
2023
(In thousands)
Accounts receivable, gross
$32,015
$47,075
Allowance for doubtful accounts
(170)
(138)
Accounts receivable, net
$31,845
$46,937
Inventories, net
Inventory amounts are stated at the lower of cost or net realizable value, using the first-in, first-out method.
 
September 30,
2024
December 31,
2023
(In thousands)
Raw materials
$8,731
$8,752
Work in process
6,929
5,234
Finished goods
18,990
13,319
Inventories, gross
34,650
27,305
Valuation adjustments for excess and obsolete inventory
(1,186)
(1,156)
Inventories, net
$33,464
$26,149
Goodwill
Goodwill is tested for impairment annually in the third quarter of the Company’s fiscal year or more frequently if indicators of potential
impairment exist.  The Company monitors the industries in which it operates and reviews its business performance for indicators of potential
impairment.  The recoverability of goodwill is measured at the reporting unit level, which represents the operating segment.  The carrying
amount of goodwill as of September 30, 2024 and December 31, 2023 was $12.8 million.
On July 1, 2024, the Company estimated the fair value of its reporting units using the discounted cash flow approach and market
approach. The forecast of future cash flows, which is based on the Company’s best estimate of future net sales and operating expenses, is
based primarily on expected category expansion, pricing, market segment, and general economic conditions. The Company incorporates
other significant inputs to its fair value calculations, including discount rate and market multiples, to reflect current market conditions.  As a
result, the analysis performed indicated that the fair value of each reporting unit, that is allocated goodwill, significantly exceeds its carrying
value, and therefore, no impairment charges were recorded.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 12
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accrued Expenses and Other Liabilities
 
September 30,
2024
December 31,
2023
(In thousands)
Accrued expenses and other liabilities, current
Payroll, incentives and commissions payable
$7,134
$11,037
Warranty reserve
983
1,057
Other accrued expenses and other liabilities
2,407
3,489
Total accrued expenses and other liabilities
10,524
15,583
Other liabilities, non-current
100
207
Total accrued expenses, and current and non-current other liabilities
$10,624
$15,790
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 13
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 — Investments and Fair Value Measurements
Fair Value of Financial Instruments
The following table presents the Company’s financial assets measured on a recurring basis by contractual maturity, including pricing
category, amortized cost, gross unrealized gains and losses, and fair value.  As of the dates reported in the table, the Company had no
financial liabilities and no Level 3 financial assets.
September 30, 2024
December 31, 2023
Pricing
Category
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
(In thousands)
Cash equivalents
Money market
securities
Level 1
$13,653
$—
$—
$13,653
$18,767
$—
$—
$18,767
U.S. treasury
securities
Level 2
11,449
2
—
11,451
—
—
—
—
Total cash equivalents
25,102
2
—
25,104
18,767
—
—
18,767
Short-term investments
U.S. treasury
securities
Level 2
17,233
78
—
17,311
4,900
1
(1)
4,900
Corporate notes and
bonds
Level 2
32,408
65
(2)
32,471
25,674
11
(18)
25,667
Municipal and agency
notes and bonds
Level 2
5,584
—
(2)
5,582
9,887
—
(9)
9,878
Total short-term investments
55,225
143
(4)
55,364
40,461
12
(28)
40,445
Long-term investments
Corporate notes and
bonds
Level 2
18,307
179
—
18,486
9,229
28
(3)
9,254
Municipal and agency
notes and bonds
Level 2
2,798
2
—
2,800
4,585
—
(7)
4,578
Total long-term investments
21,105
181
—
21,286
13,814
28
(10)
13,832
Total short and long-term
investments
76,330
324
(4)
76,650
54,275
40
(38)
54,277
Total
$101,432
$326
$(4)
$101,754
$73,042
$40
$(38)
$73,044
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 14
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents a summary of the fair value and gross unrealized losses on the available-for-sale securities that have
been in a continuous unrealized loss position, aggregated by type of investment instrument.  The available-for-sale securities that were in an
unrealized gain position have been excluded from the table.
 
September 30, 2024
December 31, 2023
 
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(In thousands)
U.S. treasury securities
$—
$—
$2,931
$(1)
Corporate notes and bonds
2,492
(2)
15,276
(21)
Municipal and agency notes and bonds
5,582
(2)
12,956
(16)
Total available-for-sale investments with unrealized loss positions
$8,074
$(4)
$31,163
$(38)
Sales of Available-for-Sale Investments
The following table presents the sales of available-for-sale investments.
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
(In thousands)
Corporate notes and bonds
$—
$—
$—
$2,966
Realized losses on sales of securities were immaterial during the three and nine months ended September 30, 2024 and 2023.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 15
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 — Lines of Credit
Credit Agreement
The Company entered into a credit agreement with JPMorgan Chase Bank, N.A. (“JPMC”) on December 22, 2021 (as amended, the
“Credit Agreement”).  The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of
$50.0 million and includes both a revolving loan and a letters of credit (“LCs”) component. 
Under the Credit Agreement, as of September 30, 2024, there were no revolving loans outstanding.  In addition, under the LCs
component, the Company utilized $18.4 million of the maximum allowable credit line of $30.0 million, which includes newly issued LCs, and
previously issued and unexpired stand-by letters of credit (“SBLCs”) and certain non-expired commitments under the Company’s previous
Loan and Pledge Agreement with Citibank, N.A. which are guaranteed under the Credit Agreement.
Letters of Credit
The following table presents the total outstanding LCs and SBLCs issued by the Company to its customers related to product
warranty and performance guarantees.
September 30,
2024
December 31,
2023
(In thousands)
Outstanding letters of credit
$17,398
$19,945
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 16
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 — Commitments and Contingencies
Litigation
From time-to-time, the Company has been named in and subject to various proceedings and claims in connection with its business. 
The Company may in the future become involved in litigation in the ordinary course of business, including litigation that could be material to
its business.  The Company considers all claims, if any, on a quarterly basis and, based on known facts, assesses whether potential losses
are considered reasonably possible, probable and estimable.  Based upon this assessment, the Company then evaluates disclosure
requirements and whether to accrue for such claims in its consolidated financial statements.  The Company records a provision for a liability
when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.  These provisions are
reviewed at least quarterly and are adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other
information and events pertaining to a particular case.  As of September 30, 2024, the Company was not involved in any lawsuits, legal
proceedings or claims that would have a material effect on the Company’s financial position, results of operations, or cash flows.  Therefore,
there were no material losses which were probable or reasonably possible.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 17
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8 — Income Taxes
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
(In thousands, except percentages)
Provision for (benefit from) income taxes
$344
$518
$(699)
$(906)
Discrete items
426
357
566
986
Provision for (benefit from) income taxes, excluding discrete items
$770
$875
$(133)
$80
Effective tax rate
3.9%
5.1%
62.4%
(114.2%)
Effective tax rate, excluding discrete items
8.7%
8.6%
11.8%
10.0%
The Company’s interim period tax provision for (benefit from) income taxes is determined using an estimate of its annual effective tax
rate, adjusted for discrete items, if any, that arise during the period.  Each quarter, the Company updates its estimate of the annual effective
tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.  The
Company’s quarterly tax provision and estimate of its annual effective tax rate are subject to variation due to several factors, including
variability in accurately predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of special tax
regimes, and changes in how the Company does business.
For the three and nine months ended September 30, 2024, the recognized provision for and (benefit from) income taxes, respectively,
resulted from the tax projection based on the full year forecasted profit and included benefits related to the U.S. federal foreign-derived
intangible income (“FDII”), federal research and development (“R&D”) tax credit, certain permanent differences, such as share-based
compensation shortfalls, and partial release of California valuation allowance.
For the three and nine months ended September 30, 2023, the recognized provision for and (benefit from) income taxes, respectively,
included benefits related to the U.S. FDII and federal R&D tax credit, along with a discrete tax benefit due primarily to share-based
compensation windfalls and prior years’ discrete tax benefit largely related to increased tax credits.
The effective tax rate excluding discrete items for the nine months ended September 30, 2024, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer share-based compensation, and lower projected U.S. FDII
benefits.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 18
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 — Segment Reporting
The Company’s Chief Operating Decision-Maker (“CODM”) is its President and Chief Executive Officer.  The Company continues to
monitor and review its segment reporting structure in accordance with authoritative guidance to determine whether any changes have
occurred that would impact its reportable segments.
The following tables present a summary of the Company’s financial information by segment and corporate operating expenses.
Three Months Ended September 30, 2024
Nine Months Ended September 30, 2024
Water
Emerging
Technologies
Corporate
Total
Water
Emerging
Technologies
Corporate
Total
(In thousands)
Revenue
$38,344
$240
$—
$38,584
$77,351
$522
$—
$77,873
Cost of revenue
13,334
138
—
13,472
27,633
427
—
28,060
Gross profit
25,010
102
—
25,112
49,718
95
—
49,813
Operating expenses
General and
administrative
1,803
906
4,964
7,673
5,637
2,908
16,226
24,771
Sales and marketing
3,777
1,977
659
6,413
11,359
5,484
1,826
18,669
Research and
development
1,145
2,824
—
3,969
3,318
8,946
—
12,264
Total operating
expenses
6,725
5,707
5,623
18,055
20,314
17,338
18,052
55,704
Operating income
(loss)
$18,285
$(5,605)
$(5,623)
$7,057
$29,404
$(17,243)
$(18,052)
$(5,891)
Three Months Ended September 30, 2023
Nine Months Ended September 30, 2023
Water
Emerging
Technologies
Corporate
Total
Water
Emerging
Technologies
Corporate
Total
(In thousands)
Revenue
$36,812
$224
$—
$37,036
$70,622
$538
$—
$71,160
Cost of revenue
11,114
40
—
11,154
23,136
444
—
23,580
Gross profit
25,698
184
—
25,882
47,486
94
—
47,580
Operating expenses
General and
administrative
2,039
1,061
4,269
7,369
5,837
2,976
12,891
21,704
Sales and marketing
3,272
1,560
579
5,411
9,567
4,171
1,659
15,397
Research and
development
1,098
2,871
—
3,969
3,121
8,922
—
12,043
Total operating
expenses
6,409
5,492
4,848
16,749
18,525
16,069
14,550
49,144
Operating income
(loss)
$19,289
$(5,308)
$(4,848)
$9,133
$28,961
$(15,975)
$(14,550)
$(1,564)
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 19
Table of Contents
ENERGY RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 10 — Concentrations
Customer Revenue Concentration
The following tables present the customers that account for 10% or more of the Company’s revenue and their related segment for
each of the periods presented.  Although certain customers might account for greater than 10% of the Company’s revenue at any one point in
time, the concentration of revenue between a limited number of customers shifts regularly, depending on when revenue is recognized.  The
percentages by customer reflect specific relationships or contracts that would concentrate revenue for the periods presented and do not
indicate a trend specific to any one customer.
Three Months Ended September 30,
Nine Months Ended September 30,
 
Segment
2024
2023
2024
2023
Customer A
Water
14%
20%
14%
16%
Customer B
Water
17%
15%
** 
** 
Customer C
Water
** 
15%
** 
** 
Customer D
Water
11%
** 
11%
** 
Customer E
Water
10%
** 
** 
** 
Customer F
Water
** 
10%
** 
** 
**Zero or less than 10%.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 20
Table of Contents
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Overview
Energy Recovery, Inc. (the “Company”, “Energy Recovery”, “we”, “our” and “us”) designs and manufactures solutions that make
industrial processes more efficient and sustainable.  Leveraging our pressure exchanger technology, which generates little to no emissions
when operating, we believe our solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of
commercial and industrial processes.  As the world coalesces around the urgent need to address climate change and its impacts, we are
helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint.  We believe
that our customers do not have to sacrifice quality and cost savings for sustainability and we are committed to developing solutions that drive
long-term value – both financial and environmental.
The original product application of our technology, the PX® Pressure Exchanger® (“PX”) energy recovery device, was a major
contributor to the advancement of seawater reverse osmosis desalination (“SWRO”), significantly lowering the energy intensity and cost of
water production globally from SWRO.  Our pressure exchanger technology is being applied to the wastewater filtration market, such as
battery manufacturers, mining operations, municipalities, and other manufacturing plants that discharge wastewater with significant levels of
metals and pollutants, and has also been applied to the development of our PX G1300® for use in the CO2 market.
Engineering, and research and development (“R&D”), have been, and remain, an essential part of our history, culture and corporate
strategy.  Since our formation, we have developed leading technology and engineering expertise through the continual evolution of our
pressure exchanger technology, which can enhance environmental sustainability and improve productivity by reducing waste and energy
consumption in high-pressure industrial fluid-flow systems.  This versatile technology works as a platform to build product applications and is
at the heart of many of our products.  In addition, we have engineered and developed ancillary devices, such as our hydraulic turbochargers
and circulation “booster” pumps, that complement our energy recovery devices.
Segments
Our reportable operating segments consist of the water and emerging technologies segments.  These segments are based on the
industries in which the technology solutions are sold, the type of energy recovery device or other technology sold and the related solution and
service or, in the case of emerging technologies, where revenues from new and/or potential devices utilizing our pressure exchanger
technology can be brought to market.  Other factors for determining the reportable operating segments include the manner in which our Chief
Operating Decision Maker (“CODM”), our President and Chief Executive Officer, evaluates our performance combined with the nature of the
individual business activities.  In addition, our corporate operating expenses include expenditures in support of the water and emerging
technologies segments.  We continue to monitor and review our segment reporting structure in accordance with authoritative guidance to
determine whether any changes have occurred that would impact our reportable segments.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 21
Table of Contents
Results of Operations
A discussion regarding our financial condition and results of operations for the three and nine months ended September 30, 2024,
compared to the three and nine months ended September 30, 2023, is presented below.
Revenue
Variability in revenue from quarter to quarter is typical, therefore year-on-year comparisons are not necessarily indicative of the trend
for the full year due to these variations.  There is no specific seasonality in our revenues to highlight that occurs throughout a calendar year.
We generally track our revenues by channels.  The channels we recognize and channel definitions we utilize are as follows:
•Megaproject (“MPD”) channel: The MPD channel has been the main driver of our long-term growth as revenue from this channel
benefits from a growing number of projects as well as an increase in the capacity of these projects in some cases.  MPD projects
are large-scale in nature and generally have shipment timelines from 16 to 36 months from contract date. Recognition of
revenue is dependent on customers’ project timing and execution of these projects.
•Original Equipment Manufacturer (“OEM”) channel: The OEM channel reflects sales to a wide variety of industries in the
desalination, wastewater, and the refrigeration markets.  This channel contains projects smaller in size and revenue, and of
shorter duration compared to those projects in the MPD channel. 
•Aftermarket (“AM”) channel: The AM channel represents support and services rendered to our installed customer base.  AM
revenue generally fluctuates from year-to-year and is dependent on our customers’ timing of product upgrades, as well as their
replenishment of spare parts and supplies.
Revenue by Channel Customers
Three Months Ended September 30,
2024
2023
Revenue
% of
Revenue
Revenue
% of
Revenue
Change
(In thousands, except percentages)
Megaproject
$29,009
75%
$26,829
73%
$2,180
8%
Original equipment manufacturer
4,919
13%
5,307
14%
(388)
(7%)
Aftermarket
4,656
12%
4,900
13%
(244)
(5%)
Total revenue
$38,584
100%
$37,036
100%
$1,548
4%
Nine Months Ended September 30,
2024
2023
Revenue
% of
Revenue
Revenue
% of
Revenue
Change
(In thousands, except percentages)
Megaproject
$48,924
63%
$42,283
59%
$6,641
16%
Original equipment manufacturer
15,210
19%
16,845
24%
(1,635)
(10%)
Aftermarket
13,739
18%
12,032
17%
1,707
14%
Total revenue
$77,873
100%
$71,160
100%
$6,713
9%
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 22
Table of Contents
Revenue Attributable to Primary Geographical Markets by Segments
Three Months Ended September 30,
2024
2023
Water
Emerging
Technologies
Total
Water
Emerging
Technologies
Total
(In thousands)
Middle East and Africa
$28,043
$153
$28,196
$24,543
$—
$24,543
Asia
6,829
—
6,829
5,688
—
5,688
Americas
1,051
—
1,051
5,091
123
5,214
Europe
2,421
87
2,508
1,490
101
1,591
Total revenue
$38,344
$240
$38,584
$36,812
$224
$37,036
Nine Months Ended September 30,
2024
2023
Water
Emerging
Technologies
Total
Water
Emerging
Technologies
Total
(In thousands)
Middle East and Africa
$47,295
$399
$47,694
$38,272
$108
$38,380
Asia
16,770
36
16,806
19,180
—
19,180
Americas
6,957
—
6,957
9,628
153
9,781
Europe
6,329
87
6,416
3,542
277
3,819
Total revenue
$77,351
$522
$77,873
$70,622
$538
$71,160
Three months ended September 30, 2024, as compared to the three months ended September 30, 2023
The increase in MPD revenue of $2.2 million was due primarily to:
•Desalination: The decrease in revenue of $0.6 million was due primarily to lower shipments of products to the Americas and
Middle East and Africa (“MEA”) markets, partially offset by higher shipments of products to the Asia and Europe markets.
•Wastewater: The increase in revenue of $2.8 million was due primarily to higher shipments of products to the MEA market.
The decrease in OEM revenue of $0.4 million was due primarily to:
•Desalination: The decrease in revenue of $0.6 million was due primarily to lower shipments of products to the Asia and Americas
markets, partially offset by higher shipments of products to the MEA and Europe markets.
•Wastewater: The increase in revenue of $0.3 million was due primarily to higher shipments of products to the Asia market,
partially offset by lower shipments of products to the Europe and Americas markets.
•Emerging Technology:  The decrease in revenue of $0.1 million was due primarily to lower shipments of products.
The decrease in AM revenue of $0.2 million was due primarily to lower shipments of products to the Asia market, partially offset by
higher shipments of products to the Europe and MEA markets.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 23
Table of Contents
Nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023
The increase in MPD revenue of $6.6 million was due primarily to:
•Desalination: The increase in revenue of $3.8 million was due primarily to higher shipments of products to the MEA, Asia and
Europe markets, partially offset by lower shipments of products to the Americas market.
•Wastewater: The increase in revenue of $2.8 million was due primarily to higher shipments of products to the MEA market.
The decrease in OEM revenue of $1.6 million was primarily due to:
•Desalination: The decrease in revenue of $0.5 million was due primarily to lower shipments of products to the Asia and Americas
markets, partially offset by higher shipments of products to the MEA and Europe markets.
•Wastewater: The decrease in revenue of $0.9 million was due primarily to lower shipments of products in all markets, with the
largest decrease in the Europe market.
•Emerging Technology:  The decrease in revenue of $0.3 million was due primarily to an installment in Europe and sales to a gas
producer in the Americas, both occurring in the prior year. 
The increase in AM revenue of $1.7 million was due primarily to higher shipments of product to the Americas, Asia, and the MEA
markets, partially offset by lower shipments of product to the Asia market.
Concentration of Revenue
See Note 10, “Concentrations,” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements
(unaudited),” of this Quarterly Report on Form 10-Q (the “Notes”) for further discussion regarding our concentration of revenue.
Gross Profit and Gross Margin
Gross profit represents revenue less cost of revenue.  Cost of revenue consists primarily of raw materials, personnel costs (including
share-based compensation), manufacturing overhead, warranty costs, and depreciation expense.
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
Change
2024
2023
Change
(In thousands, except percentage and basis point)
Gross profit
$25,112
$25,882
$(770)
(3.0)%
$49,813
$47,580
$2,233
Gross margin
65.1%
69.9%
(480) bps
(100.0)%
64.0%
66.9%
(290) bps
The decrease in gross profit for the three months ended September 30, 2024, as compared to the prior year, was due primarily to a
decrease in gross margin, partially offset by an increase in sales of PXs.  The decrease in gross margin for the three months ended
September 30, 2024, as compared to the prior year, was due primarily to higher manufacturing costs, higher costs related to product mix, and
an increase in freight costs and indirect costs.
The increase in gross profit for the nine months ended September 30, 2024, as compared to the prior year, was due primarily to an
increase in sales of PXs, partially offset by a decrease in gross margin.  The decrease in gross margin for the nine months ended
September 30, 2024, as compared to the prior year, was due primarily to higher manufacturing costs and freight costs, partially offset by
average selling prices related to product mix.
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Operating Expenses
The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and research and development
(“R&D”) operating expenses for the three and nine months ended September 30, 2024, as compared to the comparable periods in the prior
year, are discussed within the following overall operating expenditures, and the segment and corporate operating expenses discussions
below.
Three Months Ended September 30,
2024
2023
Water
Emerging
Technologies
Corporate
Total
Water
Emerging
Technologies
Corporate
Total
(In thousands)
General and
administrative
$1,803
$906
$4,964
$7,673
$2,039
$1,061
$4,269
$7,369
Sales and marketing
3,777
1,977
659
6,413
3,272
1,560
579
5,411
Research and
development
1,145
2,824
—
3,969
1,098
2,871
—
3,969
Total operating
expenses
$6,725
$5,707
$5,623
$18,055
$6,409
$5,492
$4,848
$16,749
Three months ended September 30, 2024, as compared to the three months ended September 30, 2023
Overall Operating Expenditures.  Overall operating expenditures increased $1.3 million, or 7.8%.  This increase was due primarily to
higher consulting costs related to the enhancement of our corporate growth strategy, S&M employee compensation and benefit costs related
to an increase in headcount, and an increase in S&M and R&D share-based compensation expense, partially offset by lower marketing and
sales commission costs.
Water Segment.  Water segment operating expenses increased by $0.3 million, or 4.9%.  This increase was due primarily to an
increase in share-based compensation expense and consultant costs, partially offset by lower sales commission costs.
Emerging Technologies Segment.  Emerging Technologies segment operating expenses increased by $0.2 million, or 3.9%.  This
increase was due primarily to an increase in research and development costs and consultant costs, partially offset by lower employee
compensation costs.
Corporate Operating Expenses. Corporate operating expenses increased by $0.8 million, or 16.0%.  This increase was due primarily
to higher consulting costs related to the enhancement of our corporate growth strategy and an increase in employee compensation costs.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 25
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Nine Months Ended September 30,
2024
2023
Water
Emerging
Technologies
Corporate
Total
Water
Emerging
Technologies
Corporate
Total
(In thousands)
General and
administrative
$5,637
$2,908
$16,226
$24,771
$5,837
$2,976
$12,891
$21,704
Sales and marketing
11,359
5,484
1,826
18,669
9,567
4,171
1,659
15,397
Research and
development
3,318
8,946
—
12,264
3,121
8,922
—
12,043
Total operating
expenses
$20,314
$17,338
$18,052
$55,704
$18,525
$16,069
$14,550
$49,144
Nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023
Overall Operating Expenditures.  Overall operating expenditures increased by $6.6 million, or 13.4%.  This increase was due primarily
to higher consulting costs related to the enhancement of our corporate growth strategy and an increase in employee compensation and
benefit costs, recruiting costs, travel expenses, and an increase in share-based compensation expense due to modification of certain equity
awards and higher severance payments, both related to the termination of certain executive-level employees, partially offset by lower
marketing costs and depreciation expense.
Water Segment.  Water segment operating expenses increased by $1.8 million, or 9.7%.  This increase was due primarily to higher
employee compensation and benefit costs and share-based compensation expense in S&M related to an increase in headcount to support
our existing desalination operations and our growth in wastewater.  In addition, non-employee operating expenses were higher due primarily
to an increase in consultant costs to support our growth in desalination and wastewater.
Emerging Technologies Segment.  Emerging Technologies operating expenses increased by $1.3 million, or 7.9%.  This increase was
due primarily to higher employee compensation and benefit costs, and share-based compensation expense, both related to an increase in
headcount in S&M and R&D, an increase in research and development costs, higher consultant costs, and an increase in severance cost,
partially offset by lower marketing costs. 
Corporate Operating Expenses.  Corporate operating expenses increased by $3.5 million, or 24.1%.  This increase was due primarily
to higher employee compensation and benefit costs, and share-based compensation expense, related to an increase in headcount in G&A,
an increase in recruiting costs, higher travel costs, and an increase in share-based compensation expense due to modification of certain
equity awards and higher severance payments.  In addition, the increase in non-employee operating expenses was due primarily to higher
consulting costs related to the enhancement of our corporate growth strategy, partially offset by lower marketing costs.
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Other Income, Net
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
(In thousands)
Interest income
$1,711
$1,083
$4,816
$2,486
Other non-operating expense, net
57
(38)
(45)
(129)
Total other income, net
$1,768
$1,045
$4,771
$2,357
The increase in “Total other income, net” in the three and nine months ended September 30, 2024, as compared to the comparable
periods in the prior year, was due primarily to an increase in short- and long-term investments.
Income Taxes
 
Three Months Ended September 30,
Nine Months Ended September 30,
 
2024
2023
2024
2023
(In thousands, except percentages)
(Benefit from) provision for income taxes
$344
$518
$(699)
$(906)
Discrete items
426
357
566
986
(Benefit from) provision for income taxes, excluding discrete items
$770
$875
$(133)
$80
Effective tax rate
3.9%
5.1%
62.4%
(114.2%)
Effective tax rate, excluding discrete items
8.7%
8.6%
11.8%
10.0%
The interim period tax provision for (benefit from) income taxes is determined using an estimate of our annual effective tax rate,
adjusted for discrete items, if any, that arise during the period.  Each quarter, we update our estimate of the annual effective tax rate, and if
the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.  The quarterly tax provision and estimate
of our annual effective tax rate are subject to variation due to several factors, including variability in accurately predicting our pre-tax income
or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in how we do business.
For the three and nine months ended September 30, 2024, the recognized provision for and (benefit from) income taxes, respectively,
resulted from the tax projection based on the full year forecasted profit and included benefits related to the U.S. federal foreign-derived
intangible income (“FDII”), federal R&D tax credit, certain permanent differences, such as share-based compensation shortfalls, and partial
release of California valuation allowance.
For the three and nine months ended September 30, 2023, the recognized provision for and (benefit from) income taxes, respectively,
included benefits related to the U.S. FDII and federal R&D tax credit, along with a discrete tax benefit due primarily to share-based
compensation windfalls and prior years’ discrete tax benefit largely related to increased tax credits.
The effective tax rate excluding discrete items for the nine months ended September 30, 2024, as compared to the prior year, differed
primarily due to lower projected R&D tax credits, increased non-deductible officer share-based compensation, and lower projected U.S. FDII
benefits.
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Liquidity and Capital Resources
Overview
From time-to-time, management and our Board of Directors review our liquidity and future cash needs and may make a decision to
(1) return capital to our shareholders through a share repurchase program or dividend payout; or (2) seek additional debt or equity financing. 
As of September 30, 2024, our principal sources of liquidity consisted of (i) unrestricted cash and cash equivalents of $63.3 million that are
primarily invested in money market funds and U.S. treasury securities; (ii) investment-grade short-term and long-term marketable debt
instruments of $76.7 million that are primarily invested in U.S. treasury securities, corporate notes and bonds, and municipal and agency
notes and bonds; and (iii) accounts receivable, net of allowances, of $31.8 million.  As of September 30, 2024, there was unrestricted cash of
$1.1 million held outside the U.S.  We invest cash not needed for current operations predominantly in investment-grade, marketable debt
instruments with the intent to make such funds available for future operating purposes, as needed.  Although these securities are available for
sale, we generally hold these securities to maturity, and therefore, do not currently see a need to trade these securities in order to support our
liquidity needs in the foreseeable future.  We believe the risk of this portfolio to us is in the ability of the underlying companies or government
agencies to cover their obligations at maturity, not in our ability to trade these securities at a profit.  Based on current projections, we believe
existing cash balances and future cash inflows from this portfolio will meet our liquidity needs for at least the next 12 months.
Credit Agreement
We entered into a credit agreement with JPMorgan Chase Bank, N.A. (“JPMC”) on December 22, 2021 (as amended, the “Credit
Agreement”).  The Credit Agreement, which will expire on December 21, 2026, provides a committed revolving credit line of $50.0 million and
includes both a revolving loan and a letters of credit (“LCs”) component. The maximum allowable LCs under the credit line component of the
Credit Agreement is $30.0 million.  As of September 30, 2024, we were in compliance with all covenants under the Credit Agreement.
Under the Credit Agreement, as of September 30, 2024, there were no revolving loans outstanding.  In addition, as of September 30,
2024, under the LCs component, we utilized $18.4 million of the maximum allowable credit line of $30.0 million, which included newly
issued LCs, and previously issued and unexpired stand-by letters of credits (“SBLCs”) and certain non-expired commitments under the
previous Loan and Pledge Agreement with Citibank, N.A., which are guaranteed under the Credit Agreement.  As of September 30, 2024,
there was $17.4 million of outstanding LCs.  These LCs had a weighted average remaining life of approximately 17 months.
See Note 6, “Lines of Credit,” of the Notes for further discussion related to the Credit Agreement.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 28
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Cash Flows
Nine Months Ended September 30,
2024
2023
Change
 
(In thousands)
Net cash provided by operating activities
$11,567
$12,272
$(705)
Net cash used in investing activities
(22,171)
(18,375)
(3,796)
Net cash provided by financing activities
5,795
1,184
4,611
Effect of exchange rate differences on cash and cash equivalents
(23)
27
(50)
Net change in cash, cash equivalents and restricted cash
$(4,832)
$(4,892)
$60
Cash Flows from Operating Activities
Net cash provided by operating activities is subject to the project driven, non-cyclical nature of our business.  Operating cash flow can
fluctuate significantly from year to year, due to the timing of receipts of large project orders.  Operating cash flow may be negative in one year
and significantly positive in the next, consequently individual quarterly results and comparisons may not necessarily indicate a significant
trend, either positive or negative. 
The lower net cash provided by operating assets and liabilities for the nine months ended September 30, 2024, as compared to the
prior year, was due primarily to the following factors: 
•Accounts receivable and contract assets: an increase in cash provided primarily related to an increase in revenues, the timing of
billings related to shipments of product or certification of installations, and collections on the account receivable balances;
•Inventory: an increase in cash used primarily related to the increase in PXs manufactured for project deliveries in the fourth
quarter of 2024 and early 2025; and
•Accrued liabilities: an increase in cash used primarily related to a decrease in employee compensation and benefits, and a
reduction of tax accruals.
Cash Flows from Investing Activities
Net cash used in investing activities primarily relates to sales, maturities and purchases of investment-grade marketable debt
instruments, such as corporate notes and bonds, and capital expenditures supporting our growth.  We believe our investments in marketable
debt instruments are structured to preserve principal and liquidity while at the same time maximizing yields without significantly increasing
risk.  The higher net cash used in investing activities of $3.8 million in the nine months ended September 30, 2024, as compared to the prior
year, was primarily driven by $3.8 million of net cash used for purchases of marketable debt instruments.
Cash Flows from Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2024, as compared to the cash provided by
financing activities in the prior year, was due primarily to an increase of cash from exercises of employee stock options granted under our
equity incentive plans.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 29
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Liquidity and Capital Resource Requirements
We believe that our existing resources and cash generated from our operations will be sufficient to meet our anticipated capital
requirements for at least the next 12 months.  However, we may need to raise additional capital or incur additional indebtedness to continue
to fund our operations or to support acquisitions in the future and/or to fund investments in our latest technology arising from rapid market
adoption.  These needs could require us to seek additional equity or debt financing.  Our future capital requirements will depend on many
factors including the continuing market acceptance of our products, our rate of revenue growth, the timing of new product introductions, the
expansion of our R&D, manufacturing and S&M activities, and the timing and extent of our expansion into new geographic territories.  In
addition, we may enter into potential material investments in, or acquisitions of, complementary businesses, services or technologies in the
future which could also require us to seek additional equity or debt financing.  Should we need additional liquidity or capital funds, these funds
may not be available to us on favorable terms, or at all.
Recent Accounting Pronouncements
Refer to Note 1, “Description of Business and Significant Accounting Policies – Significant Accounting Policies,” of the Notes to
Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements (unaudited),” of this Quarterly Report on Form 10-Q.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 30
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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk may be found primarily in two areas, foreign currency and interest rates.
Foreign Currency Risk
Our foreign currency exposures are due to fluctuations in exchange rates for the U.S. dollar (“USD”) versus the British pound, Saudi
riyal, Emirati dirham, European euro, Chinese yuan, Indian rupee and Canadian dollar.  Changes in currency exchange rates could adversely
affect our consolidated operating results or financial position.
Our revenue contracts have been denominated in the USD.  At times, our international customers may have difficulty in obtaining
the USD to pay our receivables, thus increasing collection risk and potential bad debt expense.  To the extent we expand our international
sales, a larger portion of our revenue could be denominated in foreign currencies.  As a result, our cash and operating results could be
increasingly affected by changes in exchange rates.
In addition, we pay many vendors in foreign currency and, therefore, are subject to changes in foreign currency exchange rates.  Our
international sales and service operations incur expense that is denominated in foreign currencies.  This expense could be materially affected
by currency fluctuations.  Our international sales and services operations also maintain cash balances denominated in foreign currencies.  To
decrease the inherent risk associated with translation of foreign cash balances into our reporting currency, we do not maintain excess cash
balances in foreign currencies.
We have not hedged our exposure to changes in foreign currency exchange rates because expenses in foreign currencies have been
insignificant to date and exchange rate fluctuations have had little impact on our operating results and cash flows.  In addition, we do not
have any exposure to the Russian ruble.
Interest Rate and Credit Risks
The primary objective of our investment activities is to preserve principal and liquidity while at the same time maximizing yields without
significantly increasing risk.  We invest primarily in investment-grade short-term and long-term marketable debt instruments that are subject
to counter-party credit risk.  To minimize this risk, we invest pursuant to an investment policy approved by our Board of Directors.  The policy
mandates high credit rating requirements and restricts our exposure to any single corporate issuer by imposing concentration limits.
As of September 30, 2024, our investment portfolio of $88.1 million, in investment-grade marketable debt instruments, such as U.S.
treasury securities, corporate notes and bonds, and municipal and agency notes and bonds, are classified as either cash equivalents or
short-term and/or long-term investments on our Condensed Consolidated Balance Sheets.  These investments are subject to interest rate
fluctuations and decrease in market value to the extent interest rates increase, which occurred during the nine months ended September 30,
2024.  To minimize the exposure due to adverse shifts in interest rates, we maintain investments with a weighted average maturity of
approximately eight months.  As of September 30, 2024, a hypothetical 1% increase in interest rates would have resulted in a less than
$0.4 million decrease in the fair value of our investments in marketable debt instruments as of such date.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 31
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Item 4 — Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, have evaluated
the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the
end of the period covered by this report.
Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of
September 30, 2024, our disclosure controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 32
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PART II — OTHER INFORMATION
Item 1 — Legal Proceedings
We have been, and may be from time to time, involved in legal proceedings or subject to claims incident to the ordinary course of
business.  We are not presently a party to any legal proceedings that we believe are likely to have a material adverse effect on our business,
financial condition, or operating results.  Regardless of the outcome, such proceedings or claims can have an adverse impact on us because
of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be
obtained.
Item 1A — Risk Factors
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, “Risk Factors,” in the 2023 Annual
Report.
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 — Defaults Upon Senior Securities
None.
Item 4 — Mine Safety Disclosures
Not applicable.
Item 5 — Other Information
During the three months ended September 30, 2024, no director or officer (within the meaning of Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended) has adopted or terminated any Rule 10b5-1 trading arrangement and/or any non-Rule 10b5-1 trading
arrangement (as defined in Item 408 of Regulation S-K).
Energy Recovery, Inc. | Q3'2024 Form 10-Q | 33
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Item 6 — Exhibits
A list of exhibits filed or furnished with this report or incorporated herein by reference is found in the Exhibit Index below.
Exhibit
Number
Exhibit Description
101
Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, “Financial Information” of this
Quarterly Report on Form 10-Q.
104
Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.
*Filed herewith.
**The certification furnished in Exhibit 32.1 is not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that
section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ENERGY RECOVERY, INC.
 
Date:
October 30, 2024
By:
/s/ DAVID W. MOON
David W. Moon
President and Chief Executive Officer
(Principal Executive Officer)
Date:
October 30, 2024
By:
/s/ MICHAEL S. MANCINI
Michael S. Mancini
Chief Financial Officer
(Principal Financial Officer)