# Energy Recovery, Inc. (ERII) Informational only - not investment advice. CIK: 0001421517 SIC: 3559 Special Industry Machinery, NEC SIC breadcrumb: [Manufacturing](/division/D/) > [Industrial And Commercial Machinery And Computer Equipment](/major-group/35/) > [SIC 3559 Special Industry Machinery, NEC](/industry/3559/) Latest 10-K filed: 2026-02-25 SEC page: https://www.sec.gov/edgar/browse/?CIK=1421517 Filing source: https://www.sec.gov/Archives/edgar/data/1421517/000142151726000022/erii-20251231.htm ## At a glance FY2025 · period end 2025-12-31 · filed 2026-02-25 · accession 0001421517-26-000022 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001421517.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 134,987,000 USD | 2025 | verified | | Net income | 22,962,000 USD | 2025 | verified | | Assets | 231,514,000 USD | 2025 | verified | | Free cash flow | 17,440,000 USD | 2025 | computed | | Net margin | 17.01% | 2025 | computed | | Operating margin | 17.70% | 2025 | computed | | Revenue YoY | -6.87% | 2025 | computed | | ROE | 11.14% | 2025 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | ERII | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | 17.0% | 7.7% | 88 | 110 | | Operating margin | 17.7% | 13.1% | 75 | 104 | | Revenue growth | -6.9% | 5.8% | 6 | 111 | | FCF margin | 12.9% | 9.6% | 62 | 103 | | ROE | 11.1% | 11.7% | 48 | 108 | | ROA | 9.9% | 5.6% | 84 | 111 | | Liabilities / equity | 0.12 | 1.10 | 3 | 108 | | Current ratio | 10.44 | 2.02 | 96 | 110 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC major-group 35 Industrial And Commercial Machinery And Computer Equipment, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 134987000 | USD | 2025 | 2026-02-25 | | Net income | 22962000 | USD | 2025 | 2026-02-25 | | Assets | 231514000 | USD | 2025 | 2026-02-25 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001421517.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | | 57,784,000 | 69,129,000 | 74,515,000 | 86,942,000 | 118,986,000 | 103,904,000 | 125,591,000 | 128,349,000 | 144,948,000 | 134,987,000 | | Net income | | | | 3,719,000 | 18,354,000 | 22,093,000 | 10,913,000 | 26,387,000 | 14,269,000 | 24,049,000 | 21,504,000 | 23,050,000 | 22,962,000 | | Operating income | | | | 3,426,000 | 9,249,000 | 9,978,000 | 10,364,000 | 31,294,000 | 13,831,000 | 24,829,000 | 19,050,000 | 19,724,000 | 23,889,000 | | Gross profit | 25,722,000 | 16,713,000 | 24,560,000 | 31,866,000 | 39,095,000 | | | | 71,234,000 | 87,356,000 | 87,079,000 | 96,933,000 | 87,931,000 | | Diluted EPS | | | | 0.07 | 0.33 | 0.40 | 0.19 | 0.47 | 0.24 | 0.42 | 0.37 | 0.40 | 0.42 | | Operating cash flow | | | | 4,965,000 | 2,895,000 | 7,565,000 | 5,268,000 | 16,870,000 | 13,526,000 | 12,631,000 | 26,054,000 | 20,522,000 | 18,770,000 | | Capital expenditures | | | | 1,112,000 | 7,376,000 | 5,235,000 | 7,382,000 | 6,785,000 | 6,684,000 | 4,232,000 | 2,567,000 | 1,298,000 | 1,330,000 | | Share buybacks | | | | 9,375,000 | 4,276,000 | 10,000,000 | 0.00 | 0.00 | 23,346,000 | 26,654,000 | 0.00 | 50,384,000 | 35,623,000 | | Assets | | | | 149,063,000 | 164,485,000 | 179,841,000 | 188,774,000 | 204,314,000 | 213,690,000 | 217,039,000 | 252,974,000 | 242,792,000 | 231,514,000 | | Liabilities | | | | 83,930,000 | 72,591,000 | 66,463,000 | 52,761,000 | 32,690,000 | 34,911,000 | 31,701,000 | 33,166,000 | 32,782,000 | 25,322,000 | | Stockholders' equity | | | | 68,492,000 | 91,894,000 | 113,378,000 | 136,013,000 | 171,624,000 | 178,779,000 | 185,338,000 | 219,808,000 | 210,010,000 | 206,192,000 | | Cash and cash equivalents | | | | 61,364,000 | 27,780,000 | 21,955,000 | 26,387,000 | 94,255,000 | 74,358,000 | 56,354,000 | 68,098,000 | 29,627,000 | 48,076,000 | | Free cash flow | | | | 3,853,000 | -4,481,000 | 2,330,000 | -2,114,000 | 10,085,000 | 6,842,000 | 8,399,000 | 23,487,000 | 19,224,000 | 17,440,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | | 6.44% | 26.55% | 29.65% | 12.55% | 22.18% | 13.73% | 19.15% | 16.75% | 15.90% | 17.01% | | Operating margin | | | | 5.93% | 13.38% | 13.39% | 11.92% | 26.30% | 13.31% | 19.77% | 14.84% | 13.61% | 17.70% | | Return on equity | | | | 5.43% | 19.97% | 19.49% | 8.02% | 15.37% | 7.98% | 12.98% | 9.78% | 10.98% | 11.14% | | Return on assets | | | | 2.49% | 11.16% | 12.28% | 5.78% | 12.91% | 6.68% | 11.08% | 8.50% | 9.49% | 9.92% | | Liabilities / equity | | | | 1.23 | 0.79 | 0.59 | 0.39 | 0.19 | 0.20 | 0.17 | 0.15 | 0.16 | 0.12 | | Current ratio | | | | 7.13 | 4.15 | 4.41 | 4.06 | 9.10 | 7.67 | 8.63 | 8.64 | 7.41 | 10.44 | ## As-reported value updates 8 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period. Ledger: /company/ERII/revisions/ ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001421517.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q3 | 2022-09-30 | | | 0.08 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | -0.11 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | | | -0.03 | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 37,036,000 | 9,660,000 | 0.17 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 57,189,000 | 19,805,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 12,090,000 | -8,260,000 | -0.14 | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 27,199,000 | -642,000 | -0.01 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 38,584,000 | 8,481,000 | 0.15 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 67,075,000 | 23,471,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 8,065,000 | -9,880,000 | -0.18 | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 28,051,000 | 2,054,000 | 0.04 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 32,000,000 | 3,874,000 | 0.07 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 66,871,000 | 26,914,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 9,706,000 | -12,251,000 | -0.23 | reported discrete quarter | | 2026-Q2 | 2026-06-30 | 11,996,000 | -3,198,000 | -0.06 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from ERII's latest 10-K: [/company/ERII/business/](/company/ERII/business/). ## Risk Factors Verbatim Item 1A Risk Factors from ERII's latest 10-K: [/company/ERII/risk-factors/](/company/ERII/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1421517/000142151726000083/erii-20260630.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-08-05 Report date: 2026-06-30 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. 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 Desalination and Wastewater 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.  Other factors for determining the reportable operating segments include the manner in which our Chief Operating Decision Maker (“CODM”), our Interim President and Chief Executive Officer, evaluates our performance combined with the nature of the individual business activities.  In addition, our Corporate and Other include expenditures in support of the Desalination and Wastewater segments, as well as revenue and expenditures associated with the former Emerging Technologies segment.  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. During the six months ended June 30, 2026, we changed the composition of our reportable segments to better reflect how the CODM manages the business. During the fist quarter of fiscal 2026, the Water segment was separated into two segments, the Desalination segment and the Wastewater segment. During the first quarter of fiscal 2026, the CO2 retail grocery business within the Emerging Technologies segment was wound-down, which resulted in the Emerging Technologies segment no longer meeting the criteria of a reportable segment as of the second quarter of fiscal 2026. As a result, revenue and expenses associated with the former Emerging Technologies segment have been included within Corporate and Other.  Prior periods have been recast to conform to the current year presentation. Energy Recovery, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 25 Table of Contents Results of Operations A discussion regarding our financial condition and results of operations for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, is presented below. Revenue As a significant portion of our revenue is derived from large project contract deliveries that are up to 36 months from contract date, 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. Revenue by Channel Customers [[GREPCENT_TABLE]] [["","Three Months Ended June 30,"],["","2026","","2025"],["","Revenue","","% of Revenue","","Revenue","","% of Revenue","","Change"],["","(In thousands, except percentages)"],["Original equipment manufacturer","$5,178","","43%","","$8,357","","30%","","$(3,179)","","(38%)"],["Aftermarket","4,112","","34%","","4,892","","17%","","(780)","","(16%)"],["Megaproject","2,706","","23%","","14,802","","53%","","(12,096)","","(82%)"],["Total revenue","$11,996","","100%","","$28,051","","100%","","$(16,055)","","(57%)"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Six Months Ended June 30,"],["","2026","","2025"],["","Revenue","","% of Revenue","","Revenue","","% of Revenue","","Change"],["","(In thousands, except percentages)"],["Original equipment manufacturer","$11,766","","54%","","$12,358","","34%","","$(592)","","(5%)"],["Aftermarket","6,866","","32%","","8,920","","25%","","(2,054)","","(23%)"],["Megaproject","3,070","","14%","","14,838","","41%","","(11,768)","","(79%)"],["Total revenue","$21,702","","100%","","$36,116","","100%","","$(14,414)","","(40%)"]] [[/GREPCENT_TABLE]] Revenue Attributable to Primary Geographical Markets by Segments [[GREPCENT_TABLE]] [["","Three Months Ended June 30,"],["2026","","2025"],["Desalination","","Wastewater","","Corporate and Other","","Total","","Desalination","","Wastewater","","Corporate and Other","","Total"],["","(In thousands)"],["Middle East","$6,081","","$\u2014","","$\u2014","","$6,081","","$8,275","","$\u2014","","$92","","$8,367"],["Africa","475","","\u2014","","\u2014","","475","","1,049","","\u2014","","\u2014","","1,049"],["Other","4,927","","513","","\u2014","","5,440","","16,176","","2,339","","120","","18,635"],["Total revenue","$11,483","","$513","","$\u2014","","$11,996","","$25,500","","$2,339","","$212","","$28,051"]] [[/GREPCENT_TABLE]] Energy Recovery, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 26 Table of Contents [[GREPCENT_TABLE]] [["","Six Months Ended June 30,"],["2026","","2025"],["Desalination","","Wastewater","","Corporate and Other","","Total","","Desalination","","Wastewater","","Corporate and Other","","Total"],["","(In thousands)"],["Middle East","$8,587","","$\u2014","","$77","","$8,664","","$10,289","","$\u2014","","$93","","$10,382"],["Africa","671","","\u2014","","\u2014","","671","","1,915","","\u2014","","\u2014","","1,915"],["Other","11,132","","1,114","","121","","12,367","","21,055","","2,644","","120","","23,819"],["Total revenue","$20,390","","$1,114","","$198","","$21,702","","$33,259","","$2,644","","$213","","$36,116"]] [[/GREPCENT_TABLE]] Three months ended June 30, 2026, as compared to the three months ended June 30, 2025 The decrease in Original Equipment Manufacturer (“OEM”) revenue of $3.2 million was due primarily to: •Desalination: The decrease in revenue of $1.3 million was due primarily to lower shipments of products to the Asia and Africa markets, partially offset by higher shipments of products to the America, Europe and Middle East markets. •Wastewater: The decrease in revenue of $1.9 million was due primarily to lower shipments of products to the Asia markets. The decrease in After Market (“AM”) revenue of $0.8 million was due primarily to lower shipment of products to the Europe and Asia markets, partially offset by higher shipments of products to the Middle East market. The decrease in Megaproject (“MPD”) revenue of $12.1 million was primarily due to lower shipments of products to the Europe, Middle East and Asia markets. Six months ended June 30, 2026, as compared to the six months ended June 30, 2025 The decrease in OEM revenue of $0.6 million was due primarily to: •Desalination: The increase in revenue of $0.8 million was due primarily to higher shipments of products to the Europe, Middle East and Africa markets, partially offset by lower shipments of products to the Asia market. •Wastewater: The decrease in revenue of $1.4 million was due primarily to lower shipments of products to the Asia market. The decrease in AM revenue of $2.1 million was primarily due to lower shipments to the Asia and Europe markets. The decrease in MPD revenue of $11.8 million was due primarily to lower shipments to the Europe, Asia and Middle East markets. 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 stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense. [[GREPCENT_TABLE]] [["","Three Months Ended June 30,","","","","Six Months Ended June 30,"],["","2026","","2025","","Change","","2026","","2025","","Change"],["","(In thousands, except percentage and basis point)"],["Gross profit","$8,957","","$17,954","","$(8,997)","","$11,659","","$22,412","","$(10,753)"],["Gross margin","74.7%","","64.0%","","1,070 bps","","53.7%","","62.1%","","(840) bps"]] [[/GREPCENT_TABLE]] Energy Recovery, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 27 Table of Contents The decrease in gross profit for the three months ended June 30, 2026, as compared to the prior year, was due primarily to lower volume as compared to the prior year, partially offset by decreases to indirect manufacturing costs and channel mix. The increase in gross margin for the three months ended June 30, 2026, as compared to the prior year, was due primarily to indirect manufacturing costs and channel mix, partially offset by lower volume. The decrease in gross profit and gross margin for the six months ended June 30, 2026, as compared to the prior year, was due primarily to lower volume as compared to the prior year as well as $1.6 million of restructuring charges booked to inventory associated with the wind down of the CO2 retail grocery business, as well as increased costs related to product and channel mix, pricing, and tariffs, partially offset by improvements to indirect manufacturing costs during the six months ended June 30, 2026. Operating Expenses The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and R&D operating expenses for the three months ended June 30, 2026, 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. [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1421517/000142151726000022/erii-20251231.htm Complete FY 2025 MD&A: /company/ERII/mda/fy2025/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Filing date: 2026-02-25 Report date: 2025-12-31 Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand our results of operations and financial condition.  It should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item 8, “Financial Statements and Supplementary Data,” in this Annual Report on Form 10-K. Overview 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 management evaluates the performance of the Company 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, as well as R&D expenditures applicable to potential future industry verticals, or enabling technologies that could benefit either or both existing business units. On February 25, 2026, we decided to wind down operations of the CO2 retail grocery business within our Emerging Technologies segment due to a fundamental change in the outlook of the business.  See Note 13, “Subsequent Events,” of the Notes for further discussion regarding the wind down. Global Economic and Political Environment Considerations The markets for our products are dynamic and constantly evolving.  Our products are sold in numerous countries worldwide, with a large percentage of our sales generated outside the U.S., specifically in the Middle East, Africa and Asia markets which provide a significant portion of our total revenue.  Therefore, we are exposed to and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations.  There is uncertainty surrounding macroeconomic factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, rising interest rates, and labor shortages.  These global macroeconomic factors, coupled with the U.S. political climate, political unrest internationally, and known conflicts in Europe and the Middle East, have created global economic and political uncertainty, and have impacted demand for certain of our products.  While the impact and longevity of these factors remain uncertain, we are constantly evaluating the extent to which these factors will impact our business, financial condition or results of operations.  Over the long-term, demand for our energy recovery devices could correlate to global macroeconomic and geopolitical factors.  Any disruption to the economic factors and regulations in these regions, which remain uncertain, may adversely affect our results of operations and financial condition. Refer to Part I, Item 1, “Business,” and Part I, Item 1A, “Risk Factors,” in this Annual Report on Form 10-K for further discussion of these trends and other risks. Results of Operations A discussion regarding our financial condition and results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, can be found under Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 26, 2025, which is available free of charge on the SEC’s website at http://www.sec.gov and at our investor relations website (https://ir.energyrecovery.com). Revenue Energy Recovery, Inc. | 2025 Annual Report (Form 10-K) | 35 Table of Contents As a significant portion of our revenue is derived from large project contract deliveries that are up to 36 months from contract date, there is no specific seasonality in our revenues to highlight. 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 [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","2025","","2024"],["","Revenue","","% of Revenue","","Revenue","","% of Revenue","","Change"],["","(In thousands, except percentages)"],["Megaproject","$82,885","","61%","","$95,399","","66%","","$(12,514)","","(13%)"],["Original equipment manufacturer","31,940","","24%","","31,525","","22%","","415","","1%"],["Aftermarket","20,162","","15%","","18,024","","12%","","2,138","","12%"],["Total revenue","$134,987","","100%","","$144,948","","100%","","$(9,961)","","(7%)"]] [[/GREPCENT_TABLE]] Revenue Attributable to Primary Geographical Markets by Segments [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["2025","","2024"],["Water","","Emerging Technologies","","Total","","Water","","Emerging Technologies","","Total"],["","(In thousands)"],["Middle East","$68,084","","$92","","$68,176","","$59,538","","$399","","$59,937"],["Africa","15,010","","\u2014","","15,010","","30,731","","\u2014","","30,731"],["Other","51,608","","193","","51,801","","54,041","","239","","54,280"],["Total revenue","$134,702","","$285","","$134,987","","$144,310","","$638","","$144,948"]] [[/GREPCENT_TABLE]] Year ended December 31, 2025, as compared to the year ended December 31, 2024 Revenues associated with our Water segment represented 99% of total revenues during the years ended December 31, 2025 and 2024. Revenues associated with our Emerging Technologies segment were immaterial. The decrease in MPD revenue of $12.5 million was due primarily to lower shipments to the Africa and Asia markets, partially offset by higher shipments of products to the Middle East and Europe markets. The increase in OEM revenue of $0.4 million was primarily due: •Desalination: The increase in revenue of $2.5 million was due primarily to higher shipments of products to the Asia market. •Wastewater: The decrease in revenue of $2.1 million was due primarily to lower shipments of products to the Asia market. The increase in AM revenue of $2.1 million was due primarily to higher shipments to the Asia and Middle East markets. Energy Recovery, Inc. | 2025 Annual Report (Form 10-K) | 36 Table of Contents Revenues attributable to domestic and international sales Revenues are primarily attributable to international sales and are concentrated in the Middle East and Africa.  See Note 10, “Concentrations – Revenue by Geographic Location and Country,” of the Notes for further discussion regarding our concentration of revenue by geographic location. Gross Profit and Gross Margin Gross profit represents revenue less cost of revenue.  Cost of revenue consists primarily of raw materials, personnel costs (including stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense. [[GREPCENT_TABLE]] [["","Years Ended December 31,"],["","2025","","2024","","Change"],["(In thousands, except percentage and basis point)"],["Gross profit","$87,931","","$96,933","","$(9,002)"],["Gross margin","65.1%","","66.9%","","(180) bps"]] [[/GREPCENT_TABLE]] The decrease in gross profit and gross margin for the year ended December 31, 2025, as compared to the prior year, was due primarily to lower sales volume spread over fixed costs, increased costs related to product and channel mix, pricing and tariffs, partially offset by a decrease in indirect manufacturing costs during the year ended December 31, 2025. Operating Expenses The total material changes of general and administrative (“G&A”), sales and marketing (“S&M”) and R&D operating expenses for the year ended December 31, 2025, as compared to the comparable period in the prior year, are discussed within the following overall operating expenditures, and the segment and corporate operating expenses discussions below. [[GREPCENT_TABLE]] [["","","Years Ended December 31,"],["","","2025","","2024"],["","","Water","","Emerging Technologies","","Corporate","","Total","","Water","","Emerging Technologies","","Corporate","","Total"],["","","(In thousands)"],["General and administrative","","$5,686","","$2,350","","$21,733","","$29,769","","$8,127","","$3,821","","$21,126","","$33,074"],["Sales and marketing","","13,664","","5,449","","1,813","","20,926","","15,683","","7,340","","2,400","","25,423"],["Research and development","","6,344","","6,690","","\u2014","","13,034","","4,523","","11,713","","\u2014","","16,236"],["Restructuring charges","","105","","47","","161","","313","","1,147","","832","","497","","2,476"],["Total operating expenses","","$25,799","","$14,536","","$23,707","","$64,042","","$29,480","","$23,706","","$24,023","","$77,209"]] [[/GREPCENT_TABLE]] Year ended December 31, 2025, as compared to the year ended December 31, 2024 Overall Operating Expenditures.  Overall operating expenditures decreased by $13.2 million, or (17.1%).  This decrease was due primarily to a decrease in employee costs, such as employee compensation and stock-based compensation, as well as lower Emerging Technologies segment development costs, facility expenses and restructuring charges, partially offset by impairment costs associated with the sublease of the Katy, Texas lease incurred during the year ended December 31, 2025.  Water Segment. Water segment related operating expenses represented 40% and 38% of overall operating expenses during the years ended December 31, 2025 and 2024, respectively and decreased by $3.7 million, or (12.5%).  This decrease was due primarily to lower employee costs, including stock-based compensation costs, and lower restructuring charges. Energy Recovery, Inc. | 2025 Annual Report (Form 10-K) | 37 Table of Contents Emerging Technologies Segment. Emerging Technologies segment related operating expenses represented 23% and 31% of overall operating expenses during the years ended December 31, 2025 and 2024, respectively and decreased by $9.2 million, or (38.7%).  This decrease was due primarily to lower employee costs, including stock-based compensation, lower development costs and lower restructuring charges. Corporate Operating Expenses.  Corporate operating expenses decreased by $0.3 million, or (1.3%).  This decrease was primarily due to lower employee costs, such as employee compensation, partially offset by an increase in consulting costs and impairment costs associated with the sublease of the Katy, Texas lease incurred during the year ended December 31, 2025. Restructuring Charges.  During the fourth quarter of fiscal year 2024, we implemented a restructuring plan which included reductions in our workforce in all functions of the organization, primarily within the G&A functi [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2025 MD&A: /company/ERII/mda/fy2025/ All MD&A years: /company/ERII/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2024 MD&A](/company/ERII/mda/fy2024/): filed 2025-02-26; accession 0001421517-25-000048 (https://www.sec.gov/Archives/edgar/data/1421517/000142151725000048/erii-20241231.htm) - [FY 2023 MD&A](/company/ERII/mda/fy2023/): filed 2024-02-21; accession 0001421517-24-000055 (https://www.sec.gov/Archives/edgar/data/1421517/000142151724000055/erii-20231231.htm) - [FY 2022 MD&A](/company/ERII/mda/fy2022/): filed 2023-02-22; accession 0001421517-23-000046 (https://www.sec.gov/Archives/edgar/data/1421517/000142151723000046/erii-20221231.htm) - [FY 2021 MD&A](/company/ERII/mda/fy2021/): filed 2022-02-24; accession 0001421517-22-000037 (https://www.sec.gov/Archives/edgar/data/1421517/000142151722000037/erii-20211231.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 3559 Special Industry Machinery, NEC) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm Macro-to-micro threads including this sector: [Inflation (CPI / PCE / PPI)](/thread/inflation-cpi-pce-ppi/), [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/), [Industrial orders & inventories](/thread/industrial-orders/), [Trade & external](/thread/trade-external/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/ERII.md · JSON record: /company/ERII.json · verified financials: /company/ERII/financials.json / /company/ERII/financials.csv · machine TOC for the whole site: /llms.txt