Energy Recovery, Inc. (NASDAQ:ERII) Q2 2019 Earnings Conference Call - Final Transcript

Aug 01, 2019 • 05:00 pm ET

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Energy Recovery, Inc. (NASDAQ:ERII) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Energy Recovery Second Quarter Earnings Call. [Operator Instructions] As a reminder, this program is being recorded.

I would now like to turn the conference over to our host, James Siccardi, Vice President of Investor Relations. Thank you, you may begin.

Executive
James Siccardi

Good afternoon, everyone, and welcome to Energy Recovery's earnings conference call for the second quarter of 2019. My name is Jim Siccardi, Vice President of Investor Relations at Energy Recovery. And I'm here today with our President and Chief Executive Officer, Mr. Chris Gannon; and our Chief Financial Officer, Mr. Joshua Ballard.

During today's call, we may make projections and other forward-looking statements under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business, economic market outlook, the company's ability to achieve the milestones and commercialization under the VorTeq licensing agreement, growth expectations, new products and their performance, cost structure and business strategy.

Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates or projections. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. We refer you to document the company files from time to time with the SEC, specifically the company's Forms 10-K and 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. All statements made during this call are made only as of today, August 1, 2019, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances unless otherwise required by law.

In addition, we may make some references to non-GAAP financial measures during this call. You will find supplemental data in the company's earnings press release which was released to news wires and furnished to the SEC earlier today. The press release includes reconciliations of the non-GAAP measures to the comparable GAAP results.

At this point, I'd like to turn the call over to our Chief Financial Officer, Joshua Ballard. Josh, the floor is yours.

Executive
Joshua Ballard

Thanks, Jim, and good afternoon, everyone. The second quarter ending June 30 was another strong one for Energy Recovery. We generated total revenue of $22.8 million, representing 10% growth year-over-year. Year-to-date, we have achieved revenues of $42.6 million, 23% growth over the first half of 2018. Our top line growth translated into a product gross margin of 71% and an overall gross margin of 76% for the quarter. Our gross margin continued to show strength despite downward pressures from tariffs and other cost increases. In addition, we reported GAAP net income for the quarter of $3.7 million or $0.07 per diluted share.

Our water business generated $19.2 million in revenue during the second quarter, representing growth of 12%. And year-to-date, we have achieved revenues of $35.2 million, a 25% increase over the same period