Energy Recovery, Inc. Q2 FY2025 earnings call

• Reiterating 2025 guidance on all metrics and reinstating wastewater guidance; core desalination business resilient to macro environment with multiple large deals signed and line of sight to full year revenue.
• Announced an additional share repurchase program; past 10 months have seen 3 share repurchase authorizations totaling $105 million.
• Contracted desalination capacity, water reuse capacity, and CO2 refrigeration installations growing at high rates; conviction in long-term trends driving business increasing.
• Thanked employees for their creative and decisive execution during volatile environment.

No detailed financial performance of product segments with absolute terms and revenue contribution % provided in the transcript.

• Reiterating 2025 guidance on all metrics and reinstating wastewater guidance.
• Line of sight to full year revenue based on contracts and pipeline.
• Announced additional share repurchase program with $105 million in authorizations over past 10 months, aiming to repurchase over 10% of outstanding shares while executing playbook and reinvesting for growth.

No specific risk discussion provided in the transcript.

Q: Congrats on the strong update here. Appreciate the color around annual desalination contracted capacity in the shareholder letter just now, David. Does that kind of expected capacity growth in addition to your recent awards give you confidence perhaps in achieving the higher end of the longer-term ranges you set in November for desal revenue, particularly if we're thinking about 2026?

A: Yes. I think -- so that's a good question. I think it's too early to tell. And just a reminder, that contracted capacity, those are projects that are -- we believe will be tendered during that time period, but making water could be 2 or 3 years out in terms of when the projects are ready. So we're still getting clarity around the content of that $550 million pipeline. But I think with the awards that we saw this quarter and what we're seeing early in '26, we're feeling confident about '26. And we'll be able to give you some guidance around 2026 as we get into the third quarter earnings call.

Q: Congrats on a pretty strong quarter, all things considered. David, the letter described a much better result in China than the worst-case scenario that was provided last quarter. Is this because the tariffs have touched your work less than anticipated? Or has it emerged that there's more commitment to your product at a higher price than you anticipated or some combination of the 2?

A: Yes. So I'd say that pause in tariffs back in May really opened up projects that were sitting there on the board that we have been working on through that period where there were 100% plus tariffs for products going into China. Our team continued to work on -- continued to nurse those projects along. And as soon as tariff rates dropped, we were able to execute on those projects and ship more than $2 million in the quarter. We continue to ship now. And so I just -- I chalk that up to a very focused sales team in China who never stopped pushing, and the pause in tariffs really helped our -- really helped us. Would you add anything, Mike? Michael Mancini: No, I'd say at 125% tariffs, it's difficult to do business in China. And so I think the reduction of 10% was a big deal.