Revenue exhibits extreme cyclicality, swinging from $67.1M in 2024Q4 to $9.7M in 2026Q1, while operating margins remain highly sensitive to project throughput, collapsing to -103.3% in the most recent quarter.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 |
|---|
| Sales/Revenue | 136.34M | 134.7M | 144.95M | 128.35M | 125.59M | 103.9M | 92.09M | 72.83M | 74.52M | 63.16M | 54.72M | 44.71M | 30.43M | 43.05M | 42.63M | 28.05M | 45.85M | 47.01M | 52.12M | 35.41M | 20.06M |
| Revenue Growth % | -3.25% | -7.07% | 12.93% | 2.2% | 20.87% | 12.83% | 26.44% | -2.26% | 17.99% | 15.43% | 22.37% | 46.96% | -29.32% | 0.97% | 52% | -38.83% | -2.47% | -9.79% | 47.17% | 76.56% | - |
| Cost of Goods Sold | 48.69M | 46.92M | 48.02M | 41.27M | 38.23M | 32.67M | 28.25M | 20.34M | 17.87M | 19.06M | 17.85M | 19.11M | 13.71M | 17.32M | 22.42M | 20.25M | 23.78M | 17.59M | 18.93M | 14.85M | 8.13M |
| COGS % of Revenue | - | 34.83% | 33.13% | 32.15% | 30.44% | 31.44% | 30.68% | 27.92% | 23.99% | 30.18% | 32.62% | 42.74% | 45.07% | 40.24% | 52.59% | 72.19% | 51.86% | 37.43% | 36.33% | 41.94% | 40.54% |
| Gross Profit | 87.66M | 87.78M | 96.93M | 87.08M | 87.36M | 71.23M | 63.84M | 52.5M | 56.64M | 44.09M | 36.87M | 25.6M | 16.71M | 25.72M | 20.21M | 7.8M | 22.07M | 29.42M | 33.19M | 20.56M | 11.93M |
| Gross Margin % | 64.29% | 65.17% | 66.87% | 67.85% | 69.56% | 68.56% | 69.32% | 72.08% | 76.01% | 69.82% | 67.38% | 57.26% | 54.93% | 59.76% | 47.41% | 27.81% | 48.14% | 62.58% | 63.67% | 58.06% | 59.46% |
| Gross Profit Growth % | - | -9.44% | 11.32% | -0.32% | 22.63% | 11.58% | 21.61% | -7.31% | 28.45% | 19.61% | 44% | 53.19% | -35.02% | 27.25% | 159.17% | -64.67% | -24.97% | -11.35% | 61.39% | 72.4% | - |
| Operating Expenses | 60.57M | 63.22M | 77.21M | 68.03M | 62.53M | 57.4M | 32.55M | 42.13M | 46.66M | 40.82M | 36.51M | 37.39M | 35.2M | 28.43M | 28.25M | 29.8M | 27.04M | 23.27M | 20.29M | 11.23M | 8.29M |
| OpEx % of Revenue | - | 46.94% | 53.27% | 53% | 49.79% | 55.25% | 35.34% | 57.85% | 62.62% | 64.63% | 66.73% | 83.63% | 115.68% | 66.04% | 66.27% | 106.25% | 58.97% | 49.49% | 38.92% | 31.72% | 41.32% |
| Selling, General & Admin | 38.42M | 19.35M | 58.5M | 51.03M | 44.62M | 37.32M | 33.65M | 32.27M | 29.02M | 26.75M | 25.74M | 29.1M | 24.66M | 23.14M | 22.44M | 24.74M | 25.24M | 20.23M | 17.87M | 9.53M | 7.02M |
| SG&A % of Revenue | - | 14.37% | 40.36% | 39.76% | 35.53% | 35.92% | 36.54% | 44.3% | 38.95% | 42.35% | 47.05% | 65.08% | 81.06% | 53.77% | 52.63% | 88.22% | 55.05% | 43.03% | 34.29% | 26.91% | 35% |
| Research & Development | 11.93M | 6.34M | 16.24M | 17M | 17.91M | 20.07M | 23.45M | 23.4M | 17.01M | 13.44M | 10.14M | 7.66M | 9.69M | 4.36M | 4.77M | 3.53M | 3.94M | 3.04M | 2.42M | 1.71M | 1.27M |
| R&D % of Revenue | - | 4.71% | 11.2% | 13.25% | 14.26% | 19.31% | 25.46% | 32.13% | 22.83% | 21.29% | 18.53% | 17.13% | 31.85% | 10.13% | 11.2% | 12.57% | 8.6% | 6.47% | 4.63% | 4.81% | 6.32% |
| Other Operating Expenses | 0 | 37.53M | 2.48M | 0 | 0 | 12K | -24.55M | -13.53M | -80K | -188K | 290K | -139K | 69K | 109K | 143K | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating Income | 27.09M | 24.55M | 19.72M | 19.05M | 24.83M | 13.83M | 31.29M | 10.36M | 9.98M | 3.28M | 357K | -11.79M | -18.48M | -2.89M | -8.65M | -25.29M | -4.97M | 6.15M | 12.9M | 9.33M | 3.64M |
| Operating Margin % | 19.87% | 18.23% | 13.61% | 14.84% | 19.77% | 13.31% | 33.98% | 14.23% | 13.39% | 5.19% | 0.65% | -26.37% | -60.75% | -6.71% | -20.3% | -90.18% | -10.83% | 13.08% | 24.75% | 26.34% | 18.15% |
| Operating Income Growth % | - | 24.49% | 3.54% | -23.28% | 79.52% | -55.8% | 201.95% | 3.87% | 204.58% | 817.65% | 103.03% | 36.21% | -539.99% | 66.62% | 65.79% | -409.24% | -180.76% | -52.33% | 38.3% | 156.26% | - |
| EBITDA | 38.59M | 28.32M | 25.54M | 24.8M | 31.13M | 19.77M | 36.59M | 14.76M | 13.84M | 6.94M | 4.04M | -7.95M | -14.46M | 909K | -7.61M | -23.93M | 237K | 7.33M | 13.42M | 9.65M | 3.87M |
| EBITDA Margin % | 28.31% | 21.02% | 17.62% | 19.32% | 24.79% | 19.03% | 39.74% | 20.26% | 18.57% | 10.99% | 7.38% | -17.79% | -47.51% | 2.11% | -17.85% | -85.34% | 0.52% | 15.6% | 25.75% | 27.25% | 19.3% |
| EBITDA Growth % | 61.61% | 10.85% | 3.01% | -20.34% | 57.47% | -45.97% | 147.94% | 6.67% | 99.31% | 71.96% | 150.76% | 44.98% | -1690.21% | 111.94% | 68.2% | -10198.73% | -96.77% | -45.37% | 39.08% | 149.32% | - |
| D&A (Non-Cash Add-back) | 11.51M | 3.76M | 5.82M | 5.75M | 6.3M | 5.94M | 5.3M | 4.39M | 3.86M | 3.67M | 3.68M | 3.84M | 4.03M | 3.8M | 1.04M | 1.36M | 5.2M | 1.18M | 522K | 323K | 231K |
| EBIT | 27.24M | 27.59M | 22.2M | 19.05M | 24.83M | 13.83M | 33.63M | 10.36M | 11.44M | 9.25M | 3.72M | -11.93M | -18.41M | -2.7M | -8.51M | -25.11M | -5.16M | 6.2M | 13.77M | 9.33M | 3.64M |
| Net Interest Income | 3.27M | 3.61M | 6.22M | 3.76M | 908K | 204K | 913K | 2.01M | 1.54M | 868K | 306K | 11K | 0 | 0 | -6K | -34K | -73K | -46K | 794K | 412K | -19K |
| Interest Income | 3.27M | 3.61M | 6.22M | 3.76M | 908K | 204K | 913K | 2.01M | 1.54M | 870K | 309K | 53K | 0 | 0 | 0 | 0 | 0 | 0 | 873K | 517K | 58K |
| Interest Expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1K | 2K | 3K | 42K | 0 | 0 | 6K | 34K | 73K | 46K | 79K | 105K | 77K |
| Other Income/Expense | -2.04M | 3.04M | 6.01M | 3.65M | 1.24M | 173K | 839K | 1.89M | 1.46M | 680K | 287K | -181K | 69K | 109K | 137K | 150K | -267K | 8K | 794K | 412K | -19K |
| Pretax Income | 25.05M | 27.59M | 25.73M | 22.7M | 26.07M | 14M | 32.13M | 12.26M | 11.44M | 3.96M | 644K | -11.97M | -18.41M | -2.78M | -8.52M | -25.14M | -5.23M | 6.16M | 13.7M | 9.74M | 3.62M |
| Pretax Margin % | 18.37% | 20.49% | 17.75% | 17.69% | 20.76% | 13.48% | 34.89% | 16.83% | 15.35% | 6.26% | 1.18% | -26.78% | -60.52% | -6.46% | -19.98% | -89.65% | -11.41% | 13.1% | 26.28% | 27.5% | 18.05% |
| Income Tax | 4.46M | 4.63M | 2.69M | 1.2M | 2.02M | -265K | 5.75M | 1.34M | -10.65M | -8.39M | -390K | -334K | 291K | 327K | -262K | 1.3M | -1.63M | 2.47M | 5.03M | 3.95M | 1.24M |
| Effective Tax Rate % | 17.81% | 16.79% | 10.43% | 5.29% | 7.76% | -1.89% | 17.88% | 10.96% | -93.12% | -212.18% | -60.56% | 2.79% | -1.58% | -11.77% | 3.08% | -5.17% | 31.07% | 40.14% | 36.74% | 40.52% | 34.22% |
| Net Income | 20.59M | 22.96M | 23.05M | 21.5M | 24.05M | 14.27M | 26.39M | 10.91M | 22.09M | 12.35M | 1.03M | -11.64M | -18.7M | -3.11M | -8.25M | -26.44M | -3.61M | 3.69M | 8.66M | 5.79M | 2.38M |
| Net Margin % | 15.1% | 17.05% | 15.9% | 16.75% | 19.15% | 13.73% | 28.65% | 14.98% | 29.65% | 19.55% | 1.89% | -26.03% | -61.48% | -7.22% | -19.36% | -94.28% | -7.87% | 7.84% | 16.62% | 16.36% | 11.88% |
| Net Income Growth % | -3.92% | -0.38% | 7.19% | -10.58% | 68.54% | -45.92% | 141.79% | -50.6% | 78.89% | 1094.39% | 108.88% | 37.78% | -502.22% | 62.37% | 68.79% | -632.9% | -197.88% | -57.45% | 49.54% | 143.2% | - |
| Net Income (Continuing) | 20.59M | 22.96M | 23.05M | 21.5M | 24.05M | 14.27M | 26.39M | 10.91M | 22.09M | 18.35M | 1.03M | -11.64M | -18.7M | -3.11M | -8.25M | -26.44M | -3.61M | 3.69M | 8.66M | 5.79M | 2.38M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.39 | 0.42 | 0.40 | 0.37 | 0.42 | 0.24 | 0.47 | 0.19 | 0.40 | 0.33 | 0.07 | -0.22 | -0.36 | -0.06 | -0.16 | -0.50 | -0.07 | 0.07 | 0.18 | 0.14 | 0.06 |
| EPS Growth % | 3.09% | 5% | 8.11% | -11.9% | 75% | -48.94% | 147.37% | -52.5% | 21.21% | 371.43% | 131.82% | 38.89% | -492.11% | 62% | 68% | -621.5% | -199% | -61.11% | 28.57% | 133.33% | - |
| EPS (Basic) | - | 0.43 | 0.40 | 0.38 | 0.43 | 0.25 | 0.47 | 0.20 | 0.41 | 0.34 | 0.07 | -0.22 | -0.36 | -0.06 | -0.16 | -0.50 | -0.07 | 0.07 | 0.19 | 0.15 | 0.06 |
| Diluted Shares Outstanding | 52.66M | 54.16M | 57.82M | 57.74M | 57.64M | 58.72M | 56.64M | 56.07M | 55.34M | 55.61M | 55.45M | 52.15M | 51.67M | 51.07M | 51.45M | 52.61M | 52.07M | 52.64M | 47.39M | 41.43M | 40.24M |
| Basic Shares Outstanding | 52.66M | 53.8M | 57.21M | 56.44M | 56.22M | 56.99M | 55.71M | 54.74M | 53.76M | 53.7M | 52.34M | 52.15M | 51.67M | 51.07M | 51.45M | 52.61M | 52.07M | 50.17M | 44.85M | 39.06M | 38.02M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Project-based revenue volatility
As evidenced by the quarterly financial data, ERII's top-line performance exhibits extreme volatility, with revenue swinging from $67.1M in 2024Q4 to $9.7M in 2026Q1, reflecting a heavy reliance on the timing of large-scale desalination project completions rather than consistent, recurring organic growth across its core segments.
The significant fluctuations in quarterly revenue suggest that the company remains tethered to the capital expenditure cycles of its primary MENA-based customers. Investors should monitor whether the transition toward CO2 refrigeration can eventually smooth these lumpy revenue patterns, as the current project-based model appears to offer little visibility into near-term growth durability.
According to the reported income statements, ERII maintains impressive gross margins that frequently exceed 65%, yet these figures are highly sensitive to project mix, as seen in the 2026Q1 contraction to 44.7% when lower-margin activities or reduced throughput likely pressured the company's specialized manufacturing cost structure.
The ability to sustain such high gross margins suggests significant pricing power derived from the proprietary nature of the PX technology. However, the sharp margin compression during lower-revenue quarters implies that the company's high-fixed-cost manufacturing base requires substantial volume to remain profitable, leaving little room for error during project lulls.
Based on the provided financial figures, ERII's operating income demonstrates extreme sensitivity to revenue volume, swinging from a 48% operating margin in 2025Q4 to a -103.3% margin in 2026Q1, which indicates that the company struggles to scale its SG&A and R&D expenses during periods of lower project activity.
The persistent R&D investment, while necessary for long-term innovation, appears to act as a structural drag on operating profitability during off-peak quarters. This suggests that the company's operating leverage is currently insufficient to absorb the volatility inherent in its project-based business model, warranting caution regarding bottom-line stability.
As reported in recent filings, ERII's net income is frequently impacted by significant stock-based compensation, which reached $13.6M in 2025Q4, effectively masking the underlying operational performance and creating a disconnect between reported GAAP earnings and the cash-generating capacity of the core water technology business.
The high level of stock-based compensation relative to net income suggests that shareholders should be wary of the dilution and the true economic cost of the company's human capital. This practice appears to inflate the perceived profitability of the firm, making it difficult to assess the sustainability of earnings without adjusting for these non-cash expenses.
While the company pivots toward CO2 refrigeration, the historical failure of the VorTeq project, as noted in company intelligence, suggests that ERII may face significant execution risks in new markets where its proprietary ceramic technology may not command the same competitive moat or pricing power.
Short-sellers might focus on the potential for the core desalination market to reach saturation, combined with the high cash burn associated with entering the competitive HVAC sector. If the new refrigeration segment fails to achieve scale, the company may find itself with a bloated cost structure and limited avenues for future growth.
Quick answers to the most common questions about buying ERII stock.
For fiscal year 2025, Energy Recovery, Inc. (ERII) reported total revenue of $134.7M. This represents a 571.6% increase compared to $20.1M in 2006.
Energy Recovery, Inc. (ERII) is profitable, generating $23.0M in net income for the fiscal year ending 2025 with a net profit margin of 17.0%.
Energy Recovery, Inc. (ERII) reported an operating income of $24.6M, resulting in an operating profit margin of 18.2%. This margin reflects the operational efficiency of the business before interest and taxes.
Energy Recovery, Inc. (ERII) generated $87.8M in gross profit for the year, representing a gross profit margin of 65.2%. This demonstrates the company's core pricing power and production efficiency.