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Energy Recovery, Inc. Reports First Quarter 2009 Financial Results

Energy Recovery, Inc. (Nasdaq:ERII), a leader in the design and development of energy recovery devices for desalination, announced today the results of its first quarter ended March 31, 2009. In the first quarter of 2009, ERI achieved net revenue of $12.6 million, a 39% increase over the same period last year and at the midpoint of the Company’s net revenue guidance range of $12 million to $13 million. ERI reported net income of $1.6 million, or $0.03 per diluted share, for the three months ended March 31, 2009 compared to $947,000, or $0.02 per diluted share, for the same period last year.

“During the first quarter, we shipped the largest single order of PX devices in the company’s history to the Hadera desalination plant in Israel,” said GG Pique, President and CEO of Energy Recovery, Inc. “We continue to see strong growth in the reverse osmosis sector of the desalination industry in Australia, Spain, China, the Middle East and North Africa, as well as emerging growth in countries such as India where water scarcity persists.”

ERI provides the following guidance for the second quarter of 2009 and the full year:

Q2 2009 Fiscal Year 2009
Estimated net revenue

$10 to $11 million

$60 to $65 million
Estimated net income $0 $9 to $11 million
Estimated earnings per diluted share $0.00 $0.17 to $0.21

Forward Looking Statements

This press release includes “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements regarding ERI’s estimated net revenue, net income and earnings per diluted share for the second quarter of 2009 and for the 2009 fiscal year and statements about the growth of the reverse osmosis sector of the desalination industry. Because such forward-looking statements involve risks and uncertainties, the Company's actual results may differ materially from the predictions in those forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, delays in, or cancellation of, the construction of desalination plants, the inability of our customers to obtain project financing, delays in governmental approvals, changes in end users’ budgets for desalination plants or the timing of their purchasing decisions, the world economic crisis and other risks detailed in the Company's filings with the Securities and Exchange Commission (“SEC”). All forward-looking statements are made as of today, and the Company assumes no obligation to update such statements. For more details relating to the risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, please refer to the Company's SEC filings.

Conference Call to Discuss First Quarter 2009 Results

The conference call scheduled today at 1:30 p.m. PST will be in a "listen-only" mode for all participants other than the investment professionals who regularly follow the Company. The toll-free phone number for the call is 800-762-8908 or 408-629-9031 and the access code is 4057072. Callers should dial in approximately 15 minutes prior to the scheduled start time. A telephonic replay will be available at 800-406-7325 or 303-590-3030, Access Code: 4057072, until Thursday, May 21, 2009. Investors may also access the live call or the replay over the internet at The replay will be available approximately three hours after the live call concludes.

About ERI®

About ERI

Energy Recovery, Inc. (NASDAQ: ERII) is a leading manufacturer of energy recovery devices that are helping make desalination affordable. ERI’s PX Pressure Exchanger® (PX®) device is a rotary positive displacement pump designed to recover energy from the high pressure reject stream of SWRO systems at up to 98% efficiency with no downtime. The company is headquartered in the San Francisco Bay Area with offices in key desalination centers worldwide, including Madrid, Shanghai, Florida and the United Arab Emirates. For more information on ERI and its PX devices, please visit

Financial Results



(in thousands, except share data)


March 31, 2009

December 31, 2008

Current assets:
Cash and cash equivalents $ 75,004 $ 79,287
Restricted cash 5,518 246
Accounts receivable, net of allowance for doubtful accounts of $39 and $59 at March 31, 2009 and December 31, 2008, respectively 11,587 20,615
Unbilled receivables, current 4,092 4,948
Inventories 10,080 8,493
Deferred tax assets, net 1,755 1,755
Prepaid expenses and other current assets 1,451984
Total current assets 109,487 116,328
Unbilled receivables, non-current 2,652 1,929
Restricted cash, non-current 3,526 19
Property and equipment, net 2,605 1,845
Intangible assets, net 315 321
Deferred tax assets, non-current, net 119 119
Other assets, non-current 5151
Total assets$118,755$120,612
Current liabilities:
Accounts payable $ 1,811 $ 2,270
Accrued expenses and other current liabilities 4,143 4,787
Income taxes payable 111 1,657
Accrued warranty reserve 296 270
Deferred revenue 2,699 4,000
Current portion of long-term debt 128 172
Current portion of capital lease obligations 3737
Total current liabilities 9,225 13,193
Long-term debt 309 385
Capital lease obligations, non-current 17 27
Other non-current liabilities 68
Total liabilities9,55713,613
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding



Common stock, $0.001 par value; 200,000,000 shares authorized; 50,121,086 and 50,015,718 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively 50 50
Additional paid-in capital 99,016 98,527
Notes receivable from stockholders (168 ) (296 )
Accumulated other comprehensive loss (16 ) (44 )
Retained earnings 10,3168,762
Total stockholders’ equity109,198106,999
Total liabilities and stockholders’ equity$118,755$120,612



(in thousands, except per share data)


Three Months Ended

March 31,

Net revenue $ 12,646 $ 9,120
Cost of revenue 4,5733,674
Gross profit 8,073 5,446
Operating expenses:
General and administrative 3,154 2,661
Sales and marketing 1,510 1,343
Research and development 804509
Total operating expenses 5,4684,513
Income from operations 2,605 933
Other income (expense):
Interest expense (14 ) (21 )
Interest and other income (expense),net (88)647
Income before provision for income taxes 2,503 1,559
Provision for income taxes 949612
Net income $1,554$947
Earnings per share:
Basic $0.03$0.02
Diluted $0.03$0.02
Number of shares used in per share calculations:
Basic 50,05239,804
Diluted 52,58042,196


Energy Recovery, Inc.
Tom Willardson, 510-483-7370
Chief Financial Officer

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