Energy Recovery Inc (ERII) Q4 2025 Earnings Call Highlights: Strategic Shifts and Project Delays

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Thu, February 26, 2026 at 2:02 PM GMT+9 3 min read

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**Annual Savings:** $7 million from winding down the CO2 retail grocery business.

Release Date: February 25, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Energy Recovery Inc (NASDAQ:ERII) maintains a strong market position in the water business with its leading pressure exchanger technology.

The company is confident in its growth prospects for 2027 based on its pipeline and underlying demand trends.

Energy Recovery Inc (NASDAQ:ERII) is winding down its CO2 retail grocery business, resulting in $7 million of annual savings.

The company is focused on optimizing performance by investing in innovation, growing its wastewater business, and cutting operating expenses.

Energy Recovery Inc (NASDAQ:ERII) is planning to expand its manufacturing footprint outside the US, which could lead to cost efficiencies.

Negative Points

Energy Recovery Inc (NASDAQ:ERII) experienced delays in several large desalination projects, impacting its 2025 and 2026 financial performance.

The company's business remains lumpy, with significant project delays causing frustration among investors.

The CO2 retail grocery business wind-down is a disappointing outcome, despite the hard work invested over the years.

There is a risk of further project delays, with three major projects expected to slip into 2027.

The company faces challenges in the tendering process due to fewer EPCs bidding on desalination projects, which can extend timelines.

Q & A Highlights

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Q: Can you summarize the reasons for the Q4 shortfall and the revenue outlook for 2026? A: Michael Mancini, CFO, explained that two projects were delayed into 2026, and three more are expected to shift into 2027. The guidance assumes these projects will slip, accounting for $25 million to $30 million. Additionally, a buffer of $15 million to $20 million is included to account for other potential delays.

Q: Are the project delays larger than usual, and is there a common theme causing these delays? A: Michael Mancini noted that while the delays are significant, they are limited to three large projects. These projects are more susceptible to delays due to their size and location in countries new to desalination. A trend of fewer EPCs bidding on projects has also been observed, extending the tendering process.

Q: What are the cost savings from winding down the CO2 business, and are there further cuts planned for 2026? A: Michael Mancini stated that the CO2 exit will save $7 million annually, though not fully realized in 2026. The company plans additional cost savings, though they are nearing the bottom of the curve for efficiency improvements.

Story Continues  

Q: How is the new PX Q650 product priced compared to existing products, and what is the strategy for its introduction? A: Michael Mancini explained that the PX Q650 is priced based on the total CapEx for a desalination plant, leading to a higher effective ASP per product. The product offers better energy consumption, allowing for potential pricing increases by sharing savings with customers.

Q: What is the timeline for the manufacturing expansion outside the US, and what are the capital commitments? A: David Moon, CEO, stated that site selection should be finalized by mid-2026, with production starting in early 2027. Capital costs are expected to be in the range of $3 million to $6 million for 2026, with similar or slightly lower costs in 2027.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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