Energy Recovery Q1 revenue beats estimates; CEO to retire, CFO to resign

Overview

• U.S. energy-saving tech firm's Q1 revenue rose 20%, beating analyst expectations

• Gross margin fell due to restructuring charges and higher product and channel costs

• Company announced CEO retirement, CFO resignation, and new $25 mln share buyback plan

Outlook

• Company did not provide specific guidance in the press release

Result Drivers

• RESTRUCTURING CHARGES - Gross margin declined due to $1.6 mln in restructuring charges from winding down the CO2 retail grocery business

• COST INCREASES - Higher costs related to product and channel mix, pricing, tariffs, and indirect manufacturing expenses weighed on margins

• CHANNEL MIX - Revenue growth was driven by a 65% increase in OEM sales and a sharp rise in megaprojects, while aftermarket sales declined 32%

Company press release: ID:nBw45X37la

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 3 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the industrial machinery & equipment peer group is "buy"

• Wall Street's median 12-month price target for Energy Recovery Inc is $14.50, about 28.2% above its May 5 closing price of $11.31

• The stock recently traded at 17 times the next 12-month earnings vs. a P/E of 17 three months ago

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