SAN LEANDRO, Calif. - Energy Recovery (NASDAQ:ERII), a global leader in energy efficiency technology, has secured contracts worth over $12 million to supply its PX Pressure Exchanger devices for three seawater reverse osmosis (SWRO) desalination projects in the United Arab Emirates, the company announced today. The contracts, which are expected to be fulfilled by the end of 2024, were previously included in the company's financial forecasts.
The orders will support the creation of close to 1 million cubic meters per day of desalination capacity. Notably, one of the contracts will equip a floating desalination barge in the Arabian Gulf, designed to produce fresh water offshore and transfer it to the mainland. This innovative approach addresses the scarcity of coastal land available for such facilities, providing a strategic alternative for water-scarce regions with dense coastal populations.
Energy Recovery will provide both the PX Q400 and PX Q300 models for these projects, which operate at a relatively low noise level of 79 decibels, contributing to a more favorable working environment.
Rodney Clemente, Senior Vice President of Water at Energy Recovery, highlighted the company's longstanding presence and leadership in the UAE's desalination industry, with a contracted capacity of roughly 5 million cubic meters per day since their first large-scale project in the region in 2008.
The company's PX devices are reputed for reducing energy consumption by up to 60% in SWRO facilities, offering the lowest lifecycle cost among energy recovery solutions on the market. The new contracts in the UAE are projected to save over 416 gigawatt hours of energy annually, which translates to avoiding around 201,265 tons of CO2 emissions each year. This is comparable to the annual electricity usage of over 36,000 homes.
Based in the San Francisco Bay Area, Energy Recovery has been at the forefront of delivering energy-efficient solutions for more than three decades, with a focus on operational efficiency and environmental sustainability. The company's technology is utilized across various industries worldwide, and it maintains manufacturing and R&D facilities in California and Texas.
This announcement is based on a press release statement and contains forward-looking statements that involve certain risks and uncertainties. The company's actual results may differ from those projected in these statements.
In other recent news, Energy Recovery Inc. has been making notable strides both financially and in terms of sustainability. The company secured contracts totaling $27.5 million to supply its PX Pressure Exchanger technology for seawater reverse osmosis desalination projects in Morocco. These projects align with the country's strategic plan to source half of its drinking water from desalination by 2030, and are expected to provide potable water for over 600,000 residents.
In financial developments, Energy Recovery maintained its full-year revenue guidance of $140 million to $150 million during its 2Q '24 Earnings Call. This announcement came alongside the appointment of Michael Mancini as the new Chief Financial Officer. Despite a small net income loss in the quarter, the company reported an increase in Water revenue and expressed confidence in achieving its financial targets for the year.
Moreover, the company announced $15 million in contracts for Pressure Exchangers in India, and reported a growth in cash and investment position from $129 million to $138 million in the second quarter. These recent developments indicate the company's steady progress towards its operational and financial goals.
InvestingPro Insights
Energy Recovery's recent $12 million contract win in the UAE aligns well with its strong financial performance and market position. According to InvestingPro data, the company has demonstrated impressive revenue growth, with a 24.92% increase in the last twelve months as of Q2 2024. This growth is further emphasized by the quarterly revenue growth of 31.25% in Q2 2024, indicating a robust demand for Energy Recovery's energy-efficient solutions.
The company's focus on operational efficiency is reflected in its financials. Energy Recovery boasts a high gross profit margin of 67.47%, which is consistent with the InvestingPro Tip highlighting its "impressive gross profit margins." This efficiency allows the company to maintain a strong competitive edge in the desalination industry.
Moreover, Energy Recovery's financial health appears solid. An InvestingPro Tip notes that the company "holds more cash than debt on its balance sheet," which provides financial flexibility to pursue growth opportunities like the UAE projects. Additionally, the company's liquid assets exceed short-term obligations, suggesting a strong ability to meet its near-term financial commitments.
While Energy Recovery trades at a relatively high P/E ratio of 50.33, its PEG ratio of 0.58 indicates that it may be undervalued relative to its growth prospects. This aligns with another InvestingPro Tip stating that the company is "trading at a low P/E ratio relative to near-term earnings growth."
For investors seeking more comprehensive analysis, InvestingPro offers 14 additional tips for Energy Recovery, providing a deeper understanding of the company's financial position and market performance.
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