Energy Recovery (ERII) Q3 2026 Earnings Report

The call was strongly optimistic overall, supported by the rebound in Megaproject contracting, a record approximately $525 million pipeline, at least $50 million of 2027 Megaproject revenue visibility, technology leadership, zero debt, cash and free cash flow generation, cost reductions, and shareholder returns. The main challenges were shipment-timing uncertainty that prevented guidance reinstatement, below-expectation wastewater quarterly performance, historical China concentration, and near-term aftermarket destocking.

For 2027, management said it has line of sight to at least $50 million of Megaproject revenue; the $17 million Q4 Megaproject backlog is a floor expectation for Q4, and management expects and hopes there may also be other contracting activity in the next few months. For wastewater, management is expecting a nice tick up in Q4, which should support the business into next year and beyond, and is focused on driving pipeline and growth in Q4 and subsequent years. Management has not restored annual or quarterly guidance because the timing of shipments remains difficult to predict, but said it may shift its position on guidance in the not-too-distant future as project evolution and velocity become more definitive and predictable. The company also expects an accelerated pace of new product innovation in 2027 and 2028, with its new facility in Dammam, Saudi Arabia starting manufacturing next year.