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Dec 31, 2025
Energy Recovery Q4 2025 Earnings Report
Energy Recovery reported its fourth quarter 2025 financial results, showing a significant increase in operating income despite flat revenue.
Key Takeaways
Energy Recovery delivered a strong Q4 2025 with revenue of $66.9 million and a 22% increase in operating income to $31.3 million. While gross margins compressed slightly due to product mix and tariffs, the company significantly reduced operating expenses by 36.5%, leading to improved profitability and a diluted EPS of $0.50.
Revenue remained stable at $66.9 million, with strong growth in the Aftermarket channel (up 54%) offsetting declines in OEM revenue.
Operating expenses decreased by 36.5% to $13.6 million, driven by lower employee, consulting, and restructuring costs.
Income from operations rose 22.3% year-over-year to $31.3 million, resulting in an operating margin of 46.8%.
The company maintained a solid liquidity position with $83.3 million in cash and investments at year-end.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Management has released a shareholder letter discussing the 2026 outlook, focusing on continued business updates and financial targets.
Positive Outlook
- Strong growth in Aftermarket channel revenue
- Significant reduction in operating expense structure
- Robust cash and investment position of $83.3 million
- Increased operating income despite flat revenue
- Successful execution of cost-saving restructuring
Challenges Ahead
- Gross margin compression due to tariffs
- Gross margin compression due to product mix
- Decline in OEM channel revenue
- Timing of revenue from contracted projects impacting quarterly growth
- Higher effective tax rate compared to the previous year
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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