Energy Recovery Inc

In the Q2 earnings season for water infrastructure stocks, Mueller Water Products reported revenues of $395.9 million, up 4.1% year on year, exceeding analysts' expectations by 1.2%, and delivered a very strong quarter with beats on EPS and EBITDA estimates, though it gave the weakest full-year guidance update in the group. Among the five tracked companies, Watts Water Technologies was the best performer, with revenues of $763.2 million, up 18.6% year on year, beating expectations by 4.9%, while Tennant was the weakest, with revenues of $324 million, up 1.7%, missing estimates by 1.7% and providing disappointing EBITDA guidance. Energy Recovery saw revenues plummet 57.2% to $12 million, missing estimates by 36.3%, and Xylem reported revenues of $2.34 billion, up 1.5%, meeting expectations. As a group, the companies' revenues missed consensus estimates by 6.4%, and their shares have declined on average 9.4% since the latest earnings results.

Energy Recovery reported second-quarter 2026 revenue of $12.0 million, a 57% year-over-year decrease driven primarily by project execution delays associated with the war in Iran. Gross margin rose 1,070 basis points to 74.7%, but operating margin swung to negative 49.0% from positive 5.3% a year earlier, and the company posted a net loss of $3.2 million versus net income of $2.1 million in the prior-year quarter. Megaproject revenue plunged 82% to $2.7 million from $14.8 million, while the megaproject backlog stood at $27 million with management noting contracting activity has resumed in certain conflict areas. Interim CEO Alexander J. Buehler said the pipeline is 'uniquely strong' with visibility extending five years, and the company is building a new Saudi Arabia facility expected to improve margins gradually as it reaches planned run-rate production in 2027 and 2028.