Energy Recovery Q2 Revenue Drops 57% to $12M

Energy Recovery shares fell 4.49 percent to $6.80 on Nasdaq on September 23, 2026. The stock sits just $0.02 above its 52-week low. This drop follows a rating cut by Seaport Global Securities.

The company reported Q2 2026 revenue of $12.0 million. This represents a 57 percent decline from the prior year. The fall is attributed to project execution delays in the Middle East.

Revenue decline driven by regional delays

Desalination revenue dropped to $11.5 million from $25.5 million. Megaproject revenue fell to $2.7 million from $14.8 million. These figures show that near-term results depend heavily on specific project timing.

The company cited conflict, financing, and logistics challenges as causes. These issues directly impacted the ability to execute key projects. Consequently, revenue from high-value contracts was significantly lower than expected.

Cash flow rises despite net loss

Energy Recovery posted a GAAP net loss of $3.2 million. This compares to net income of $2.1 million in the same quarter last year. Diluted loss per share was $0.06, versus earnings of $0.04 previously.

Operating cash flow increased to $16.3 million from $4.1 million. Gross margin reached 74.7 percent. However, operating margin was negative 49.0 percent. This reflects lower volumes and restructuring charges.

Rating cut cites lack of clarity

Seaport Global Securities cut its rating from Buy to Neutral on September 14. The firm cited Middle East disruption and withdrawn desalination guidance. It also noted a need for greater clarity on the forward plan.

An interim chief executive currently oversees the business. Project visibility remains tied to customer financing and delivery schedules. As of September 23, the market capitalization was $350.5 million.