# EDGAR Filing Document

**Accession Number:** 0001421517
**File Stem:** 0001421517-26-000041
**Filing Date:** 2026-5
**Character Count:** 136468
**Document Hash:** 28c5854d70a6d86c1c1422ae878cea22
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001421517-26-000041.hdr.sgml**: 20260506

**ACCESSION NUMBER**: 0001421517-26-000041

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 66

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260506

**DATE AS OF CHANGE**: 20260506

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Energy Recovery, Inc.
- **CENTRAL INDEX KEY:** 0001421517
- **STANDARD INDUSTRIAL CLASSIFICATION:** SPECIAL INDUSTRY MACHINERY, NEC [3559]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 010616867
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34112
- **FILM NUMBER:** 26948343

**BUSINESS ADDRESS:**
- **STREET 1:** 1717 DOOLITTLE DRIVE
- **CITY:** SAN LEANDRO
- **STATE:** CA
- **ZIP:** 94577
- **BUSINESS PHONE:** (510) 483-7370

**MAIL ADDRESS:**
- **STREET 1:** 1717 DOOLITTLE DRIVE
- **CITY:** SAN LEANDRO
- **STATE:** CA
- **ZIP:** 94577

?xml version='1.0' encoding='ASCII'? erii-20260331

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549** 

**FORM 10-Q** 

*(Mark One)*

☑**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended March 31, 2026**

**OR**

☐**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from ____________ to __________**

**Commission File Number: 001-34112**

![ER_Logo_Primary_Horiz_RGB-titlepage.jpg](erii-20260331_g1.jpg)

**Energy Recovery, Inc.**

*(Exact Name of Registrant as Specified in its Charter)*

---

| | |
|:---|:---|
| **Delaware** | **01-0616867** |
| *(State or Other Jurisdiction of Incorporation)* | *(I.R.S. Employer Identification No.)* |

---

**1717 Doolittle Drive**, **San Leandro**, **California 94577**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(Address of Principal Executive Offices) (Zip Code)*

**(510) 483-7370** 

*(Registrant's Telephone Number, Including Area Code)*

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| <u>Title of each class</u> | <u>Trading Symbol</u> | <u>Name of each exchange on which registered</u> |
| **Common Stock, $0.001 par value** | **ERII** | **The Nasdaq Stock Market LLC** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)` of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing

requirements for the past 90 days. Yes 🗹 No ◻

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such

files). Yes 🗹 No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an

emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in

Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☑

As of April 30, 2026, there were 51,545,259 shares of the registrant's common stock outstanding.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q)

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page No.** |
| **[PART I](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** | **[PART I](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** | **[PART I](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** |
| **[FINANCIAL INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** | **[FINANCIAL INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** | **[FINANCIAL INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1372)** |
| [Item 1](#iacff67f1b0d94ef38e07a01d62853fc0_1375) | [Financial Statements (Unaudited)](#iacff67f1b0d94ef38e07a01d62853fc0_1375) |  |
|  | [Condensed Consolidated Balance Sheets](#iacff67f1b0d94ef38e07a01d62853fc0_586) — March 31, 2026 and December 31, 2025 | [1](#iacff67f1b0d94ef38e07a01d62853fc0_586) |
|  | [Condensed Consolidated Statements of Operations](#iacff67f1b0d94ef38e07a01d62853fc0_592) — Three Months Ended March 31, 2026 and 2025 | [2](#iacff67f1b0d94ef38e07a01d62853fc0_592) |
|  | [Condensed Consolidated Statements of Comprehensive](#iacff67f1b0d94ef38e07a01d62853fc0_595)Loss — Three Months Ended March 31, 2026 and 2025 | [3](#iacff67f1b0d94ef38e07a01d62853fc0_595) |
|  | [Condensed Consolidated Statements of Stockholders'](#iacff67f1b0d94ef38e07a01d62853fc0_598)Equity — Three Months Ended March 31, 2026 and 2025 | [4](#iacff67f1b0d94ef38e07a01d62853fc0_598) |
|  | [Condensed Consolidated Statements of Cash Flows](#iacff67f1b0d94ef38e07a01d62853fc0_604) — Three Months Ended March 31, 2026 and 2025 | [5](#iacff67f1b0d94ef38e07a01d62853fc0_604) |
|  | [Notes to Condensed Consolidated Financial Statements](#iacff67f1b0d94ef38e07a01d62853fc0_607) | [6](#iacff67f1b0d94ef38e07a01d62853fc0_607) |
| [Item 2](#iacff67f1b0d94ef38e07a01d62853fc0_1378) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#iacff67f1b0d94ef38e07a01d62853fc0_1378) | [22](#iacff67f1b0d94ef38e07a01d62853fc0_1378) |
| [Item 3](#iacff67f1b0d94ef38e07a01d62853fc0_1402) | [Quantitative and Qualitative Disclosures About Market Risk](#iacff67f1b0d94ef38e07a01d62853fc0_1402) | [30](#iacff67f1b0d94ef38e07a01d62853fc0_1402) |
| [Item 4](#iacff67f1b0d94ef38e07a01d62853fc0_1405) | [Controls and Procedures](#iacff67f1b0d94ef38e07a01d62853fc0_1405) | [31](#iacff67f1b0d94ef38e07a01d62853fc0_1405) |
| **[PART II](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** | **[PART II](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** | **[PART II](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** |
| **[OTHER INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** | **[OTHER INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** | **[OTHER INFORMATION](#iacff67f1b0d94ef38e07a01d62853fc0_1408)** |
| [Item 1](#iacff67f1b0d94ef38e07a01d62853fc0_1411) | [Legal Proceedings](#iacff67f1b0d94ef38e07a01d62853fc0_1411) | [32](#iacff67f1b0d94ef38e07a01d62853fc0_1411) |
| [Item 1A](#iacff67f1b0d94ef38e07a01d62853fc0_1414) | [Risk Factors](#iacff67f1b0d94ef38e07a01d62853fc0_1414) | [32](#iacff67f1b0d94ef38e07a01d62853fc0_1414) |
| [Item 2](#iacff67f1b0d94ef38e07a01d62853fc0_1423) | [Unregistered Sales of Equity Securities and Use of Proceeds](#iacff67f1b0d94ef38e07a01d62853fc0_1423) | [33](#iacff67f1b0d94ef38e07a01d62853fc0_1423) |
| [Item 3](#iacff67f1b0d94ef38e07a01d62853fc0_1432) | [Defaults Upon Senior Securities](#iacff67f1b0d94ef38e07a01d62853fc0_1432) | [33](#iacff67f1b0d94ef38e07a01d62853fc0_1432) |
| [Item 4](#iacff67f1b0d94ef38e07a01d62853fc0_1435) | [Mine Safety Disclosures](#iacff67f1b0d94ef38e07a01d62853fc0_1435) | [34](#iacff67f1b0d94ef38e07a01d62853fc0_1435) |
| [Item 5](#iacff67f1b0d94ef38e07a01d62853fc0_1438) | [Other Information](#iacff67f1b0d94ef38e07a01d62853fc0_1438) | [34](#iacff67f1b0d94ef38e07a01d62853fc0_1438) |
| [Item 6](#iacff67f1b0d94ef38e07a01d62853fc0_1444) | [Exhibits](#iacff67f1b0d94ef38e07a01d62853fc0_1444) | [35](#iacff67f1b0d94ef38e07a01d62853fc0_1444) |
| Exhibit Index | Exhibit Index | [35](#iacff67f1b0d94ef38e07a01d62853fc0_1444) |
| [Signatures](#iacff67f1b0d94ef38e07a01d62853fc0_1312) | [Signatures](#iacff67f1b0d94ef38e07a01d62853fc0_1312) | [36](#iacff67f1b0d94ef38e07a01d62853fc0_1312) |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| FLS 1

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Forward-Looking Information**

*This Quarterly Report on Form 10-Q for the three months ended March 31, 2026, including Part I, Item 2, "Management's Discussion* 

*and Analysis of Financial Condition and Results of Operations" (the "MD&A"), contains forward-looking statements within the "safe harbor"* 

*provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this report include, but are not limited to,* 

*statements about our expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future.*

*Forward-looking statements represent our current expectations about future events, are based on assumptions, and involve risks and* 

*uncertainties. If the risks or uncertainties occur or the assumptions prove incorrect, then our results may differ materially from those set forth* 

*or implied by the forward-looking statements. Our forward-looking statements are not guarantees of future performance or events.*

*Words such as "expects," "anticipates," "aims," "projects," "intends," "plans," "believes," "estimates," "seeks," "continue," "could,"* 

*"may," "potential," "should," "will," "would," and variations of such words and similar expressions are also intended to identify such forward-*

*looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict;* 

*therefore, actual results may differ materially and adversely from those expressed in any forward-looking statement. Readers are directed to* 

*risks and uncertainties identified under Part II, Item 1A, "Risk Factors," and elsewhere in this report for factors that may cause actual results* 

*to be different from those expressed in these forward-looking statements. Except as required by law, we undertake no obligation to revise or* 

*update publicly any forward-looking statement for any reason.*

*Forward-looking statements in this report include, without limitation, statements about the following:*

---

| |
|:---|
| •our belief that our PX offers market-leading value with the highest technological and economic benefit; |
| •our belief that leveraging our pressure exchanger technology will unlock new commercial opportunities in the future; |
| •our belief that our technology helps our customer achieve environmentally sustainable operations; |
| •our expectation that sales outside of the U.S. will remain a significant portion of our revenue; |
| •the scale of the environmental impact from the use of our solutions; |
| •the timing of our receipt of payment for products or services from our customers; |
| •our belief that our existing cash and cash equivalents, our short and/or long-term investments, and the ongoing cash generated <br>from our operations, will be sufficient to meet our anticipated liquidity needs for the foreseeable future, with the exception of a <br>decision to enter into an acquisition and/or fund investments in our latest technology arising from rapid market adoption that <br>could require us to seek additional equity or debt financing;<br>|
| •our expectations relating to the amount and timing of recognized revenue from our projects; |
| •our expectation that we will continue to receive a tax benefit related to U.S. federal foreign-derived intangible income and <br>research and development tax credit;<br>|
| •the outcome of proceedings, lawsuits, disputes and claims; |
| •the impact of losses due to indemnification obligations; |
| •other factors disclosed under the MD&A and Part I, Item 3, "Quantitative and Qualitative Disclosures about Market Risk," and <br>elsewhere in this Form 10-Q.<br>|

---

*You should not place undue reliance on these forward-looking statements. These forward-looking statements reflect management's* 

*opinions only as of the date of the filing of this Quarterly Report on Form 10-Q. All forward-looking statements included in this document are* 

*subject to additional risks and uncertainties further discussed under Part II, Item 1A, "Risk Factors," and are based on information available to* 

*us as of May 6, 2026. We assume no obligation to update any such forward-looking statements. Certain risks and uncertainties could cause* 

*actual results to differ materially from those projected in the forward-looking statements. These forward-looking statements are disclosed* 

*from time to time in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with, or* 

*furnished to, the Securities and Exchange Commission (the "SEC"), as well as in Part II, Item 1A, "Risk Factors," within this Quarterly Report* 

*on Form 10-Q.*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| FLS 2

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

*It is important to note that our actual results could differ materially from the results set forth or implied by our forward-looking* 

*statements. The factors that could cause our actual results to differ from those included in such forward-looking statements are set forth* 

*under the heading Item 1A, "Risk Factors," in our Quarterly Reports on Form 10-Q, in our Annual Reports on Form 10-K, and from time-to-*

*time, in our results disclosed in our Current Reports on Form 8-K. In addition, when preparing the MD&A below, we presume the readers* 

*have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of* 

*Regulation S-K.*

*We provide our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on* 

*Schedule 14A, Forms 3, 4 and 5 filed by, or on behalf of, directors, executive officers and certain large shareholders, and any amendments to* 

*those documents filed or furnished pursuant to the Securities Exchange Act of 1934, free of charge on the Investor Relations section of our* 

*website, www.energyrecovery.com. These filings will become available as soon as reasonably practicable after such material is* 

*electronically filed with or furnished to the SEC. From time to time, we may use our website as a channel of distribution of material company* 

*information.*

*We also make available in the Investor Relations section of our website our corporate governance documents including our code of* 

*business conduct and ethics and the charters of the audit, compensation and nominating and governance committees. These documents, as* 

*well as the information on the website, are not intended to be part of this Quarterly Report on Form 10-Q. We use the Investor Relations* 

*section of our website as a means of complying with our disclosure obligations under Regulation FD. Accordingly, you should monitor the* 

*Investor Relations section of our website in addition to following our press releases, SEC filings and public conference calls and webcasts.*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 1

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**PART I — FINANCIAL INFORMATION**

**Item 1 — Financial Statements (unaudited)**

**ENERGY RECOVERY, INC.**

 **CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>|
|  | *(In thousands)* | *(In thousands)* |
| **ASSETS** |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $50116 | $48076 |
| Short-term investments | 36035 | 27173 |
| Accounts receivable, net | 38941 | 76639 |
| Inventories, net | 30886 | 24260 |
| Prepaid expenses and other assets | 5084 | 5063 |
| Total current assets | 161062 | 181211 |
| Long-term investments | 5991 | 8034 |
| Deferred tax assets, net | 10115 | 8267 |
| Property and equipment, net | 12761 | 12934 |
| Operating lease, right of use asset | 7194 | 7701 |
| Goodwill | 11128 | 12790 |
| Other assets, non-current | 737 | 577 |
| Total assets | $208988 | $231514 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| Accounts payable | $2790 | $2114 |
| Accrued expenses and other liabilities | 10890 | 11670 |
| Lease liabilities | 2591 | 2531 |
| Contract liabilities | 1080 | 1039 |
| Total current liabilities | 17351 | 17354 |
| Lease liabilities, non-current | 6254 | 6898 |
| Other liabilities, non-current | 1098 | 1070 |
| Total liabilities | 24703 | 25322 |
| Commitments and contingencies (Note 7) |  |  |
| Stockholders' equity: |  |  |
| Common stock | 67 | 67 |
| Additional paid-in capital | 245663 | 244397 |
| Accumulated other comprehensive loss | (285) | (94) |
| Treasury stock | (177577) | (166846) |
| Retained earnings | 116417 | 128668 |
| Total stockholders' equity | 184285 | 206192 |
| Total liabilities and stockholders' equity | $208988 | $231514 |

---

*See Accompanying Notes to Condensed Consolidated Financial Statements*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 2

**ENERGY RECOVERY, INC.**

 **CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
|  | *(In thousands, except per share data)* | *(In thousands, except per share data)* |
| Revenue | $9706 | $8065 |
| Cost of revenue | 5372 | 3607 |
| Restructuring - inventory reserve | 1632 |  |
| Gross profit | 2702 | 4458 |
| Operating expenses: |  |  |
| General and administrative | 6455 | 8574 |
| Sales and marketing | 5119 | 4906 |
| Research and development | 2789 | 3001 |
| Restructuring charges | 1536 | 539 |
| Impairment of goodwill | 1662 |  |
| Total operating expenses | 17561 | 17020 |
| Loss from operations | (14859) | (12562) |
| Other income: |  |  |
| Interest income | 725 | 1073 |
| Other non-operating income, net | 108 | 6 |
| Total other income, net | 833 | 1079 |
| Loss before income taxes | (14026) | (11483) |
| Benefit from income taxes | (1775) | (1603) |
| Net loss | $(12251) | $(9880) |
| Net loss per share: |  |  |
| Basic and diluted | $(0.23) | $(0.18) |
| Number of shares used in per share calculations: |  |  |
| Basic and diluted | 52660 | 54902 |

---

*See Accompanying Notes to Condensed Consolidated Financial Statements*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 3

**ENERGY RECOVERY, INC.**

 **CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS** 

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
|  | *(In thousands)* | *(In thousands)* |
| Net loss | $(12251) | $(9880) |
| Other comprehensive loss, net of tax |  |  |
| Foreign currency translation adjustments | (123) | (16) |
| Unrealized loss on investments | (68) | (7) |
| Total other comprehensive loss, net of tax | (191) | (23) |
| Comprehensive loss | $(12442) | $(9903) |

---

*See Accompanying Notes to Condensed Consolidated Financial Statements*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 4

**ENERGY RECOVERY, INC.**

 **CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| <br>*(In thousands, except shares)* |  |  |
| **Common stock** |  |  |
| Beginning balance | $67 | $66 |
| Issuance of common stock |  | 1 |
| Ending balance | 67 | 67 |
| **Additional paid-in capital** |  |  |
| Beginning balance | 244397 | 235010 |
| Issuance of common stock |  | 1091 |
| Shares held for tax withholdings | (682) | (476) |
| Stock-based compensation | 1948 | 1925 |
| Ending balance | 245663 | 237550 |
| **Accumulated other comprehensive (loss) income** |  |  |
| Beginning balance | (94) | 98 |
| Other comprehensive loss |  |  |
| Foreign currency translation adjustments | (123) | (16) |
| Unrealized loss on investments | (68) | (7) |
| Total other comprehensive loss, net | (191) | (23) |
| Ending balance | (285) | 75 |
| **Treasury stock** |  |  |
| Beginning balance | (166846) | (130870) |
| Common stock repurchased | (10731) | (4535) |
| Ending balance | (177577) | (135405) |
| **Retained earnings** |  |  |
| Beginning balance | 128668 | 105706 |
| Net loss | (12251) | (9880) |
| Ending balance | 116417 | 95826 |
| **Total stockholders' equity** | $184285 | $198113 |
| **Common stock issued (shares)** |  |  |
| Beginning balance | 66774081 | 66182906 |
| Issuance of common stock | 236340 | 350146 |
| Ending balance | 67010421 | 66533052 |
| **Treasury stock (shares)** |  |  |
| Beginning balance | 13967259 | 11397045 |
| Common stock repurchased | 960303 | 279295 |
| Ending balance | 14927562 | 11676340 |
| **Total common stock outstanding (shares)** |  |  |
| Beginning Balance | 52806822 | 54785861 |
| Issuance of common stock | 236340 | 350146 |
| Common stock repurchased | (960303) | (279295) |
| Ending Balance | 52082859 | 54856712 |

---

*See Accompanying Notes to Condensed Consolidated Financial Statements*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 5

**ENERGY RECOVERY, INC.**

 **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
|  | *(In thousands)* | *(In thousands)* |
| Cash flows from operating activities: |  |  |
| Net loss | $(12251) | $(9880) |
| Adjustments to reconcile net loss to cash provided by operating activities |  |  |
| Stock-based compensation | 1963 | 1963 |
| Depreciation and amortization | 978 | 962 |
| Accretion (amortization) of discounts (premiums) on investments | (82) | (231) |
| Deferred income taxes | (1848) | (1641) |
| Impairment of long-lived assets |  | 353 |
| Impairment of goodwill | 1662 |  |
| Restructuring - inventory reserve | 1632 |  |
| Other non-cash adjustments | (36) | 21 |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable, net | 37698 | 31677 |
| Contract assets | (54) | 378 |
| Inventories, net | (8400) | (7645) |
| Prepaid and other assets | 38 | (37) |
| Accounts payable | 561 | 176 |
| Accrued expenses and other liabilities | (865) | (6248) |
| Contract liabilities | 41 | 830 |
| Net cash provided by operating activities | 21037 | 10678 |
| Cash flows from investing activities: |  |  |
| Maturities of marketable securities | 10950 | 27224 |
| Purchases of marketable securities | (17755) | (14369) |
| Capital expenditures | (814) | (191) |
| Proceeds from sales of fixed assets | 13 | 10 |
| Net cash (used in) provided by investing activities | (7606) | 12674 |
| Cash flows from financing activities: |  |  |
| Net proceeds from issuance of common stock |  | 1092 |
| Tax payment for employee shares withheld | (682) | (476) |
| Repurchase of common stock | (10660) | (4490) |
| Payment of excise tax associated with repurchase of common stock | (34) |  |
| Net cash used in financing activities | (11376) | (3874) |
| Effect of exchange rate differences on cash and cash equivalents | (15) | 33 |
| Net change in cash, cash equivalents and restricted cash | 2040 | 19511 |
| Cash, cash equivalents and restricted cash, beginning of year | 48076 | 29757 |
| Cash, cash equivalents and restricted cash, end of period | $50116 | $49268 |

---

*See Accompanying Notes to Condensed Consolidated Financial Statements*

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 6

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 1 — Description of Business and Significant Accounting Policies**

Energy Recovery, Inc. and its wholly-owned subsidiaries (the "Company" or "Energy Recovery") designs and manufactures world-

class energy-saving technology for critical infrastructure that communities rely on every day, driving a more resilient and sustainable future.

Leveraging the Company's pressure exchanger technology, which generates little to no emissions when operating, the Company believes its

solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of commercial and industrial

processes. As the world coalesces around the urgent need to address climate change and its impacts, the Company is helping companies

reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint. The Company believes that its

customers do not have to sacrifice quality and cost savings for sustainability and the Company is committed to developing solutions that drive

long-term value – both financial and environmental. The Company's solutions are marketed, sold in, and developed for, the fluid-flow and

gas markets, such as seawater and wastewater desalination, natural gas, chemical processing and CO2-based refrigeration systems, under

the trademarks ERI<sup>®</sup>, PX<sup>®</sup>, Pressure Exchanger<sup>®</sup>, PX<sup>®</sup> Pressure Exchanger<sup>®</sup> ("PX"), Ultra High-Pressure PX, PX G<sup>™</sup>, PX G1300<sup>®</sup>,

PX PowerTrain<sup>™</sup>, AT<sup>™</sup>, and Aquabold<sup>™</sup>. The Company owns, manufactures and/or develops its solutions, in whole or in part, in the United

States of America (the "U.S.").

**Basis of Presentation**

The Condensed Consolidated Financial Statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the

Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the financial statements

prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules

and regulations. The December 31, 2025 Condensed Consolidated Balance Sheet was derived from audited financial statements and may

not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information

presented not misleading.

The March 31, 2026 unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited

Consolidated Financial Statements and the notes thereto for the fiscal year ended December 31, 2025 included in the Company's Annual

Report on Form 10-K filed with the SEC on February 25, 2026 (the "2025 Annual Report").

The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any

future periods.

**Reclassifications**

Certain prior period amounts have been reclassified in certain notes to the Condensed Consolidated Financial Statements to conform

to the current period presentation.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 7

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Use of Estimates**

The preparation of Condensed Consolidated Financial Statements, in conformity with GAAP, requires the Company's management to

make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and

accompanying notes.

The accounting policies that reflect the Company's significant estimates and judgments and that the Company believes are the most

critical to aid in fully understanding and evaluating its reported financial results are revenue recognition; stock-based compensation expense;

equipment useful life and valuation; goodwill valuation and impairment; inventory valuation and allowances, deferred taxes and valuation

allowances on deferred tax assets; and evaluation and measurement of contingencies. Those estimates could change, and as a result,

actual results could differ materially from those estimates.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a

revision of the carrying value of its assets or liabilities as of May 6, 2026, the date of issuance of this Quarterly Report on Form 10-Q. These

estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these

estimates under different assumptions or conditions. The Company undertakes no obligation to publicly update these estimates for any

reason after the date of this Quarterly Report on Form 10-Q, except as required by law.

**Significant Accounting Policies**

There have been no material changes to the Company's significant accounting policies in Note 1, "Description of Business and

Significant Accounting Policies - Significant Accounting Policies," of the Notes to Consolidated Financial Statements included in Item 8,

"Financial Statements and Supplementary Data," of the 2025 Annual Report.

**Recently Adopted Accounting Pronouncement**

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update *2025-05*, *Measurement of* 

*Credit Losses for Accounts Receivable and Contract Assets* ("ASU 2025-05"). ASU 2025-05 provides a practical expedient for measuring

expected credit losses on current accounts receivables and contract assets by assuming that conditions at the balance sheet date remain

unchanged over the life of the asset. The Company adopted ASU 2025-05 on January 1, 2026 and the adoption did not have a material

impact on results of operations, cash flows, or financial condition.

**Recently Issued Accounting Pronouncements Not Yet Adopted**

There have been no issued accounting pronouncements that have not yet been adopted during the three months ended March 31,

2026 that apply to the Company other than the pronouncements disclosed in Note 1, "Description of Business and Significant Accounting

Policies - Recently Issued Accounting Pronouncements Not Yet Adopted," of the Notes to Consolidated Financial Statements included in Item

8, "Financial Statements and Supplementary Data," of the 2025 Annual Report.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 8

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 2 — Revenue** 

**Disaggregation of Revenue**

The following table presents the disaggregated revenues by segment, and within each segment, by geographical market based on the

customer "shipped to" address, and by channel customers. Sales and usage-based taxes are excluded from revenues. [See Note](#iacff67f1b0d94ef38e07a01d62853fc0_1057) 9,

"Segment Reporting," [for further discussion related to the Company's segments](#iacff67f1b0d94ef38e07a01d62853fc0_1057).

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Total** | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Total** |
| *(In thousands)* |  |  |  |  |  |  |  |  |
| **Geographical market** | **Geographical market** | **Geographical market** | **Geographical market** | **Geographical market** |  |  |  |  |
| Middle East | $2506 | $— | $77 | $2583 | $2014 | $— | $1 | $2015 |
| Africa | 196 |  |  | 196 | 866 |  |  | $866 |
| Other | 6205 | 601 | 121 | 6927 | 4879 | 305 |  | $5184 |
| Total revenue | $8907 | $601 | $198 | $9706 | $7759 | $305 | $1 | $8065 |
| **Channel** | **Channel** | **Channel** | **Channel** | **Channel** |  |  |  |  |
| Original equipment <br>manufacturer<br>| $5866 | $601 | $121 | $6588 | $3813 | $188 | $— | $4001 |
| Aftermarket | 2677 |  | 77 | 2754 | 3910 | 117 | 1 | $4028 |
| Megaproject | 364 |  |  | 364 | 36 |  |  | $36 |
| Total revenue | $8907 | $601 | $198 | $9706 | $7759 | $305 | $1 | $8065 |

---

**Contract Balances**

The following table presents contract balances by category.

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>|
|  | *(In thousands)* | *(In thousands)* |
| Accounts receivable, net | $38941 | $76639 |
| Contract assets, current (included in prepaid expenses and other assets) | $1701 | $1647 |
| Contract liabilities: |  |  |
| Contract liabilities, current | $1080 | $1039 |
| Total contract liabilities | $1080 | $1039 |

---

**Contract Liabilities**

The Company records contract liabilities, which consist of customer deposits and deferred revenue, when cash payments are

received in advance of the Company's performance. The following table presents the change in contract liability balances during the reported

periods.

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>|
| *(In thousands)* |  |  |
| Contract liabilities, beginning of year | $1039 | $571 |
| Revenue recognized | (462) | (297) |
| Cash received, excluding amounts recognized as revenue during the period | 503 | 765 |
| Contract liabilities, end of period | $1080 | $1039 |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 9

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Remaining Performance Obligations**

As of March 31, 2026, the following table presents the revenue that is expected to be recognized related to performance obligations

that are unsatisfied or partially unsatisfied.

---

| | |
|:---|:---|
| **Period** | **Remaining** <br>**Performance** <br>**Obligations**<br>|
|  | *(In thousands)* |
| 2026 (remaining nine months) | $10461 |
| 2027 | 6587 |
| Total | $17048 |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 10

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 3 — Loss Per Share** 

Net loss for the reported period is divided by the weighted average number of basic and diluted common shares outstanding during

the reported period to calculate the basic and diluted loss per share, respectively. Outstanding stock options to purchase common shares,

unvested restricted stock units ("RSUs"), and unvested performance restricted stock units ("PRSUs") are collectively referred to as "equity

awards."

• *Basic loss per share* is computed using the weighted average number of common shares outstanding during the period.

• *Diluted loss per share* is computed using the weighted average number of common and potentially dilutive shares outstanding

during the period, using the treasury stock method. Any anti-dilutive effect of equity awards outstanding is not included in the

computation of diluted loss per share.

The following table presents the computation of basic and diluted loss per share.

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| *(In thousands, except per share amounts)* |  |  |
| Numerator |  |  |
| Net loss | $(12251) | $(9880) |
| Denominator (weighted average shares) |  |  |
| Basic and dilutive common shares outstanding | 52660 | 54902 |
| Diluted common shares outstanding | 52660 | 54902 |
| Loss Per Share |  |  |
| Basic and dilutive | $(0.23) | $(0.18) |

---

The following table presents the equity awards that are excluded from diluted loss per share because (i) their effect would have been

anti-dilutive, or (ii) the equity awards were contingent upon conditions for issuance which were not satisfied as of March 31, 2026.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| *(In thousands)* |  |  |
| Anti-dilutive equity award shares | 3305 | 2806 |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 11

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 4 — Other Financial Information** 

**Cash, Cash Equivalents and Restricted Cash**

The Condensed Consolidated Statements of Cash Flows explain the changes in the total of cash, cash equivalents and restricted

cash. The following table presents a reconciliation of cash, cash equivalents and restricted cash, such as cash amounts deposited in

restricted cash accounts in connection with the Company's credit cards, reported for each period within the Condensed Consolidated Balance

Sheets and the Condensed [Consolidated Statements of Cash Flows](#iacff67f1b0d94ef38e07a01d62853fc0_604) that sum to the total of such amounts.

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>| **March 31,**<br>**2025**<br>|
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Cash and cash equivalents | $50116 | $48076 | $49137 |
| Restricted cash, non-current (included in other assets, non-current) |  |  | 131 |
| Total cash, cash equivalents and restricted cash | $50116 | $48076 | $49268 |

---

**Inventories, net**

Inventory amounts are stated at the lower of cost or net realizable value, using the first-in, first-out method.

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>|
|  | *(In thousands)* | *(In thousands)* |
| Raw materials | $9688 | $8289 |
| Work in process | 6879 | 6270 |
| Finished goods | 17035 | 10768 |
| Inventories, gross | 33602 | 25327 |
| Valuation adjustments for excess and obsolete inventory | (2716) | (1067) |
| Inventories, net | $30886 | $24260 |

---

**Goodwill**

Goodwill is tested for impairment annually in the third quarter of the Company's fiscal year or more frequently if indicators of potential

impairment exist. The Company monitors the industries in which it operates and reviews its business performance for indicators of potential

impairment. The recoverability of goodwill is measured at the reporting unit level, which represents the operating segment.

In February 2026, the Company wound down operations of the CO2 retail grocery business within its Emerging Technologies

segment due to a fundamental change in the outlook of the business. The Company considered the wind down to be an indicator of

impairment and performed a quantitative impairment test using the discounted cash flow approach and market approach. Based on the

results of the analysis, the Company determined that the carrying value of the reporting unit exceeded its fair value and recorded an

impairment charge of $1.7 million during the three months ended March 31, 2026.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 12

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Accrued Expenses and Other Liabilities**

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br>| **December 31,**<br>**2025**<br>|
|  | *(In thousands)* | *(In thousands)* |
| Accrued expenses and other liabilities, current |  |  |
| Payroll, benefits, incentives and commissions payable | $5033 | $6683 |
| Warranty reserve | 189 | 205 |
| Restructuring accrual | 961 |  |
| Income taxes payable | 2382 | 2401 |
| Other accrued expenses and other liabilities | 2325 | 2381 |
| Total accrued expenses and other liabilities | 10890 | 11670 |
| Other liabilities, non-current | 1098 | 1070 |
| Total accrued expenses, and current and non-current other liabilities | $11988 | $12740 |

---

**Restructuring** 

**2024 Restructuring Plan**

During the fourth quarter of fiscal year 2024, the Company implemented a restructuring plan which included reductions primarily within

the G&A function, in order to lower the Company's operating cost structure, and to position the Company for profitable growth. The Company

recorded a restructuring charge of approximately $2.8 million in total, of which $0.5 million was recorded during the three months ended

March 31, 2025. The total restructuring charge recorded relates to severance and benefits, including reemployment assistance, for

38 terminated employees, which was approximately 15% of the Company's workforce. The restructuring plan was complete as of December

31, 2025. All expenses associated with the Company's restructuring plan are included in "Restructuring charges" in the Condensed

Consolidated Statements of Operations.

**2026 Restructuring Plan**

During the first quarter of fiscal year 2026, the Company wound down operations of the CO2 retail grocery business within its

Emerging Technologies segment due to a fundamental change in the outlook of the business. The Company recorded a restructuring charge

of approximately $1.5 million during the three months ended March 31, 2026. The restructuring charge recorded relates to severance and

benefits, including reemployment assistance, for 23 terminated employees. In addition, the Company incurred other related charges

associated with the wind down of the CO2 retail grocery business, including excess and obsolescence reserves taken on CO2 inventory of

approximately $1.6 million and impairment of goodwill of approximately $1.7 million, which are included in "Restructuring - inventory reserve"

and "Impairment of goodwill" in the Condensed Consolidated Statements of Operations, respectively. Refer to section Goodwill within this

footnote for additional information. The restructuring plan was substantially complete by the end of the first quarter of fiscal year 2026 and the

Company does not expect to incur significant additional expenses related to the restructuring.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 13

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

The following table presents the change in the Company's restructuring accrual balances, which is included within Accrued expenses

and other liabilities on the Condensed Consolidated Balance Sheets, during the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Severance and** <br>**Benefits**<br>|
|  | *(In thousands)* |
| Balance, as of December 31, 2024 | $2476 |
| Restructuring provision, net of adjustments | 313 |
| Cash paid | (2789) |
| Balance, as of December 31, 2025 | $— |
| Restructuring provision | 1536 |
| Cash paid | (575) |
| Balance, as of March 31, 2026 | $961 |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 14

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 5 — Investments and Fair Value Measurements** 

**Fair Value of Financial Instruments**

The following table presents the Company's financial assets measured on a recurring basis by contractual maturity, including pricing

category, amortized cost and fair value. Gross unrealized gains and losses were not material for the periods presented. As of March 31,

2026 and December 31, 2025, the Company had no financial liabilities and no Level 3 financial assets.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
|  | **Pricing** <br>**Category**<br>| **Amortized**<br>**Cost**<br>| **Fair**<br>**Value**<br>| **Amortized**<br>**Cost**<br>| **Fair**<br>**Value**<br>|
|  |  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **Cash equivalents** | **Cash equivalents** |  |  |  |  |
| Money market securities | Level 1 | $17892 | $17892 | $11225 | $11225 |
| U.S. treasury securities | Level 2 |  |  | 12952 | 12955 |
| Total cash equivalents | Total cash equivalents | 17892 | 17892 | 24177 | 24180 |
| **Short-term investments** | **Short-term investments** |  |  |  |  |
| U.S. treasury securities  | Level 2 | 26535 | 26539 | 13618 | 13640 |
| Corporate notes and bonds  | Level 2 | 9507 | 9496 | 13505 | 13533 |
| Total short-term investments | Total short-term investments | 36042 | 36035 | 27123 | 27173 |
| **Long-term investments** | **Long-term investments** |  |  |  |  |
| U.S. treasury securities  | Level 2 | 955 | 957 | 1959 | 1971 |
| Corporate notes and bonds  | Level 2 | 5026 | 5034 | 6038 | 6063 |
| Total long-term investments | Total long-term investments | 5981 | 5991 | 7997 | 8034 |
| Total short and long-term investments | Total short and long-term investments | 42023 | 42026 | 35120 | 35207 |
| Total | Total | $59915 | $59918 | $59297 | $59387 |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 15

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 6 — Lines of Credit**

**Credit Agreement**

The Company entered into a credit agreement with JPMorgan Chase Bank, N.A. on December 22, 2021 (as amended, the "Credit

Agreement"). The Credit Agreement was amended on January 21, 2026 to extend the expiration date from December 21, 2026 to

January 21, 2031. The Credit Agreement provides a committed revolving credit line of $50.0 million and includes both a revolving loan and a

letters of credit ("LCs") component.

Under the Credit Agreement, as of March 31, 2026, there were no revolving loans outstanding. In addition, under the LCs

component, as of March 31, 2026 and December 31, 2025, the Company utilized $20.4 million of the maximum allowable credit line of

$30.0 million, which includes newly issued LCs and previously issued and unexpired stand-by letters of credit ("SBLCs").

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 16

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 7 — Commitments and Contingencies**

**Sublease**

On March 10, 2025, the Company entered into an agreement to sublease its Katy, Texas operating lease. The sublease commenced

on March 10, 2025 and will expire on December 31, 2029. The sublease is classified as an operating lease and has a remaining lease term

of 3.8 years as of March 31, 2026. Sublease income was immaterial during the three months ended March 31, 2026 and 2025, and is

recorded as a reduction of lease expense in general and administrative within the Company's Condensed Consolidated Statements of

Operations.

The Company considered the sublease to be an indicator of impairment of the original lease. The Company compared the

undiscounted cash flows from the sublease to the carrying value of the Katy, Texas operating lease, which included the associated right-of-

use asset and leasehold improvements. The Company concluded that the carrying value was not recoverable as it exceeded the estimated

undiscounted cash flows.

The Company calculated the impairment charge by comparing the carrying value of the Katy, Texas operating lease to its fair value,

which was calculated based on the net discounted cash flows associated with the sublease. The Company recorded a total impairment

charge of $0.4 million during the three months ended March 31, 2025, of which $0.2 million and $0.2 million was recorded against the right-

of-use asset and the associated leasehold improvements, respectively. The allocation of the impairment charge was based on the relative

carrying value of the assets. The impairment charge was recorded in general and administrative within the Company's Condensed

Consolidated Statements of Operations.

**Litigation**

From time-to-time, the Company has been named in and subject to various proceedings and claims in connection with its business.

The Company may in the future become involved in litigation in the ordinary course of business, including litigation that could be material to

its business. The Company considers all claims, if any, on a quarterly basis and, based on known facts, assesses whether potential losses

are considered reasonably possible, probable and estimable. Based upon this assessment, the Company then evaluates disclosure

requirements and whether to accrue for such claims in its consolidated financial statements. The Company records a provision for a liability

when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are

reviewed at least quarterly and are adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other

information and events pertaining to a particular case. As of March 31, 2026, the Company was not involved in any lawsuits, legal

proceedings or claims that would have a material effect on the Company's financial position, results of operations, or cash flows. Therefore,

there were no material losses which were probable or reasonably estimable and accordingly, the Company did not record a provision for

litigation as of March 31, 2026 and December 31, 2025.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 17

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**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 8 — Income Taxes**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| *(In thousands, except percentages)* |  |  |
| Benefit from income taxes | $(1775) | $(1603) |
| Discrete items | (132) | 52 |
| Benefit from income taxes, excluding discrete items | $(1907) | $(1551) |
| Effective tax rate | 12.7% | 14.0% |
| Effective tax rate, excluding discrete items | 13.6% | 13.5% |

---

The Company's interim period tax benefit from income taxes is determined using an estimate of its annual effective tax rate, adjusted

for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if

the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The Company's quarterly tax

provision and estimate of its annual effective tax rate are subject to variation due to several factors, including variability in accurately

predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in

how the Company does business.

For the three months ended March 31, 2026, the recognized benefit from income taxes resulted from the tax projection based on the

full year forecasted profit and included benefits related to the U.S. federal foreign income and foreign-derived deduction eligible

income ("FDDEI") federal research and development ("R&D") tax credit, reduced by certain permanent differences, such as non-deductible

stock-based compensation.

For the three months ended March 31, 2025, the recognized benefit from income taxes resulted from the tax projection based on the

full year forecasted profit and included benefits related to the U.S. federal foreign-derived intangible income ("FDII"), federal R&D tax credit,

certain permanent differences, such as stock-based compensation shortfalls, and partial release of California valuation allowance.

The effective tax rate excluding discrete items for the three months ended March 31, 2026, as compared to the prior year, differed

primarily due to lower projected federal R&D tax credits, increased non-deductible officer stock-based compensation, largely offset by

projected higher U.S. FDDEI benefits.

On July 4, 2025, the One Big Beautiful Bill ("OBBBA") Act, which includes a broad range of tax reform provisions, was signed into law

in the United States. During the three months ended March 31, 2026, the Company recorded its best estimate of the impact of the OBBBA on

the income tax provision. The Company will continue to evaluate the elections available within the OBBBA, which may impact the timing of

permanent and temporary differences within the Company's tax provision.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 18

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_568)*

**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 9 — Segment Reporting**

The Company's Chief Operating Decision-Maker ("CODM") is its President and Chief Executive Officer. The Company continues to

monitor and review its segment reporting structure in accordance with authoritative guidance to determine whether any changes have

occurred that would impact its reportable segments.

During the three months ended March 31, 2026, the Company changed the composition of its reportable segments to better reflect

how the CODM manages the business. As a part of this change, the Water segment was separated into two segments, the Desalination

segment and the Wastewater segment, as both met the criteria of a reportable segment. Prior periods have been recast to conform to the

current year presentation. The recast of prior year information had no impact on the Company's Condensed Consolidated Balance Sheets,

Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss or Condensed

Consolidated Statements of Cash Flows.

*Segment Definition*

Income and type of expense activities that are included in the Desalination, Wastewater and Emerging Technologies segments and

corporate operating expenses are as follows:

*Desalination segment:* The continued development, sales and support of the PX, hydraulic turbochargers and pumps used in

seawater desalination treatment facilities.

*Wastewater segment:* The continued development, sales and support of the PX, hydraulic turbochargers and pumps used in

wastewater treatment facilities.

*Emerging Technologies segment:* The continued development, sales and support of activities related to emerging

technologies, such as the PX G1300 used in industrial and commercial refrigeration applications*.* In February 2026, the

Company wound down operations of the CO2 retail grocery business within its Emerging Technologies segment due to a

fundamental change in the outlook of the business. As of the first quarter of fiscal year 2026, the Company has substantially

completed the wind down of the business.

*Corporate operating expenses:* The corporate expenses include certain unallocated expenses outside of the operating

segments, such as audit and accounting services, legal services, board of director fees and expenses, human resources

activities, information systems activities and other separately managed general expenses not related to the identified

segments.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 19

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_568)*

**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

The following table presents a summary of the Company's financial information by segment, including significant segment expenses,

and corporate operating expenses.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
|  | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Corporate** | **Total** | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Corporate** | **Total** |
| *(In thousands)* |  |  |  |  |  |  |  |  |  |  |
| Revenue | $8907 | $601 | $198 | $— | $9706 | $7759 | $305 | $1 | $— | $8065 |
| Cost of revenue | 4942 | 370 | 60 |  | 5372 | 3382 | 179 | 46 |  | 3607 |
| Restructuring - inventory reserve |  |  | 1632 |  | 1632 |  |  |  |  |  |
| Gross profit (loss) | 3965 | 231 | (1494) |  | 2702 | 4377 | 126 | (45) |  | 4458 |
| Operating expenses |  |  |  |  |  |  |  |  |  |  |
| General and administrative | 756 | 981 | 348 | 4370 | 6455 | 845 | 728 | 755 | 6246 | 8574 |
| Sales and marketing | 2485 | 1163 | 858 | 613 | 5119 | 2108 | 1037 | 1270 | 491 | 4906 |
| Research and development | 1616 | 136 | 1037 |  | 2789 | 849 | 329 | 1823 |  | 3001 |
| Restructuring charges | 335 | 18 | 1140 | 43 | 1536 | 107 | 103 | 123 | 206 | 539 |
| Impairment of goodwill |  |  | 1662 |  | 1662 |  |  |  |  |  |
| Total operating expenses | 5192 | 2298 | 5045 | 5026 | 17561 | 3909 | 2197 | 3971 | 6943 | 17020 |
| Operating income (loss) | $(1227) | $(2067) | $(6539) | $(5026) | $(14859) | $468 | $(2071) | $(4016) | $(6943) | $(12562) |

---

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 20

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_568)*

**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 10 — Concentrations** 

**Revenue by Country**

The following table presents the Company's product revenue by country.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| Product revenue by country:<sup>(1)</sup> |  |  |
| Cyprus | 12% | \*\*  |
| Egypt | 12% | \*\*  |
| India | \*\*  | 18% |
| Others<sup>(2)</sup> | 76% | 82% |
| Total | 100% | 100% |

---

<sup>\*\*</sup>Zero or less than 10%.

<sup>(1)</sup> Countries representing more than 10% of product revenues for the periods presented.

<sup>(2)</sup> Countries in the aggregate, individually representing less than 10% of product revenues for the periods presented.

**Customer Revenue Concentration**

The following table presents the customers that account for 10% or more of the Company's revenue and their related segment for

each of the periods presented. Although certain customers might account for greater than 10% of the Company's revenue at any one point in

time, the concentration of revenue between a limited number of customers shifts regularly, depending on when revenue is recognized. The

percentages by customer reflect specific relationships or contracts that would concentrate revenue for the periods presented and do not

indicate a trend specific to any one customer.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **Segment** | **2026** | **2025** |
| Customer A | Desalination | 13% | \*\*  |
| Customer B | Desalination | \*\*  | 12% |

---

<sup>\*\*</sup>Zero or less than 10%.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 21

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_568)*

**ENERGY RECOVERY, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)** 

**Note 11 — Stockholders' Equity** 

**Share Repurchase Programs**

The Company's Board, from time-to-time, has authorized share repurchase programs under which the Company may, at the

discretion of management, repurchase its outstanding common stock in the open market, or in privately negotiated transactions, in

compliance with applicable state and federal securities laws. The timing and amounts of any purchase under the Company's share

repurchase programs is based on market conditions and other factors including price, regulatory requirements, and capital availability. The

Company accounts for stock repurchases under these programs using the cost method. As of March 31, 2026, the Company has

repurchased 14,927,562 shares of its common stock at an aggregate cost of $176.8 million under all share repurchase programs.

*February 2025 Authorization*

On February 26, 2025, the Company announced that the Board authorized a share repurchase program under which the Company

may repurchase its outstanding common stock, at the discretion of management, for up to $30.0 million in aggregate cost, which includes

both the share value of the acquired common stock and the fees charged in connection with acquiring the common stock (the "February 2025

Authorization"). On August 19, 2025, the Company concluded all share repurchases under the February 2025 Authorization. Under the

February 2025 Authorization, the Company repurchased 2,183,648 shares at an aggregate cost of $30.0 million.

*August 2025 Authorization*

On August 6, 2025, the Board announced a share repurchase program under which the Company may repurchase its outstanding

common stock, at the discretion of management, for up to $25.0 million in aggregate cost, which includes both the share value of the

acquired common stock and the fees charged in connection with acquiring the common stock (the "August 2025 Authorization"). The August

2025 Authorization will expire in May 2026. The Company began to purchase under the August 2025 Authorization in August 2025.

The following table presents the share repurchase activities under the August 2025 Authorization as of March 31, 2026.

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Shares** <br>**Purchased**<br>| **Average Price Paid** <br>**per Share**<sup>(1)</sup><br>| **Plan Activity** |
|  |  |  | *(In millions)* |
| August 2025 Authorization |  |  | 25.0 |
| Repurchases under August 2025 Authorization | 1346869 | $12.07 | (16.3) |
| Remaining amount under August 2025 Authorization |  |  | $8.7 |

---

<sup>(1)</sup> Excluding commissions

*May 2026 Authorization*

On May 6, 2026, the Company announced that the Board authorized a share repurchase program under which the Company may

repurchase its outstanding common stock, at the discretion of management, for up to $25.0 million in aggregate cost, which includes both the

share value of the acquired common stock and the fees charged in connection with acquiring the common stock (the "May 2026

Authorization"). The May 2026 Authorization will expire in April 2027. The Company expects to begin purchasing under the May 2026

Authorization in May 2026.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 22

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Item 2 — Management's Discussion and Analysis of Financial Condition and Results of** 

**Operations**

**Overview**

Energy Recovery, Inc. (the "Company", "Energy Recovery", "we", "our" and "us") designs and manufactures solutions that make

industrial processes more efficient and sustainable. Leveraging our pressure exchanger technology, which generates little to no emissions

when operating, we believe our solutions lower costs, save energy, reduce waste, and minimize emissions for companies across a variety of

commercial and industrial processes. As the world coalesces around the urgent need to address climate change and its impacts, we are

helping companies reduce their energy consumption in their industrial processes, which in turn, reduces their carbon footprint. We believe

that our customers do not have to sacrifice quality and cost savings for sustainability and we are committed to developing solutions that drive

long-term value – both financial and environmental.

The original product application of our technology, the PX<sup>®</sup> Pressure Exchanger<sup>®</sup> ("PX") energy recovery device, was a major

contributor to the advancement of seawater reverse osmosis desalination ("SWRO"), significantly lowering the energy intensity and cost of

water production globally from SWRO. Our pressure exchanger technology is being applied to the wastewater filtration market, such as

battery manufacturers, mining operations, municipalities, and other manufacturing plants that discharge wastewater with significant levels of

metals and pollutants.

Engineering, and research and development ("R&D"), have been, and remain, an essential part of our history, culture and corporate

strategy. Since our formation, we have developed leading technology and engineering expertise through the continual evolution of our

pressure exchanger technology, which can enhance environmental sustainability and improve productivity by reducing waste and energy

consumption in high-pressure industrial fluid-flow systems. This versatile technology works as a platform to build product applications and is

at the heart of many of our products. In addition, we have engineered and developed ancillary devices, such as our hydraulic turbochargers

and circulation "booster" pumps, that complement our energy recovery devices.

**Segments**

Our reportable operating segments consist of the desalination, wastewater and emerging technologies segments. These segments

are based on the industries in which the technology solutions are sold, the type of energy recovery device or other technology sold and the

related solution and service or, in the case of emerging technologies, where revenues from new and/or potential devices utilizing our

pressure exchanger technology can be brought to market. Other factors for determining the reportable operating segments include the

manner in which our Chief Operating Decision Maker ("CODM"), our President and Chief Executive Officer, evaluates our performance

combined with the nature of the individual business activities. In addition, our corporate operating expenses include expenditures in support

of the desalination, wastewater and emerging technologies segments. We continue to monitor and review our segment reporting structure in

accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

During the three months ended March 31, 2026, we changed the composition of our reportable segments to better reflect how the

CODM manages the business. As a part of this change, the Water segment was separated into two segments, the Desalination segment and

the Wastewater segment. Prior periods have been recast to conform to the current year presentation.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 23

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Results of Operations**

A discussion regarding our financial condition and results of operations for the three months ended March 31, 2026, compared to the

three months ended March 31, 2025, is presented below.

**Revenue**

As a significant portion of our revenue is derived from large project contract deliveries that are up to 36 months from contract date,

variability in revenue from quarter to quarter is typical, therefore year-on-year comparisons are not necessarily indicative of the trend for the

full year due to these variations. There is no specific seasonality in our revenues to highlight.

***Revenue by Channel Customers***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |  |  |
|  | **2026** | **2026** | **2025** | **2025** |  |  |
|  | **Revenue** | **% of** <br>**Revenue**<br>| **Revenue** | **% of** <br>**Revenue**<br>| **Change** | **Change** |
|  | *(In thousands, except percentages)* | *(In thousands, except percentages)* | *(In thousands, except percentages)* | *(In thousands, except percentages)* | *(In thousands, except percentages)* | *(In thousands, except percentages)* |
| Original equipment manufacturer | $6588 | 68% | $4001 | 50% | $2587 | 65% |
| Aftermarket | 2754 | 28% | 4028 | 50% | (1274) | (32%) |
| Megaproject | 364 | 4% | 36 | —% | 328 | 911% |
| Total revenue | $9706 | 100% | $8065 | 100% | $1641 | 20% |

---

***Revenue Attributable to Primary Geographical Markets by Segments***

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2026** | **2026** | **2026** | **2025** | **2025** | **2025** | **2025** |
| | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Total** | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Middle East | $2506 | $— | $77 | $2583 | $2014 | $— | $1 | $2015 |
| Africa | 196 |  |  | 196 | 866 |  |  | 866 |
| Other | 6205 | 601 | 121 | 6927 | 4879 | 305 |  | 5184 |
| Total revenue | $8907 | $601 | $198 | $9706 | $7759 | $305 | $1 | $8065 |

---

*Three months ended March 31, 2026, as compared to the three months ended March 31, 2025*

The increase in original equipment manufacturer revenue of $2.6 million was due primarily to:

• *Desalination*: The increase in revenue of $2.1 million was due primarily to higher shipments of products to the Europe market and

the Middle East market, partially offset by lower shipments of products to the Africa market.

• *Wastewater*: The increase in revenue of $0.4 million was due primarily to higher shipments of products to the Asia market.

• *Emerging Tech*: The increase in revenue of $0.1 million was due primarily to higher shipments of products to the Americas

market.

The decrease in aftermarket revenue of $1.3 million was primarily due to lower shipments to the Asia and Middle East markets.

The increase in megaproject revenue of $0.3 million was due primarily to higher shipments to the Middle East market.

***Concentration of Revenue***

See [Note](#iacff67f1b0d94ef38e07a01d62853fc0_1102)10, "Concentrations," of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, "Financial Statements

(unaudited)," of this Quarterly Report on Form 10-Q (the "Notes") for further discussion regarding our concentration of revenue.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 24

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Gross Profit and Gross Margin**

Gross profit represents revenue less cost of revenue. Cost of revenue consists primarily of raw materials, personnel costs (including

stock-based compensation), manufacturing overhead, warranty costs, and depreciation expense.

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |  |
|  | **2026** | **2025** | **Change** |
| *(In thousands, except percentage and basis point)* |  |  |  |
| Gross profit | $2702 | $4458 | $(1756) |
| Gross margin | 27.8% | 55.3% | (2750) bps |

---

The decrease in gross profit and gross margin for the three months ended March 31, 2026, as compared to the prior year, was due

primarily to $1.6 million of restructuring charges booked to inventory associated with the wind down of the CO2 retail grocery business, as

well as increased costs related to product and channel mix, pricing, tariffs, and indirect manufacturing costs during the three months ended

March 31, 2026.

**Operating Expenses**

The total material changes of general and administrative ("G&A"), sales and marketing ("S&M") and R&D operating expenses for the

three months ended March 31, 2026, as compared to the comparable period in the prior year, are discussed within the following overall

operating expenditures, and the segment and corporate operating expenses discussions below.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2026** | **2026** | **2026** | **2026** | **2025** | **2025** | **2025** | **2025** | **2025** |
|  | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Corporate** | **Total** | **Desalination** | **Wastewater** | **Emerging** <br>**Technologies**<br>| **Corporate** | **Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| General and <br>administrative<br>| $756 | $981 | $348 | $4370 | $6455 | $845 | $728 | $755 | $6246 | $8574 |
| Sales and <br>marketing<br>| 2485 | 1163 | 858 | 613 | 5119 | 2108 | 1037 | 1270 | 491 | 4906 |
| Research and <br>development<br>| 1616 | 136 | 1037 |  | 2789 | 849 | 329 | 1823 |  | 3001 |
| Restructuring <br>charges<br>| 335 | 18 | 1140 | 43 | 1536 | 107 | 103 | 123 | 206 | 539 |
| Impairment of <br>goodwill<br>|  |  | 1662 |  | 1662 |  |  |  |  |  |
| Total operating <br>expenses<br>| $5192 | $2298 | $5045 | $5026 | $17561 | $3909 | $2197 | $3971 | $6943 | $17020 |

---

*<u>Three months ended</u> <u>March 31, 2026</u><u>, as compared to the</u> <u>three months ended</u> <u>March 31, 2025</u>*

*Overall Operating Expenditures.* Overall operating expenditures increased by $0.5 million, or 3.2%. This increase was due primarily

to impairment of goodwill and restructuring charges incurred as part of the wind down of the CO2 retail grocery business, partially offset by a

decrease in employee costs, as well as consulting costs and impairment costs associated with the sublease of the Katy, Texas lease incurred

during the three months ended March 31, 2025.

*Desalination Segment.* Desalination segment related operating expenses increased by $1.3 million, or 32.8%. This increase was due

primarily to higher employee costs, including stock-based compensation costs, and higher restructuring charges.

Wastewater *Segment.* Wastewater segment related operating expenses increased by $0.1 million, or 4.6%. This increase was due

primarily to higher consulting costs, partially offset by lower employee costs.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 25

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

*Emerging Technologies Segment.* Emerging Technologies segment related operating expenses increased by $1.1 million, or 27.0%.

This increase was due primarily to impairment of goodwill and restructuring charges incurred as part of the wind down of the CO2 retail

grocery business, partially offset by lower employee costs, including stock-based compensation costs.

*Corporate Operating Expenses.* Corporate operating expenses decreased by $1.9 million, or (27.6%). This decrease was primarily

due to lower employee costs, consulting costs and impairment costs associated with the sublease of the Katy, Texas lease incurred during

the three months ended March 31, 2025.

*Restructuring Charges.* During the first quarter of fiscal year 2026, we wound down operations of the CO2 retail grocery business

within our Emerging Technologies segment due to a fundamental change in the outlook of the business. We recorded a restructuring charge

of approximately $1.5 million during the three months ended March 31, 2026. The total restructuring charge recorded relates to severance

and benefits, including reemployment assistance, for 23 terminated employees. In addition to the restructuring charges, the Company

incurred other related charges associated with the wind down of the CO2 retail grocery business, including excess and obsolescence

reserves taken on CO2 inventory of approximately $1.6 million and impairment of goodwill of approximately $1.7 million, which are included in

"Restructuring - inventory reserve" and "Impairment of goodwill" in the Condensed Consolidated Statements of Operations, respectively.

The restructuring plan was substantially complete by the end of the first quarter of fiscal year 2026 and the Company does not expect to incur

significant additional expenses related to the restructuring.

During the fourth quarter of fiscal year 2024, we implemented a restructuring plan which included reductions in our workforce in all

functions of the organization, primarily within the G&A function, in order to lower our operating cost structure, and to position the Company for

profitable growth. We recorded total restructuring charges of approximately $2.8 million, of which $0.5 million was recorded during the three

months ended March 31, 2025. The total restructuring charge relates to severance and benefits, including reemployment assistance, for

38 terminated employees, which was approximately 15% of our workforce. The implementation of the restructuring plan was complete as of

December 31, 2025. See [Note](#iacff67f1b0d94ef38e07a01d62853fc0_463) 4, "Other Financial Information – Restructuring," of the Notes [for further discussion and disclosure on our](#iacff67f1b0d94ef38e07a01d62853fc0_871)

[restructuring program](#iacff67f1b0d94ef38e07a01d62853fc0_871).

**Other Income, Net**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| *(In thousands)* |  |  |
| Interest income | $725 | $1073 |
| Other non-operating income, net | 108 | 6 |
| Total other income, net | $833 | $1079 |

---

The decrease in "Total other income, net" in the three months ended March 31, 2026, as compared to the comparable period in the

prior year, was primarily due to a decrease in short- and long-term investments.

**Income Taxes**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
|  | *(In thousands, except percentages)* | *(In thousands, except percentages)* |
| Benefit from income taxes | $(1775) | $(1603) |
| Discrete items | (132) | 52 |
| Benefit from income taxes, excluding discrete items | $(1907) | $(1551) |
| Effective tax rate | 12.7% | 14.0% |
| Effective tax rate, excluding discrete items | 13.6% | 13.5% |

---

The interim period tax benefit from income taxes is determined using an estimate of our annual effective tax rate, adjusted for discrete

items, if any, that arise during the period. Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual

effective tax rate changes, we make a cumulative adjustment in such period. The quarterly tax provision and estimate of our annual effective

tax rate are subject to variation due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of

jurisdictions to which they relate, the applicability of special tax regimes, and changes in how we do business.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 26

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

For the three months ended March 31, 2026, the recognized benefit from income taxes resulted from the tax projection based on the

full year forecasted profit and included benefits related to the U.S. federal foreign-derived deduction eligible income ("FDDEI") federal

research and development ("R&D") tax credit, and certain permanent differences, such as non-deductible stock-based compensation.

For the three months ended March 31, 2025, the recognized benefit from income taxes resulted from the tax projection based on the

full year forecasted profit and included benefits related to the U.S. federal foreign-derived intangible income ("FDII"), federal R&D tax credit,

certain permanent differences, such as stock-based compensation shortfalls, and partial release of California valuation allowance.

The effective tax rate excluding discrete items for the three months ended March 31, 2026, as compared to the prior year, differed

primarily due to lower projected federal R&D tax credits, increased non-deductible officer stock-based compensation, largely offset by

projected higher U.S. FDDEI benefits.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 27

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Liquidity and Capital Resources**

**Overview**

From time-to-time, management and our Board of Directors (the "Board") review our liquidity and future cash needs and may make a

decision to (1) return capital to our shareholders through a share repurchase program or dividend payout; or (2) seek additional debt or equity

financing. As of March 31, 2026, our principal sources of liquidity consisted of (i) unrestricted cash and cash equivalents of $50.1 million that

are held in cash accounts and invested in money market funds and U.S. treasury securities; (ii) investment-grade short-term and long-term

marketable debt instruments of $42.0 million that are primarily invested in U.S. treasury securities and corporate notes and bonds; and

(iii) accounts receivable, net of allowances, of $38.9 million. As of March 31, 2026, there was unrestricted cash of $0.9 million held outside

the U.S. We invest cash not needed for current operations predominantly in investment-grade, marketable debt instruments with the intent to

make such funds available for future operating purposes, as needed. Although these securities are available for sale, we generally hold

these securities to maturity, and therefore, do not currently see a need to trade these securities in order to support our liquidity needs in the

foreseeable future. We believe the risk of this portfolio to us is in the ability of the underlying companies or government agencies to cover

their obligations at maturity, not in our ability to trade these securities at a profit. Based on current projections, we believe existing cash

balances and future cash inflows from this portfolio will meet our liquidity needs for at least the next 12 months.

**Credit Agreement**

We entered into a credit agreement with JPMorgan Chase Bank, N.A. on December 22, 2021 (as amended, the "Credit Agreement").

The Credit Agreement provides a committed revolving credit line of $50.0 million and includes both a revolving loan and a letters of credit

("LCs") component. The Credit Agreement was amended on January 21, 2026 to extend the expiration date from December 21, 2026 to

January 21, 2031. The maximum allowable LCs under the credit line component of the Credit Agreement is $30.0 million. As of March 31,

2026, the Company was in compliance with all covenants under the Credit Agreement.

See [Note](#iacff67f1b0d94ef38e07a01d62853fc0_937) 6, "Lines of Credit," of the Notes for further discussion related to the Credit Agreement.

**Share Repurchase Programs**

The Board, from time-to-time, has authorized share repurchase programs under which we may, at our discretion, repurchase the

Company's outstanding common stock in the open market, or in privately negotiated transactions, in compliance with applicable state and

federal securities laws. The timing and amounts of any purchase under the share repurchase programs are based on market conditions and

other factors including price, regulatory requirements, and capital availability. We account for stock repurchases under these programs using

the cost method. As of March 31, 2026, we have cumulatively repurchased 14.9 million shares of the Company's common stock at an

aggregate cost of $176.8 million under all share repurchase programs. The following is a discussion of the current share repurchase

program during the three months ended March 31, 2026. See [Note](#iacff67f1b0d94ef38e07a01d62853fc0_247) 11, "Stockholders' Equity – Share Repurchase Programs," [of the](#iacff67f1b0d94ef38e07a01d62853fc0_1018) Notes

f[or further discussion related to share repurchase programs and a reconciliation of the latest share repurchase plan balance](#iacff67f1b0d94ef38e07a01d62853fc0_493).

On August 6, 2025, we announced that the Board authorized a share repurchase program under which we may repurchase our

outstanding common stock, at the discretion of management, up to $25.0 million in aggregate cost, which includes both the share value of the

acquired common stock and the fees charged in connection with acquiring the common stock (the "August 2025 Authorization"). We began

repurchasing our outstanding common stock under the August 2025 Authorization in August 2025. The August 2025 Authorization will expire

in May 2026. As of March 31, 2026, we have repurchased 1,346,869 shares of our common stock at an aggregate cost of approximately

$16.3 million of which 960,303 were purchased during the three months ended March 31, 2026 at an aggregate cost of approximately

$10.7 million.

On May 6, 2026, we announced that the Board authorized a share repurchase program under which we may repurchase our

outstanding common stock, at the discretion of management, for up to $25.0 million in aggregate cost, which includes both the share value of

the acquired common stock and the fees charged in connection with acquiring the common stock (the "May 2026 Authorization"). We expect

to commence repurchasing our outstanding common stock under the May 2026 Authorization in May 2026. The May 2026 Authorization will

expire in April 2027.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 28

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**Cash Flows**

---

| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |  |
| | **2026** | **2025** | **Change** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Net cash provided by operating activities | $21037 | $10678 | $10359 |
| Net cash (used in) provided by investing activities | (7606) | 12674 | (20280) |
| Net cash used in financing activities | (11376) | (3874) | (7502) |
| Effect of exchange rate differences on cash and cash equivalents | (15) | 33 | (48) |
| Net change in cash, cash equivalents and restricted cash | $2040 | $19511 | $(17471) |

---

***Cash Flows from Operating Activities***

Net cash provided by operating activities is subject to the project driven, non-cyclical nature of our business. Operating cash flow can

fluctuate significantly from reporting period to reporting period, due to the timing of receipts of large project orders. Operating cash flow may

be negative in one reporting period and significantly positive in the next. Consequently, individual reporting period results and comparisons

may not necessarily indicate a significant trend, either positive or negative.

The higher net cash provided by operating assets and liabilities for the three months ended March 31, 2026, as compared to the prior

year, was due primarily to the following factors:

• *Accounts receivable:* an increase in cash provided due to an increase in collections related to revenues earned late in the fourth

quarter of 2025;

• *Accrued liabilities:* an increase in cash provided due to incentives and restructuring expenses paid out in 2025, partially offset by,

• *Inventories:* a decrease in cash provided due to cash used to build finished goods inventory in the first quarter of 2026.

***Cash Flows from Investing Activities***

Net cash (used in) provided by investing activities primarily relates to maturities and purchases of investment-grade marketable debt

instruments, and capital expenditures supporting our growth. The decrease in cash provided during the three months ended March 31, 2026,

as compared to the prior year, is primarily due to fewer maturities of marketable securities. We believe our investments in marketable debt

instruments are structured to preserve principal and liquidity while at the same time maximizing yields without significantly increasing risk.

***Cash Flows from Financing Activities***

Net cash used in financing activities for the three months ended March 31, 2026 was higher as compared to the cash used in

financing activities in the prior year, due to higher repurchases of our common stock partially offset by lower net proceeds from the issuance

of common stock as compared to the prior year.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 29

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**Liquidity and Capital Resource Requirements**

We believe that our existing resources and cash generated from our operations will be sufficient to meet our anticipated capital

requirements for at least the next 12 months. However, we may need to raise additional capital or incur additional indebtedness to continue

to fund our operations or to support acquisitions in the future and/or to fund investments in our latest technology arising from rapid market

adoption. These needs could require us to seek additional equity or debt financing. Our future capital requirements will depend on many

factors including the continuing market acceptance of our products, our rate of revenue growth, the timing of new product introductions, the

expansion of our R&D, manufacturing and S&M activities, and the timing and extent of our expansion into new geographic territories. In

addition, we may enter into potential material investments in, or acquisitions of, complementary businesses, services or technologies in the

future which could also require us to seek additional equity or debt financing. Should we need additional liquidity or capital funds, these funds

may not be available to us on favorable terms, or at all.

**Recent Accounting Pronouncements**

Refer to Note 1, "Description of Business and Significant Accounting Policies – Significant Accounting Policies," of the Notes to

Condensed Consolidated Financial Statements in Part I, Item 1, "Financial Statements (unaudited)," of this Quarterly Report on Form 10-Q.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 30

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**Item 3 — Quantitative and Qualitative Disclosures About Market Risk**

Our exposure to market risk may be found primarily in two areas: foreign currency and interest rates.

**Foreign Currency Risk**

Our foreign currency exposures are due to fluctuations in exchange rates for the U.S. dollar ("USD") versus the British pound, Saudi

riyal, Emirati dirham, European euro, Chinese yuan, Indian rupee and Canadian dollar. Changes in currency exchange rates could adversely

affect our consolidated operating results or financial position.

Our revenue contracts have been denominated in the USD. At times, our international customers may have difficulty obtaining

the USD to pay our receivables, thus increasing collection risk and potential bad debt expense.

In addition, we pay many vendors in foreign currency and, therefore, are subject to changes in foreign currency exchange rates. Our

international sales and service operations incur expense that is denominated in foreign currencies. This expense could be materially affected

by currency fluctuations. Our international sales and services operations also maintain cash balances denominated in foreign currencies. To

decrease the inherent risk associated with translation of foreign cash balances into our reporting currency, we do not maintain excess cash

balances in foreign currencies.

We have not hedged our exposure to changes in foreign currency exchange rates because expenses in foreign currencies have been

insignificant to date and exchange rate fluctuations have had little impact on our operating results and cash flows. In addition, we do not

have any exposure to the Russian ruble.

**Interest Rate and Credit Risks** 

The primary objective of our investment activities is to preserve principal and liquidity while at the same time maximizing yields without

significantly increasing risk. We invest primarily in investment-grade short-term and long-term marketable debt instruments that are subject

to counter-party credit risk. To minimize this risk, we invest pursuant to an investment policy approved by the Board. The policy mandates

high credit rating requirements and restricts our exposure to any single corporate issuer by imposing concentration limits.

As of March 31, 2026, our investment portfolio of $42.0 million, in investment-grade marketable debt instruments, such as U.S.

treasury securities, and corporate notes and bonds, are classified as either short-term and/or long-term investments on our Condensed

Consolidated Balance Sheets. These investments are subject to interest rate fluctuations and a decrease in market value to the extent

interest rates increase. To minimize the exposure due to adverse shifts in interest rates, we maintain investments with a weighted average

maturity of approximately six months. As of March 31, 2026, a hypothetical 1% increase in interest rates would have resulted in a less than

$0.2 million decrease in the fair value of our investments in marketable debt instruments as of such date.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 31

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Item 4 — Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, have evaluated

the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the

end of the period covered by this report.

Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of

March 31, 2026, our disclosure controls and procedures were effective.

**Changes in Internal Controls**

There were no changes in our internal control over financial reporting during the period covered by this report that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 32

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**PART II — OTHER INFORMATION**

**Item 1 — Legal Proceedings**

We have been, and may be from time to time, involved in legal proceedings or subject to claims incident to the ordinary course of

business. We are not presently a party to any legal proceedings that we believe are likely to have a material adverse effect on our business,

financial condition, or operating results. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because

of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be

obtained.

**Item 1A — Risk Factors**

Except as noted below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A, "Risk Factors,"

in the 2025 Annual Report.

***Our Water segment revenues largely depend on the construction of new large-scale desalination plants and the retrofit of*** 

***existing desalination plants, and as a result, our operating results have historically experienced, and may continue to experience,*** 

***significant variability due to volatility in capital spending, availability of project financing, project timing, execution, war or other*** 

***hostilities and other factors affecting the broader water desalination industry.***

*We currently derive the majority of our Water segment revenues from sales of energy recovery products and services used in newly* 

*constructed, large-scale desalination plants and the retrofit of existing desalination plants, particularly in dry or drought-ridden regions of the* 

*world. The demand for our products used in the Water segment may decrease if the construction of these large-scale desalination plants or* 

*the retrofit of existing plants declines for any reason, including, any global or regional economic downturns, worsening global or regional* 

*political conflicts, war or other hostilities, such as the 2026 conflict in Iran and escalating tensions in the Middle East, worsening regional* 

*conditions, changing government priorities, or the impact of any global or regional conflicts.* 

*Other factors that could affect the number and capacity of large-scale desalination plants built or the timing of their completion,* 

*include the availability of required engineering and design resources; availability of credit and other forms of financing; the health of the global* 

*economy; inflation rates; changes in government regulation, permitting requirements, or priorities; and reduced capital spending for water* 

*desalination solutions. Each of these factors could result in reduced or uneven demand for our products. Pronounced variability, complete* 

*cancellations or delays in the construction of such plants or reductions in spending for desalination in general could negatively impact our* 

*Water segment sales, which in turn could have an adverse effect on our entire business, financial condition, or results of operations, and* 

*make it difficult for us to accurately forecast our future sales.*

***A sustained downturn in the economy or global unrest could impact the future of new, and the retrofit of existing,*** 

***desalination plants, and the treatment of various wastewater verticals, which could result in decreased demand for our water*** 

***products and services.***

*The demand for our water products and services depends primarily on the continued construction of new large-scale desalination* 

*plants, the retrofit of existing plants, and the construction of wastewater treatment facilities, particularly in the countries that are part of the* 

*Gulf Cooperation Council, China, Taiwan and India. Weak economic conditions, global uncertainty including the continuing conflicts in* 

*Ukraine, the 2026 conflict in Iran and escalating conflicts in the Middle East, as well as the impact of increased inflation resulting from such* 

*conflicts may have a negative economic impact on these and other countries, which may impact the levels of spending on, timing of, delays* 

*to, and availability of, project financing for new desalination and retrofit plant projects. The inability of our customers to secure credit or* 

*financing for these projects, may result in the postponement or cancellation of these projects. In addition, the change in government priorities* 

*and/or their reduction in spending for water treatment projects could result in decreased demand for our products and services, which could* 

*have an adverse effect on our business, financial condition or results of operations.*

***Uncertainty in the global geopolitical landscape and macro-economic environment may impact our operations outside the*** 

***U.S., including in the Middle East where many of our water megaprojects are planned.***

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 33

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

*We conduct our business on a global basis. Our products are sold in numerous countries worldwide, with a large percentage of our* 

*sales generated outside the U.S., specifically in the Middle East and Africa, and Asian markets which provide a significant portion of our total* 

*revenue. Therefore, we are exposed to, and impacted by, global macroeconomic factors, U.S. and foreign government policies, and foreign* 

*exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S. and globally characterized by the supply chain* 

*environment, inflationary pressure, rising interest rates, and labor shortages. These global macroeconomic factors, coupled with the U.S.* 

*political climate, political unrest internationally, and conflicts in Europe and the Middle East, such as the 2026 conflict in Iran and Iran's* 

*response to attacks by the United States and Israel, have created global economic and political uncertainty, and have impacted demand for* 

*certain of our products. While the impact and longevity of these factors remain uncertain, we are constantly evaluating the extent to which* 

*these factors will impact our business, financial condition, or results of operations. Over the long-term, demand for our energy recovery* 

*devices could correlate to global macroeconomic and geopolitical factors. Any disruption to the economic factors and regulations in these* 

*regions, which remain uncertain, may adversely affect our results of operations and financial condition.*

*In addition, there is uncertainty as to the position the U.S. will take with respect to world affairs. This uncertainty may include such* 

*issues as the U.S. support for existing treaty and trade relationships with other countries, including, notably, China, Mexico and Canada. This* 

*uncertainty, together with other recent key global events, such as currency control regulations and tariff regimes, ongoing terrorist activity,* 

*and hostilities in the Middle East, may adversely impact (i) the ability or willingness of non-U.S. companies to transact business with U.S.* 

*companies, including with us; (ii) our ability to transact business in other countries, including the Middle East, where many of the water* 

*megaprojects are planned; (iii) regulation and trade agreements affecting U.S. companies; (iv) global stock markets (including The NASDAQ* 

*Global Select Market Composite on which our common shares are traded); and (v) general global economic conditions. Furthermore, the* 

*conflicts in Europe and the Middle East have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how* 

*these conflicts will evolve or their timing. If these conflicts continue for a significant time or further expand to other countries or regions, they* 

*could have additional adverse effects on macroeconomic conditions that may have a direct adverse impact on our business and/or our supply* 

*chain, business partners or customers in the broader region. All of these factors are outside of our control, but may nonetheless cause us to* 

*adjust our strategy in order to compete effectively in global markets.*

**Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds**

**Unregistered Sales of Equity Securities**

None.

**Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

On August 6, 2025, we announced a share repurchase program (the "August 2025 Authorization"). The following table summarizes

the stock repurchase activity under the August 2025 Authorization during the three months ended March 31, 2026.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number** <br>**of Shares** <br>**Purchased**<br>| **Average Price** <br>**Paid per** <br>**Share**<sup>(1)</sup><br>| **Total Number of** <br>**Shares Purchased** <br>**as Part of Publicly** <br>**Announced** <br>**Program**<br>| **Maximum Number of** <br>**Shares or Approximate** <br>**Dollar Value**<sup>(1)</sup>**That May** <br>**Yet to be Purchased** <br>**Under the Program**<br>|
|  |  |  |  | *(In thousands)* |
| January 1 – January 31, 2026 | 109300 | $14.28 | 109300 | $17820 |
| February 1 – February 28, 2026 | 76153 | $14.66 | 76153 | $16703 |
| March 1 – March 31, 2026 | 774850 | $10.30 | 774850 | $8721 |

---

<sup>(1)</sup> Including commissions

**Item 3 — Defaults Upon Senior Securities**

None.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 34

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Item 4 — Mine Safety Disclosures**

Not applicable.

**Item 5 — Other Information**

***10b5-1 Plans***

During the three months ended March 31, 2026, no director or officer (within the meaning of Rule 16a-1(f) under the Securities

Exchange Act of 1934, as amended) has adopted or terminated a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-

K).

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 35

*[**Table of Contents**](#iacff67f1b0d94ef38e07a01d62853fc0_10)*

**Item 6 — Exhibits**

A list of exhibits filed or furnished with this report or incorporated herein by reference is found in the Exhibit Index below.

---

| | | | |
|:---|:---|:---|:---|
| **Exhibit** <br>**Number** | **Exhibit Description** |  |  |
| **Exhibit** <br>**Number** | **Exhibit Description** | [10.1](a101jpm_energyrecovery-thi.htm) | [Third Amendment to the Credit Agreement by and between Energy Recovery, Inc. as Borrower, and JPMorgan Chase Bank N.A. as Lender](a101jpm_energyrecovery-thi.htm)<br>[dated January 21, 2026](a101jpm_energyrecovery-thi.htm)<br>|
| [31.1](ex311302ceo2026-q1.htm)\* | [Certification of Principal Executive Officer, pursuant to Exchange Act Rule 13a-14(a) or](ex311302ceo2026-q1.htm) [15d-14(a), as adopted pursuant to Section 302 of the](ex311302ceo2026-q1.htm) <br>[Sarbanes-Oxley Act of 2002.](ex311302ceo2026-q1.htm)<br>|  |  |
| [31.2](ex312302cfo2026-q1.htm)\* | [Certification of Principal Financial Officer, pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the](ex312302cfo2026-q1.htm) <br>[Sarbanes-Oxley Act of 2002.](ex312302cfo2026-q1.htm)<br>|  |  |
| [32.1](ex3219062026-q1.htm)\*\* | [Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to](ex3219062026-q1.htm) <br>[Section 906 of the Sarbanes-Oxley Act of 2002.](ex3219062026-q1.htm)<br>|  |  |
| 101 | Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, "Financial Information" of this <br>Quarterly Report on Form 10-Q.<br>|  |  |
| 104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |  |  |

---

\*Filed herewith.

\*\*The certification furnished in [Exhibit 32.1](ex3219062026-q1.htm) is not deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that

section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

Energy Recovery, Inc. \| Q1'2026 Quarterly Report (Form 10-Q) \| 36

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its

behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | **ENERGY RECOVERY, INC.** |
| Date: | May 6, 2026 | By: | /s/ DAVID W. MOON |
|  |  |  | David W. Moon |
|  |  |  | President and Chief Executive Officer |
|  |  |  | (Principal Executive Officer) |
| Date: | May 6, 2026 | By: | /s/ MICHAEL S. MANCINI |
|  |  |  | Michael S. Mancini |
|  |  |  | Chief Financial Officer |
|  |  |  | (Principal Financial Officer) |

---

## Exhibit 10.1

**Exhibit 10.1**

**<u>THIRD AMENDMENT TO CREDIT AGREEMENT</u>**

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "<u>Amendment</u>"), dated as of January 21, 2026, is entered into by and among ENERGY RECOVERY, INC., a Delaware corporation (the "<u>Company</u>", and together with any other Person that becomes a Borrower under the Credit Agreement as defined below) from time to time, each individually, a "<u>Borrower</u>", and collectively, jointly and severally, the "<u>Borrowers</u>"), the other Loan Parties party hereto, and JPMORGAN CHASE BANK, N.A., as Lender (the "<u>Lender</u>"). Unless otherwise specified herein, capitalized terms used in this Amendment shall have the meanings ascribed to them in the Credit Agreement, as applicable, in each case, as hereinafter defined.

WHEREAS, the Company, the other Loan Parties party thereto from time to time and the Lender are parties to that certain Credit Agreement, dated as of December 22, 2021 (as it may be amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the "<u>Existing Credit Agreement</u>"; and the Existing Credit Agreement, as amended by this Amendment, the "<u>Credit Agreement</u>");

WHEREAS, the Company has requested that Lender extend the maturity date of the revolving credit facility and to otherwise amend the Existing Credit Agreement as set forth herein; and

WHEREAS, on the terms and conditions set forth herein, the Lender has agreed to amend the Existing Credit Agreement as set forth herein.

NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound, hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Amendments to Credit Agreement</u>. Subject to the terms and conditions of this Amendment, (a) the Existing Credit Agreement (exclusive of Schedules), is hereby amended in accordance with <u>Annex I</u> hereto by deleting the stricken text (indicated textually in the same manner as the following example: stricken text) and by inserting the double-underlined text (indicated textually in the same manner as the following example: <u>double underlined text</u>), in each case in the place where such text appears therein and (b) the Exhibits to the Credit Agreement are amended and restated in their entirety as set forth in <u>Annex II</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Conditions Precedent to Effectiveness</u>. This Amendment shall become effective upon the satisfaction of each of the following conditions precedent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)the Lender (or its counsel) shall have received a counterpart of this Amendment, signed by the Company, the other Loan Parties and the Lender;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)the Lender (or its counsel) shall have received (i) a certificate of each Loan Party, dated the date hereof and executed by its Secretary or Assistant Secretary or other officer of such Loan Party sufficiently familiar with the books and records of such Loan Party, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party and, in the case of a Borrower, its Financial Officers, and (C) contain appropriate attachments, including the charter, articles or certificate of organization or incorporation of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its bylaws or operating,

1755024456

------

management or partnership agreement, or other organizational or governing documents, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)the Lender shall have received the results of search reports in respect of the intellectual property of the Loan Parties and results of a recent lien search in the jurisdiction of organization of each Loan Party and each jurisdiction where assets of the Loan Parties are located, and such search shall reveal no Liens on any of the assets of the Loan Parties except for liens permitted by <u>Section 6.02</u> of the Credit Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)the Lender shall have received all reasonable and documented out-of-pocket fees required to be paid under the Loan Documents, and all expenses required to be reimbursed for which invoices have been presented (including the reasonable and documented out-of-pocket fees and expenses of legal counsel), on or before the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Representations</u>. Each Loan Party hereby represents and warrants to the Lender that: (a) the execution and delivery of this Amendment and the performance of its obligations hereunder are within each Loan Party's corporate or other organizational powers and have been duly authorized by all necessary corporate or other organizational actions and, if required, actions by equity holders, (b) no Default or Event of Default exists both before and after giving effect to this Amendment, (c) this Amendment has been duly executed and delivered by such Loan Party and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, (d) all Liens created under the Loan Documents continue to be perfected and have priority over all other Liens on the Collateral except in the case of Liens permitted under <u>Section 6.02</u> of the Credit Agreement, to the extent any such Liens would have priority over the Liens in favor of the Lender pursuant to any applicable law, (e) the representations and warranties of the Loan Parties set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects); and (f) the execution and delivery of this Amendment and the performance of its obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (ii) will not violate any Requirement of Law applicable to any Loan Party or any Subsidiary, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or the assets of any Loan Party or any Subsidiary, or give rise to a right thereunder to require any payment to be made by any Loan Party or any Subsidiary, except for such violations or defaults that would not reasonably be expected to have a Material Adverse Effect, and (iv) will not result in the creation or imposition of, or other requirement to create, any Lien on any asset of any Loan Party or any Subsidiary, except Liens permitted pursuant to <u>Section 6.02</u> of the Credit Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Ratification</u>. Except as expressly modified by this Amendment, all of the terms, provisions and conditions of the Credit Agreement, as heretofore amended, shall remain unchanged and in full force and effect. Each Loan Party, as debtor, grantor, pledgor, guarantor, assignor, or in any other similar capacity in which such Person grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under the Credit Agreement and each other Loan Document to which it is a party (after giving effect hereto) and (ii) to the extent such Person granted liens on or security interests in any of its property pursuant to any Loan Documents as security for or otherwise guaranteed the Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens hereafter secure all of the Obligations as amended hereby. Except as herein specifically agreed, the Credit Agreement and each other Loan Document are hereby ratified and confirmed and shall remain in full force and effect according to their terms. Except as specifically set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power, privilege or remedy of the Lender under the Credit Agreement or any of the other Loan Documents, or constitute a

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waiver of any provision of the Credit Agreement or any of the other Loan Documents. This Amendment shall not constitute a course of dealing with the Lender at variance with the Credit Agreement or the other Loan Documents such as to require further notice by such Person to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future. Each Loan Party acknowledges and expressly agrees that the Lender reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Credit Agreement (as expressly modified by this Amendment) and the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)<u>Governing Law</u>. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, but giving effect to federal laws applicable to national banks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)<u>WAIVER OF JURY TRIAL</u>. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR OTHER AGENT (INCLUDING ANY ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)<u>Counterparts; Effectiveness</u>. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Amendment shall become effective as provided in <u>Section 3</u> hereof and when the Lender shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Amendment that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment, such other Loan Document or such Ancillary Document, as applicable. The words "execution," "signed," "signature," "delivery," and words of like import in or relating to this Amendment, such other Loan Document or such Ancillary Document, as applicable shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)<u>Entire Agreement</u>. This Amendment, the other Loan Documents and any separate letter agreements with respect to fees payable to the Lender constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)<u>Severability of Provisions</u>. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)<u>Successors and Assigns</u>. The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted under the Credit Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)<u>Headings</u>. Article and Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)<u>Incorporation</u>. This Amendment shall form a part of the Credit Agreement, and all references to the Credit Agreement shall mean that document as hereby modified. Upon the effectiveness of this Amendment, each reference in the Credit Agreement or any other Loan Document to "this Agreement", "hereunder", "hereof", "herein" or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)<u>Loan Document</u>. This Amendment shall constitute a Loan Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)<u>No Prejudice; No Impairment</u>. This Amendment shall not prejudice, limit, restrict or impair any rights, privileges, powers or remedies of the Lender under the Credit Agreement or any other Loan Documents as hereby amended. The Lender reserves, without limitation, all rights which the Lender has now or in the future against any guarantor or endorser of the Obligations.

*[Signatures Immediately Follow]*

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IN WITNESS WHEREOF, the undersigned have executed this Third Amendment to Credit Agreement as of the date first written above.

**BORROWER:**<br>ENERGY RECOVERY, INC.<br>By:<u>&nbsp;&nbsp;&nbsp;&nbsp;</u><br>Name:&nbsp;&nbsp;&nbsp;&nbsp; <br>Title:&nbsp;&nbsp;&nbsp;&nbsp;<br>

*Signature Page to Third Amendment to Credit Agreement*

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*Signature Page to Third Amendment to Credit Agreement*

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**LENDER:** <br>JPMORGAN CHASE BANK, N.A., as the Lender<br>By:<u>&nbsp;&nbsp;&nbsp;&nbsp;</u><br>&nbsp;&nbsp;&nbsp;&nbsp;Name: <br>&nbsp;&nbsp;&nbsp;&nbsp;Title: <br>

*Signature Page to Third Amendment to Credit Agreement*

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**Annex I**

(*See attached*)

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**Annex II**

(*See attached*)

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*Signature Page to Third Amendment to Credit Agreement*

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER**

**PURSUANT TO EXCHANGE ACT RULE 13a-14(a) OR 15d-14(a), AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, David W. Moon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Energy Recovery, Inc. for the period ended March 31, 2026;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: May 6, 2026 | /s/ DAVID W. MOON | /s/ DAVID W. MOON |
| | Name: | David W. Moon |
| | Title: | President and Chief Executive Officer |
| | | *(Principal Executive Officer)* |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO EXCHANGE ACT RULE 13a-14(a) OR 15d-14(a), AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Michael S. Mancini, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Energy Recovery, Inc. for the period ended March 31, 2026;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: May 6, 2026 | /s/ MICHAEL S. MANCINI | /s/ MICHAEL S. MANCINI |
| | Name: | Michael S. Mancini |
| | Title: | Chief Financial Officer |
| | | *(Principal Financial Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER, PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE**

**SARBANES-OXLEY ACT OF 2002\***

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and Section 1350 of Chapter 63 of Title 18 of the United States Code, David W. Moon, President and Chief Executive Officer of Energy Recovery, Inc., and Michael S. Mancini, Chief Financial Officer of Energy Recovery, Inc., each hereby certify that, to the best of his knowledge:

1.&nbsp;&nbsp;&nbsp;&nbsp;The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2026, to which this Certification is attached as Exhibit 32.1 (the "Quarterly Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2.&nbsp;&nbsp;&nbsp;&nbsp;The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Quarterly Report and results of operations of the Company for the period covered by the Quarterly Report.

IN WITNESS WHEREOF, the undersigned has set his hand hereto:

---

| | |
|:---|:---|
| Date: May 6, 2026 | /s/ DAVID W. MOON |
| | David W. Moon |
| | *President and Chief Executive Officer* |
| Date: May 6, 2026 | /s/ MICHAEL S. MANCINI |
| | Michael S. Mancini |
| | *Chief Financial Officer* |

---

\*&nbsp;&nbsp;&nbsp;&nbsp;This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Energy Recovery, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

<br>