Energy Recovery Inc (ERII) 2023 Q4 法說會逐字稿

Greetings, and welcome to the Energy Recovery fourth-quarter and full-year 2023 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Energy Recovery 第四季和 2023 年全年財報電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, James Siccardi, Vice President of Investor Relations. Thank you. You may begin.

現在我很高興向您介紹主持人，投資者關係副總裁 James Siccardi。謝謝。你可以開始了。

Hello, everyone. And welcome to Energy Recovery’s 2023 fourth-quarter and full-year earnings conference call. My name is Jim Siccardi, Vice President of Investor Relations at Energy Recovery, and I am here today with our President and Chief Executive Officer, David Moon; and our Chief Financial Officer, Joshua Ballard.

大家好。歡迎參加 Energy Recovery 2023 年第四季和全年財報電話會議。我是能源回收公司投資者關係副總裁 Jim Siccardi，今天我和我們的總裁兼執行長 David Moon 一起來到這裡。以及我們的財務長約書亞巴拉德。

During today’s call, we may make projections and other forward-looking statements under the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business, economic and market outlook, growth expectations, new products and their performance, cost structure, and business strategy.

在今天的電話會議中，我們可能會根據 1995 年《私人證券訴訟改革法案》中包含的安全港條款對未來事件或公司未來財務表現做出預測和其他前瞻性陳述。這些陳述可能會討論我們的業務、經濟和市場前景、成長預期、新產品及其性能、成本結構和業務策略。

Forward-looking statements are based on information currently available to us and on management’s beliefs, assumptions, estimates, or projections. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors.

前瞻性陳述是基於我們目前可獲得的資訊以及管理層的信念、假設、估計或預測。前瞻性陳述並非對未來績效的保證，並受到某些風險、不確定性和其他因素的影響。

We refer you to documents the company files from time to time with the SEC, specifically the company’s Form 10-K and Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.

我們建議您參閱本公司不時向 SEC 提交的文件，特別是本公司的表格 10-K 和表格 10-Q。這些文件確定了可能導致實際結果與我們的預測或前瞻性陳述中包含的結果有重大差異的重要因素。

All statements made during this call are made only as of today, February 21, 2024, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law.

本次電話會議期間所發表的所有聲明僅截至今天，即2024 年2 月21 日，本公司明確表示不打算或沒有義務更新本次電話會議期間所做的任何前瞻性聲明以反映後續事件或情況，除非法律另有要求。

At this point, I will turn the call over to our President and Chief Executive Officer, David Moon.

現在，我將把電話轉給我們的總裁兼執行長 David Moon。

Thank you, Jim. First off, I want to thank my fellow Board members for appointing me the permanent CEO. I look forward to working with our shareholders, the Board, my leadership team, and our employees as we enter this phase of Energy Recovery’s growth.

謝謝你，吉姆。首先，我要感謝董事會成員任命我為永久執行長。當我們進入能源回收的這一成長階段時，我期待與我們的股東、董事會、我的領導團隊和員工合作。

I also want to thank Bob Mao for his grace, assistance, and advice these past four months. As we announced today, Josh Ballard has decided to step down at the end of June as our CFO. He and I are working together with Korn Ferry to conduct our CFO search. I want to thank Josh for his commitment to an orderly CFO transition, and for his continued leadership throughout this transition.

我還要感謝毛澤東在過去四個月給予我的恩典、幫助和建議。正如我們今天宣布的那樣，喬什·巴拉德 (Josh Ballard) 決定在 6 月底辭去我們的財務長 (CFO) 職務。他和我正在與光輝國際 (Korn Ferry) 合作尋找財務長。我要感謝喬許對財務長有序過渡的承諾，以及他在整個過渡過程中的持續領導。

He and the Energy Recovery leadership team have given me a great foundation to build on, which is a healthy business with nine years of consecutive revenue growth, a strong balance sheet, and a technology that is showing promise outside of our core desal business. I’m excited to be here and I look forward to our future at Energy Recovery.

他和能源回收領導團隊為我奠定了堅實的基礎，這是一項健康的業務，連續九年的收入增長，強勁的資產負債表，以及在我們的核心海水淡化業務之外顯示出前景的技術。我很高興來到這裡，我對 Energy Recovery 的未來充滿期待。

I have now been in the seat for approximately four months. Over this period, I have taken a deeper dive into our technology and products, our diversification strategy around our pressure exchanger and wastewater technology, and where we are executing that strategy.

我現在擔任這個職位大約已經四個月了。在此期間，我更深入地了解了我們的技術和產品、圍繞壓力交換器和廢水技術的多元化策略，以及我們正在執行該策略的領域。

I have a better understanding of our markets and customers, where we sit in the product development cycle and commercialization of these new products, as well as the challenges ahead of us.

我對我們的市場和客戶、我們在產品開發週期和這些新產品的商業化中所處的位置以及我們面臨的挑戰有了更好的了解。

I would like to start with a few observations and how I will approach this role. First, to be clear, my number one focus is to rebuild the shareholder value that we've seen decline in recent months and then to grow it further. There is nothing more important than creating stability, rebuilding trust with shareholders, and showing that we can deliver on the full potential of our pressure exchanger technology.

我想先談談一些觀察以及我將如何扮演這個角色。首先，需要明確的是，我的首要關注點是重建近幾個月來下降的股東價值，然後再進一步成長。沒有什麼比創造穩定性、重建股東信任以及表明我們能夠充分發揮壓力交換技術的潛力更重要的了。

We with start with delivering on an orderly CFO transition. We must also execute, and therefore, deliver on our 2024 financial targets, or walk the talk as I like to say. We have challenges, but I believe we can create true value for our shareholders in the coming years.

我們首先要實現財務長的有序過渡。我們還必須執行並因此實現我們的 2024 年財務目標，或者正如我想說的那樣，言出必行。我們面臨挑戰，但我相信我們可以在未來幾年為股東創造真正的價值。

Second, I've had extensive discussions with many of you and heard your opinions regarding the CEO transition. I assure you that your voices have been heard loud and clear, and your concerns have been communicated directly to the Board.

其次，我與你們中的許多人進行了廣泛的討論，並聽取了你們對CEO過渡的意見。我向您保證，您的聲音已被響亮而清晰地聽到，您的擔憂已直接傳達給董事會。

Third, this is a strong team, and I could not be more excited to lead it. Everyone has rolled up their sleeves and jumped into make the transition as smooth as possible, have been consummate professionals throughout, have kept the company moving forward, have signed numerous water customer contracts, continued to produce industry-leading products, and showed what the good teams do during moments of transition, adapt, and come together.

第三，這是一支強大的團隊，領導這支團隊我感到非常興奮。每個人都捲起袖子，投入到盡可能順利的過渡中，自始至終都是完美的專業人士，使公司不斷前進，簽署了眾多水務客戶合同，持續生產行業領先的產品，並展示了良好的品質團隊在過渡時刻會做、適應並團結起來。

Fourth, the company’s strategy of PX diversification and growth is the right strategy in my and the Board’s opinion. It is critical to Energy Recovery’s future, as well as to our ability to rebuild and grow shareholder value, that we continue to grow and diversify our business around our incredible pressure exchanger and intellectual property that creates value for our customers by recovering otherwise wasted energy in desal, wastewater, and now CO2 refrigeration.

第四，我和董事會認為，公司的 PX 多元化和成長策略是正確的策略。對於Energy Recovery 的未來以及我們重建和增加股東價值的能力至關重要，我們圍繞我們令人難以置信的壓力交換器和知識產權繼續發展和多元化我們的業務，透過恢復其他方式為我們的客戶創造價值海水淡化、廢水處理以及現在的二氧化碳冷凍都浪費了能源。

However, we must now do the deep work to develop our 2025 to 2029 strategic plan, or what I call our Playbook. With this Playbook, I will be able to clearly communicate what and where our growth targets will be in the desal, wastewater, and CO2 verticals, as well as the critical actions and milestones needed to achieve these targets.

然而，我們現在必須深入工作，制定 2025 年至 2029 年策略計劃，或我所說的「行動手冊」。透過這本手冊，我將能夠清楚地傳達我們在海水淡化、廢水和二氧化碳垂直領域的成長目標是什麼以及在哪裡，以及實現這些目標所需的關鍵行動和里程碑。

This Playbook will also clearly identify what our cash requirements will be to fund our growth going forward. Rest assured, though, we will continue to spend wisely and be mindful of the need to generate strong returns on investments.

本手冊也將明確確定我們的現金需求，以資助我們未來的成長。不過，請放心，我們將繼續明智地支出，並注意產生豐厚投資回報的必要性。

Our Playbook will focus on maintaining our market leadership in desal, as well as on executing in the wastewater verticals where we see the most potential growth, including wastewater treatment for lithium battery manufacturing, chemicals, municipal water, as well as CO2 commercial refrigeration.

我們的行動手冊將重點放在保持我們在海水淡化領域的市場領先地位，以及在我們認為最具成長潛力的廢水垂直領域執行，包括鋰電池製造、化學品、市政供水以及二氧化碳商業冷凍的廢水處理。

I also see derivative verticals where I believe our wastewater and CO2 refrigeration products could be applicable, however, more work needs to be done here to understand and prioritize these many other verticals.

我還看到了衍生垂直領域，我相信我們的廢水和二氧化碳冷凍產品可以適用，但是，這裡需要做更多的工作來理解和優先考慮這些許多其他垂直領域。

Fifth, I remain committed to sustainability in the products we develop and produce, as well as in our internal operations and how we produce those products. Sustainability is a critical piece of our DNA and will remain part of our strategy going forward.

第五，我仍然致力於我們開發和生產的產品以及我們的內部營運和生產這些產品的方式的可持續性。永續發展是我們 DNA 的重要組成部分，並將繼續成為我們未來策略的一部分。

And finally, Energy Recovery remains in a variable -- in a very enviable position financially. We continue to generate cash and we expect to see our cash position to grow in 2024, even while we invest in growth, which Josh will describe to you.

最後，能源回收仍然是一個變數——在財務上處於非常令人羨慕的地位。我們將繼續產生現金，並且預計我們的現金狀況將在 2024 年增長，即使我們投資於成長，喬希將向您描述這一點。

We will need to make decisions on how to deploy this growing cash position with the same financial and commercial focus that we have instilled in Energy Recovery for the past few years. Rest assured, though, I share Josh’s vision of expanding our EBITDA margin as we grow in these new verticals.

我們需要就如何部署這一不斷增長的現金頭寸做出決策，並以過去幾年我們在能源回收領域所灌輸的同樣的金融和商業重點。不過，請放心，我同意 Josh 的願景，隨著我們在這些新垂直領域的發展，擴大我們的 EBITDA 利潤率。

So where I sit today, I believe the fundamental pieces of Energy Recovery’s overall vision and diversification strategy will remain in place. We must continue to defend and strengthen our position in desal. We must accelerate growth in wastewater.

因此，在我今天的座席上，我相信 Energy Recovery 的整體願景和多元化策略的基本部分將保持不變。我們必須繼續捍衛並加強我們在海水淡化領域的地位。我們必須加速廢水排放量的成長。

And where my experience and strengths come to bear, we must define in more detail what the best market and distribution strategy is to deliver our PX G to supermarkets. Successful execution here has the potential to open doors to other vertical opportunities in the coming years, but we must first be laser focused on the task at hand.

根據我的經驗和優勢，我們必須更詳細地定義向超市提供 PX G 的最佳市場和分銷策略。這裡的成功執行有可能在未來幾年為其他垂直機會打開大門，但我們必須先專注於手邊的任務。

In short, I think, you can see that while we will certainly see changes at Energy Recovery, the fundamental principles that have attracted so many of you to our company for these past years remain in place.

簡而言之，我認為，您可以看到，雖然我們肯定會看到能源回收領域的變化，但過去幾年吸引了這麼多人加入我們公司的基本原則仍然存在。

Now, with that, let’s get into our update, and as usual, we will start with water. We delivered growth in our desal business for the ninth consecutive year in 2023. Now this growth was slower than we would have liked due to delay -- single -- a delay in a single $8 million project in India, which Josh highlighted as a specific risk last quarter. That project is now slated to ship in 2024. Due to this slippage, we came in at approximately $128 million in revenue.

現在，讓我們開始我們的更新，像往常一樣，我們將從水開始。2023 年，我們的海水淡化業務連續第九年實現成長。現在，由於印度一個 800 萬美元項目的延遲，這一增長速度比我們希望的要慢，喬希在上個季度強調了這一特定風險。該項目目前計劃於 2024 年交付。由於這種下滑，我們的營收約為 1.28 億美元。

Now despite this shipment moving into this year, we are holding our revenue water guidance of $140 million to $150 million for 2024. While this India project will increase our revenue for the year, since our last earnings call, we have had two projects in Saudi Arabia shift to 2025, that together, offset this increase by India.

現在，儘管今年發貨，我們仍將 2024 年水收入指引維持在 1.4 億至 1.5 億美元。雖然這個印度項目將增加我們今年的收入，但自上次財報電話會議以來，我們在沙烏地阿拉伯的兩個項目已轉移到 2025 年，這抵消了印度的收入成長。

In addition, we have several projects shipping in December that based on our experience in 2023, pose some timing risk. And although my team has identified some potential mitigation approaches for this risk, I'm still getting my hands around our project-based water business and prefer to remain conservative. We will tighten up this guidance throughout the year as more is known.

此外，根據我們 2023 年的經驗，我們有幾個項目將於 12 月發貨，這會帶來一些時機風險。儘管我的團隊已經確定了一些潛在的緩解這種風險的方法，但我仍在處理基於專案的水務業務，並且更願意保持保守。據了解，我們將在全年加強這項指導。

Note that our wastewater guidance of $12 million to $15 million remains unchanged, which means our overall guidance points to between roughly 10% to 17% growth for the whole of our water business this year.

請注意，我們 1200 萬至 1500 萬美元的廢水指導保持不變，這意味著我們的總體指導表明今年整個水業務的增長約為 10% 至 17%。

We also have some great things happening underneath the hood. First, roughly 50% of our desal mega project revenue will come from our Q400, our newest and most efficient energy recovery device. We are extremely proud of this fact as our initial projections were to achieve only 25% of revenue this year from the Q400.

我們還在幕後發生了一些很棒的事情。首先，我們約 50% 的海水淡化大型專案收入將來自我們最新、最高效的能源回收設備 Q400。我們對此感到非常自豪，因為我們最初的預測是今年 Q400 的收入僅佔 25%。

Not only should we achieve 50% this year, but we believe the Q400 could be as much as 75% of our revenue in 2025. The resounding success of the Q400, which was only introduced to the market in late 2022, is proof that we are continuing to innovate and show leadership in the desal space.

我們不僅今年應該實現 50%，而且我們相信 Q400 可能會在 2025 年占我們收入的 75%。Q400 於 2022 年底才推向市場，取得了巨大成功，證明了我們在海水淡化領域的持續創新和領先地位。

Second, if we hit our waste -- our guidance in wastewater, this implies wastewater could double in 2024 and be up to 10% of our overall water revenue after only our third year pursuing diversification into wastewater.

其次，如果我們減少浪費——我們對廢水的指導，這意味著廢水可能會在 2024 年翻一番，並在我們追求廢水多元化的第三年之後達到我們總水收入的 10%。

To-date, we have generated revenue from 16 different industry verticals in wastewater. We have 12 industries in our pipeline exceeding $1 million each in potential revenue. We are tracking projects in over 30 countries. And, importantly, more than a quarter of our pipeline (technical difficulty) few years away for us. We consider our wastewater business a resounding success that highlights the versatility of the PX, as well as the acceptance of our value proposition outside of desal.

迄今為止，我們已從 16 個不同的廢水垂直產業中獲得了收入。我們正在規劃 12 個產業，每個產業的潛在收入超過 100 萬美元。我們正在追蹤 30 多個國家的項目。而且，重要的是，我們的管道（技術難度）的四分之一以上還需要幾年的時間。我們認為我們的廢水處理業務取得了巨大成功，凸顯了 PX 的多功能性，以及我們在海水淡化之外的價值主張的接受度。

Now as you might expect, to tackle 16 different wastewater industry verticals takes resources and products that potentially can be unique to each vertical. Our Playbook will prioritize those verticals to ensure greater probabilities of success, financial return, and customer satisfaction. More to come here.

現在，正如您所料，要解決 16 個不同的廢水行業垂直行業，所需的資源和產品對於每個垂直行業可能都是獨一無二的。我們的行動手冊將優先考慮這些垂直領域，以確保更大的成功機率、財務回報和客戶滿意度。還有更多要來這裡。

Our water business remains firmly entrenched in a global secular upward trend in water demand and our confidence in this business has not changed. We continue to innovate and to provide a compelling argument for our product offering in the marketplace.

我們的水務業務仍然牢牢地立足於全球水需求的長期上升趨勢，我們對這項業務的信心沒有改變。我們不斷創新，為我們在市場上提供的產品提供令人信服的論點。

As you all know, there is simply not enough freshwater in the world today. The world is beginning to understand that to address these freshwater challenges, we must reuse the water that we have, which our wastewater products address, and that desal is critical to providing new freshwater capacity at scale, which our desal products address.

眾所周知，當今世界根本沒有足夠的淡水。世界開始意識到，為了應對這些淡水挑戰，我們必須重複利用現有的水，這就是我們的廢水產品所解決的問題，而脫鹽對於大規模提供新的淡水能力至關重要，這也是我們的脫鹽產品所解決的問題。

Now let’s move to our CO2 business. This year, our focus for the CO2 business unit is to gain market penetration in OEM’s and supermarkets through increased site validations. This will allow us to continue stress testing a greater number of PX Gs in the field in varied climates and operating conditions while validating and fine tuning our value proposition.

現在讓我們轉向我們的二氧化碳業務。今年，我們二氧化碳業務部門的重點是透過加強現場驗證來獲得 OEM 和超市的市場滲透率。這將使我們能夠在不同的氣候和操作條件下繼續對更多的 PX G 進行現場壓力測試，同時驗證和微調我們的價值主張。

One thing we learned during PX G field testing in 2023 was that we were seeing some operating issues that needed to be addressed. I temporarily slowed the PX G rollout in late Q4 2023 to allow our engineering team sufficient time to apply these learnings to upgrade the PX G to address these issues.

我們在 2023 年 PX G 現場測試中了解到的一件事是，我們發現了一些需要解決的操作問題。我在 2023 年第四季末暫時放慢了 PX G 的推出，以便我們的工程團隊有足夠的時間應用這些知識來升級 PX G 以解決這些問題。

Our second generation PX G is now being tested in our lab with very positive results and will be deployed to field validation sites in Europe and the US in the second quarter. This second generation PX G is a drop-in replacement for the first generation and also makes for a more reliable and quieter PX G. In addition, we have designed a more streamlined and cost-effective skid for retrofits in the field.

我們的第二代 PX G 目前正在實驗室進行測試，取得了非常積極的結果，並將於第二季部署到歐洲和美國的現場驗證站點。第二代 PX G 是第一代的直接替代品，並且使 PX G 更可靠、更安靜。此外，我們還為現場改造設計了更精簡且更具成本效益的撬裝裝置。

We have two critical milestones to achieve in 2024 with this next -- with this second generation PX G to move forward with a broader commercialization in 2025. The first milestone is the successful completion of testing in our internal labs in Q2 2024. We are encouraged by the results thus far. The second milestone is successful installation, operations, and third-party validation of the 30 to 50 additional validation sites by Q4 2024.

我們在 2024 年要實現兩個重要的里程碑，即第二代 PX G 將在 2025 年實現更廣泛的商業化。第一個里程碑是 2024 年第二季在我們的內部實驗室成功完成測試。迄今為止的結果令我們感到鼓舞。第二個里程碑是到 2024 年第四季成功安裝、營運和第三方驗證 30 到 50 個額外的驗證站點。

Now as a reminder, supermarkets are very conservative when it comes to adopting disruptive technology, especially large chains with billions of dollars of existing refrigeration infrastructure. We must take the time and pay our dues to perform extensive field validation while continuing to work with end users, OEMs, and engineering firms.

現在提醒一下，超市在採用顛覆性技術方面非常保守，尤其是擁有數十億美元現有冷凍基礎設施的大型連鎖店。我們必須花時間並付出代價來進行廣泛的現場驗證，同時繼續與最終用戶、原始設備製造商和工程公司合作。

However, we have several things on our side. Number one, growing relationships with new influential supermarkets customers in the US and Europe, who are marquee national and international chains. Repeat orders with existing supermarkets, such as Vallarta and Carrefour. Recent EPA legislation in the US, the AIM Act, and EU F-Gas Regulations, have accelerated the phase-out of HFC’s thereby putting the pressure on supermarkets and its supply chain to begin serious planning to convert refrigeration infrastructure to natural refrigerants like CO2.

然而，我們有幾件事是有利的。第一，與美國和歐洲新的有影響力的超市客戶（他們是大型國內和國際連鎖超市）不斷發展關係。重複向現有超市（例如 Vallarta 和家樂福）訂購。美國 EPA 最近的立法、AIM 法案和歐盟含氟氣體法規加速了 HFC 的淘汰，從而給超市及其供應鏈帶來壓力，要求他們開始認真規劃將製冷基礎設施轉換為天然冷媒像二氧化碳一樣。

Number four, a historical track record of successful supermarket industry adoption of past disruptive technologies such as aluminum coils, ejectors, and others. And number five, two years of PX G field testing in extreme operating conditions, which has led to the second generation PX G and provided a prioritized list of upgrades and improvements for future generation PX Gs.

第四，超市業成功採用過去顛覆性技術（如鋁捲、噴射器等）的歷史紀錄。第五，在極端操作條件下進行了兩年的 PX G 現場測試，這催生了第二代 PX G，並為下一代 PX G 提供了升級和改進的優先事項清單。

Now my experience in this industry has taught me that when introducing a disruptive technology like the PX G into this market on a broader scale, reliability is of the utmost importance to end users and that’s why we must be more deliberate and conservative, spending the necessary time to validate the product in the lab and the field while developing relationships with the industry stakeholders such as supermarkets, OEMs, major contractors, and engineering firms.

現在，我在這個行業的經驗告訴我，當更廣泛地將 PX G 這樣的顛覆性技術引入這個市場時，可靠性對最終用戶來說至關重要，這就是為什麼我們必須更加謹慎和保守，花費必要的時間在實驗室和現場驗證產品，同時與超市、原始設備製造商、主要承包商和工程公司等行業利益相關者建立關係。

A new product introduction must be -- must provide a seamless installation experience, must be operationally reliable and repeatable across varied regions and contractors. If we have done our job successfully, we will be invisible to the supermarket site manager, especially in the summer months.

新產品的推出必須－必須提供無縫的安裝體驗，必須在不同地區和承包商之間運作可靠且可重複。如果我們成功地完成了我們的工作，超市現場經理將看不到我們，尤其是在夏季。

As part of our Playbook development, we are moving towards a more standardized PX G that will allow future generation PX Gs to be a drop-in or plug-and-play of the refrigeration rack. We believe this more standardized version, which is closer to what supermarkets and OEM’s are more comfortable with, will provide a more seamless option to further accelerate the rate at which we can penetrate the market. Our initial step to this plug-and-play element is with the second generation PX G.

作為 Playbook 開發的一部分，我們正在朝著更標準化的 PX G 邁進，這將使下一代 PX G 成為冷藏架的插入式或即插即用型。我們相信，這個更標準化的版本更接近超市和 OEM 的需求，將提供更無縫的選擇，進一步加快我們滲透市場的速度。我們邁向這即插即用元素的第一步是使用第二代 PX G。

Looking forward, our focus for 2024 is to deploy at least 30 to 50 PX Gs between North America and Europe. However, because I intentionally slowed our PX G progress to allow for the second generation PX G to be launched, we are more likely to be closer to 30 validations sites.

展望未來，我們 2024 年的重點是在北美和歐洲之間部署至少 30 至 50 台 PX G。然而，因為我故意放慢了 PX G 的進度，以便推出第二代 PX G，所以我們更有可能接近 30 個驗證網站。

When it comes to selecting validation sites, we are focusing on quality versus quantity. This will provide us the critical mass we need for validation purposes and puts us in a good position to achieve the second critical milestone in Q4. And by the time we get to the first-quarter earnings call, I will be able to better define the number of validation sites for 2024.

在選擇驗證網站時，我們關注的是品質而不是數量。這將為我們提供驗證所需的臨界質量，並使我們處於有利位置，以實現第四季度的第二個關鍵里程碑。當我們召開第一季財報電話會議時，我將能夠更好地定義 2024 年驗證站點的數量。

So to sum up, the operational deliverables that I have put in place for 2024 are as follows: maintain and grow our dominant position in desal; grow our wastewater business to $12 million to $15 million in revenue; install 30 to 50 second gen PX G units across North America and Europe; and to deliver on our full-year revenue guidance of $140 million to $150 million.

綜上所述，我為 2024 年制定的營運可交付成果如下： 維持並發展我們在海水淡化領域的主導地位；將我們的廢水業務收入增加到 1200 萬至 1500 萬美元；在北美和歐洲安裝 30 至 50 台第二代 PX G 裝置；並實現我們 1.4 億至 1.5 億美元的全年收入指引。

With that, let me hand the call over to Josh to update you on our financials.

接下來，讓我把電話轉給喬什，向您介紹我們的最新財務狀況。

Thanks, David, and good afternoon, everyone. I want to start off by saying how much I have enjoyed my nearly six years here at Energy Recovery. As I will get into shortly, Energy Recovery is financially in very good shape, and I feel really positive about the company’s future.

謝謝大衛，大家下午好。首先我想說的是我在 Energy Recovery 工作的近六年是多麼愉快。正如我稍後將介紹的，Energy Recovery 的財務狀況非常良好，我對公司的未來感到非常樂觀。

Before I get to that, I want to make clear that I have been in full support of David since he made the decision to put his hat in the ring for CEO and I’m pleased the Board thought the same. David has done a great job right out the gate and it’s frankly been really enjoyable working with him. This is a decision I personally came to some time ago, which was unrelated to who our future CEO would be.

在此之前，我想明確表示，自從 David 決定競選執行長以來，我一直全力支持他，我很高興董事會也有同樣的想法。大衛一開始就做得非常出色，坦白說，與他一起工作真的很愉快。這是我個人不久前做出的決定，與我們未來的執行長是誰無關。

Now that we have our CEO, I decided it was the right time to formalize my plans. It is important to both David and I that we have a smooth transition and I look forward to fully supporting David with the CFO search process and with the upcoming transition.

現在我們有了首席執行官，我認為現在是正式製定我的計劃的最佳時機。對 David 和我來說，順利過渡非常重要，我期待在 CFO 搜尋流程和即將到來的過渡中全力支持 David。

Now, I’ll turn to our financial results, and as usual, we’ll start with revenue. First, I’d like to close the loop on some of my commentary from last quarter. We mentioned three risks to revenue from projects shipping to Israel, Algeria, and India. We were able to ship off all projects to Israel and Algeria successfully within the quarter and of the highlighted risks only the India project of $8 million was delayed to this year.

現在，我將談談我們的財務業績，像往常一樣，我們將從收入開始。首先，我想結束我上個季度的一些評論。我們提到了運往以色列、阿爾及利亞和印度的項目帶來的三個收入風險。我們能夠在本季度內成功地將所有項目運送到以色列和阿爾及利亞，在突出的風險中，只有 800 萬美元的印度項目被推遲到今年。

Despite achieving slightly lower revenue than projected in 2023, we had a great fourth quarter, a record one as a matter of fact. We recognized 35% more revenue than our previous highest quarter in Q4 2022. The team continues to prove that we can operationally handle higher and higher volumes, and I’m confident that they can handle our substantial volume in the second half of this year as well.

儘管我們實現的收入略低於 2023 年的預期，但我們在第四季度的表現非常出色，事實上是創紀錄的。我們確認 2022 年第四季的營收比之前最高季度增加了 35%。團隊不斷證明我們能夠在營運上處理越來越多的產量，我相信他們也能夠在今年下半年處理我們的大量產量。

Notably, our Middle East and Africa revenue fell for the first time in 2023 from $86 million to $77 million. This reduction was driven by our Middle East business, which fell to 37% of revenue in 2023, down from 56% in 2022, driven from temporary declines in sales to Saudi Arabia.

值得注意的是，我們的中東和非洲收入在 2023 年首次下降，從 8,600 萬美元降至 7,700 萬美元。這一減少是由我們的中東業務推動的，由於對沙烏地阿拉伯的銷售暫時下降，該業務佔收入的比例從 2022 年的 56% 降至 2023 年的 37%。

Although Middle East sales are rebounding to similar levels this year as we saw in 2022, growth in the region will likely slow in the coming years and other regions of the world will continue to show strength. Algeria is the real story of 2023, increasing from little over $4 million in 2022 to over $23 million last year.

儘管今年中東銷售額反彈至與 2022 年類似的水平，但該地區的成長在未來幾年可能會放緩，而世界其他地區將繼續表現強勁。阿爾及利亞是 2023 年的真實故事，從 2022 年的略高於 400 萬美元增加到去年的超過 2300 萬美元。

Although we forecast less activity in Algeria this year, as we have mentioned North Africa is expected to remain a strong source of revenue in the upcoming years. This year we are expecting substantial revenue from Morocco, and we currently see potentially strong revenues in Algeria and Egypt in 2025.

儘管我們預計今年阿爾及利亞的活動較少，但正如我們所提到的，北非預計在未來幾年仍將是一個強勁的收入來源。今年，我們預計摩洛哥將帶來可觀的收入，目前我們預期阿爾及利亞和埃及的收入在 2025 年可能會強勁。

Both our Asia and Americas businesses continued to expand in 2023 as well. Asia grew 23%, also reaching over 24% of revenue from 20% in 2022. This was driven by growth of over 100% in China and a substantial bump from South Korea.

我們的亞洲和美洲業務在 2023 年也持續擴張。亞洲成長了 23%，佔營收的比例也從 2022 年的 20% 達到了 24% 以上。這是由中國超過 100% 的成長和韓國的大幅成長所推動的。

India, another growth country for us, ended weaker due to the shifting of that project in the fourth quarter, but had our planned India project shipped, Asia would have almost reached 30% of revenue last year. The Americas grew 77% from $8.6 million to over $15 million in 2023, driven by strength in Chile in particular, as well as some Caribbean Island nations such as the Bahamas and the Dominican Republic.

印度是我們的另一個成長國家，由於第四季度該項目的轉移，其收盤表現疲軟，但如果我們計劃的印度項目發貨，亞洲將幾乎達到去年收入的 30%。美洲地區的銷售額成長了 77%，從 860 萬美元成長到 2023 年的 1,500 萬美元以上，這主要得益於智利以及巴哈馬和多明尼加共和國等一些加勒比海島國的強勁成長。

This growth in regions outside of the Middle East continues to hit home the underlying shift occurring in our revenues that I have mentioned in the past. We expect the Middle East to remain strong in the coming years, and for example, it is rebounding back to similar levels this year as we saw in 2022.

中東以外地區的成長繼續反映了我過去提到的我們收入中發生的根本變化。我們預計中東地區在未來幾年將保持強勁，例如，今年將反彈至與 2022 年類似的水平。

However, growth in the Middle East will likely slow in the coming years and other regions of the world will continue to show strength. This dynamic creates two risks for us that we must watch as we look forward in our water forecasts, in particular in desalination.

然而，未來幾年中東的成長可能會放緩，而世界其他地區將繼續表現強勁。這種動態為我們帶來了兩個風險，我們在展望水資源預測時必須注意這些風險，特別是在海水淡化方面。

I have touched upon these themes separately in prior quarters but want to summarize here for clarity. First, any slowdown in our Middle East business should be offset by growth in other regions. We could see an imbalance during this shift in growth from the Middle East to other regions that could cause a slowdown in growth or even a temporary dip in a given year despite long-term trends remaining firmly in place.

我在前幾個季度分別談到了這些主題，但為了清楚起見，我想在這裡總結一下。首先，我們中東業務的任何放緩都應該被其他地區的成長所抵消。我們可能會看到成長從中東轉移到其他地區的過程中出現不平衡，這可能會導致成長放緩，甚至在某一年出現暫時下滑，儘管長期趨勢仍然牢固。

Second, some of these new and upcoming regions may pose short-term risk to our forecasts, especially with regards to project timing and potential delays, such as we experienced last year. We will need to factor this risk into our projections and guidance and one reason why you see us taking some caution in our forecast this year.

其次，其中一些新的和即將到來的地區可能會對我們的預測構成短期風險，特別是在專案時間和潛在延誤方面，就像我們去年經歷的那樣。我們需要將這種風險納入我們的預測和指導中，這也是您認為我們在今年的預測中採取謹慎態度的原因之一。

Our sales are once again heavily weighted to the second half of the year and 40% of our mega projects in the third and fourth quarters are shipping out to emerging markets such as Morocco and India that pose a higher risk to timing than do those countries more established in desalination in the Middle East.

我們的銷售再次重點關注下半年，第三季和第四季的大型專案中有 40% 運往摩洛哥和印度等新興市場，這些市場的時機風險比這些國家更高在中東設立海水淡化公司。

To wrap up revenue, our projections for the first half of this year largely remain the same as I mentioned last quarter, although I will tighten our first quarter forecast to between $10 million to $13 million. We will give an update on Q2 and the second half of the year at our next call.

總結收入，我們對今年上半年的預測基本上與我上季度提到的相同，儘管我將第一季的預測收緊至 1000 萬美元至 1300 萬美元之間。我們將在下次電話會議上提供第二季和下半年的最新情況。

With regards to gross margin, we ended the year beating our guidance by about 80 basis points. Our gross margin forecast for water remains unchanged in 2024 at 64% and 67%. The cause of our wider forecast range is related to the launch of our new Q400. We are moving into volume production and will be dialing in our material and labor costs as we do so. Therefore, we are being cautiously conservative in our forecast as we start the year. I believe there is potential upside here, which is reflected in the higher end of our range.

就毛利率而言，我們年底的毛利率比預期高出約 80 個基點。我們對 2024 年水務毛利率的預測保持不變，分別為 64% 和 67%。我們預測範圍擴大的原因與我們新Q400的推出有關。我們正在進入批量生產，並將在此過程中調整我們的材料和勞動力成本。因此，我們在年初的預測中持謹慎保守的態度。我相信這裡有潛在的上漲空間，這反映在我們範圍的高端。

While we are seeing another year of margin decline regardless of the Q400, as I’ve mentioned before, this is due to inflation catching up to us which we’ve been predicting for some time. As long as we can reasonably grow ASPs in line with normalized inflation in the coming years, and we keep a firm focus on managing growing manufacturing costs, my full expectation is that we should see our water gross margin begin to move back up to the 68% to 70% range over the next couple of years.

正如我之前提到的，無論 400 季度的情況如何，我們都將看到利潤率再次下降，這是由於通貨膨脹正在追趕我們，而我們已經預測了一段時間了。只要我們能夠根據未來幾年的正常通膨合理增長平均售價，並且我們堅定地專注於管理不斷增長的製造成本，我的全部期望是我們應該看到我們的水毛利率開始回升至 68未來幾年，這一數字將在% 到70% 之間變化。

Our OpEx came in at the lower end of our guidance at $68 million or 53% of revenue, which includes nearly $1 million of one-time expenses related to the recruiting of Board members and the transition to the new CEO. Excluding those one-time expenses, our base recurring operating expense grew about 7.5% despite fairly high labor inflation last year.

我們的營運支出處於我們指導的下限，為 6800 萬美元，佔收入的 53%，其中包括與招聘董事會成員和向新首席執行官過渡相關的近 100 萬美元一次性費用。排除這些一次性費用，儘管去年勞動力通膨率相當高，但我們的基本經常性營運費用增加了約 7.5%。

Our goal this year is to increase our base recurring OpEx by 7% to 10%, which excludes any one-time transition costs that are not entirely known related to our announced changes to the executive team. Most of this increase will be driven by three factors: first, we project growing sales and marketing spend by 20% to 25%; second, G&A will grow 3% to 5% largely driven by increased spend related to CEO compensation, the CFO transition, and other executive-related costs; finally note that, roughly half the growth in OpEx this year will come from share-based compensation.

我們今年的目標是將基本經常性營運支出增加 7% 至 10%，其中不包括與我們宣布的執行團隊變動相關的任何一次性過渡成本。這一成長大部分由三個因素驅動：首先，我們預期銷售和行銷支出將成長 20% 至 25%；其次，一般行政費用將增加 3% 至 5%，主要是由於與執行長薪酬、財務長過渡以及其他高階主管相關成本相關的支出增加；最後請注意，今年營運支出成長的大約一半將來自股權激勵。

If we take the mid-point of our revenue guidance for the year, these assumptions would put us at 50% to 52% of revenue for the year and at the high end of our growth we could fall below 50%. If we look one layer down, I’m very comfortable on the trajectory of our spend versus where we want to be in the next three years.

如果我們採用今年營收指引的中點，這些假設將使我們佔全年營收的 50% 至 52%，而在成長的高端，我們可能會跌至 50% 以下。如果我們向下看，我對我們的支出軌跡與未來三年的目標感到非常滿意。

First, again taking the mid-point of our guidance, if we look at our expense components as a percentage of revenue, we continue to see progress. We are seeing a reduction of G&A from 22% of revenue in 2023 to under 21% in 2024. We see a similar trend in R&D with a reduction from 13% to 12%. And with the faster growth in sales and marketing spend, we see that increase from 17% to between 18% and 19% of revenue this year.

首先，再次以我們指導的中點為例，如果我們將費用組成部分視為收入的百分比，我們將繼續看到進展。我們預計 G&A 佔收入的比例將從 2023 年的 22% 減少到 2024 年的 21% 以下。我們在研發方面也看到了類似的趨勢，從 13% 減少到 12%。隨著銷售和行銷支出的更快成長，我們預計今年該支出佔收入的比例將從 17% 增加到 18% 至 19%。

So in short, excluding any one-time transition costs this year, we continue to see reductions in spend as a percentage of revenue in G&A and R&D, and a temporary increase in sales and marketing as compared to revenue, which should be lowered as we either begin to hit our revenue growth stride in the next one year or two years, or we begin to lower spend because we have not. This is what I have expected and previously described.

因此，簡而言之，排除今年的任何一次性過渡成本，我們繼續看到G&A 和研發支出佔收入的百分比有所下降，而銷售和營銷與收入相比則暫時增加，隨著我們的發展，銷售和行銷支出應該會降低。要么在未來一年或兩年內開始實現我們的收入成長步伐，要么我們開始降低支出，因為我們還沒有這樣做。這是我所預料和之前所描述的。

Finally, I want to comment on our cash position. We increased our cash and investments by roughly $30 million in 2023, ending the year at $122 million. We currently expect to end this year between $140 million to $150 million in cash and investments, and depending on collections from Q4, we could exceed $175 million by the end of the first quarter in 2025.

最後，我想評論一下我們的現金狀況。2023 年，我們的現金和投資增加了約 3,000 萬美元，年底達到 1.22 億美元。目前，我們預計今年年底現金和投資將達到 1.4 億至 1.5 億美元，根據第四季的收款情況，到 2025 年第一季末，我們的現金和投資可能會超過 1.75 億美元。

Note that we will see cash dip somewhat during the year, especially in Q2, as revenues decrease in these initial quarters. In addition, as we saw last year, we will be building inventory throughout the year to support shipments in third and fourth quarters. Therefore, we could see inventory levels increase to as high as $35 million to $40 million again this year, to again decrease and settle out likely 10% to 15% higher than the end of 2023.

請注意，我們將看到今年現金下降，特別是在第二季度，因為最初幾季的收入下降。此外，正如我們去年看到的那樣，我們將全年建立庫存，以支持第三和第四季的出貨量。因此，我們可能會看到今年庫存水準再次增至 3,500 萬美元至 4,000 萬美元，並再次下降，到 2023 年底可能會高出 10% 至 15%。

As we stand today, David will be assessing our go-forward strategy to execute in our various business units and more concrete decisions around capital allocation will occur later this year or early next together with the new CFO. This growing cash position is a clear indicator of how closely we have managed our spending in recent years and the immense value this company can create as we grow.

正如我們今天所站的那樣，大衛將評估我們在各個業務部門執行的前進戰略，並將在今年晚些時候或明年初與新任首席財務官一起做出有關資本分配的更具體決策。這種不斷增長的現金狀況清楚地表明了我們近年來對支出的嚴格管理，以及隨著我們的成長，公司可以創造的巨大價值。

As a part of our Playbook from this year, we will need to make specific decisions around the utilization of this cash and whether to invest in new paths to accelerate growth or to return capital to shareholders.

作為我們今年行動手冊的一部分，我們將需要圍繞這些現金的利用以及是否投資於加速成長的新途徑或將資本返還給股東做出具體決策。

With that, let’s move to Q&A.

接下來，讓我們進入問答環節。

(Operator Instructions) Pavel Molchanov, Raymond James.

（操作員說明）Pavel Molchanov、Raymond James。

Thanks for the detailed narrative and as well as taking the question. So maybe first one on the delay, the India project, is there a clear timetable for when that product will be delivered to India? Is it happening this quarter capability?

感謝您的詳細敘述並提出問題。那麼，也許第一個延遲的問題是印度項目，該產品何時交付到印度有明確的時間表嗎？這個季度有能力嗎？

Hey, Pavel, it's Josh. It's not likely to happen this quarter. We're shooting for the first half of the year, but we're confident it will be this year.

嘿，帕維爾，我是喬許。本季度不太可能發生這種情況。我們計劃在今年上半年進行拍攝，但我們有信心今年也能完成。

Okay. And any sense of why the project was delayed? Or was it the permitting or currency or just labor?

好的。知道為什麼該項目被推遲了嗎？還是許可、貨幣或只是勞動力？

No, it's been delayed in some construction and building it. Weather related specifically.

不，它的一些建設和建造已經被推遲了。具體與天氣有關。

Weather issues. Okay. Maybe on the CO2 refrigeration opportunity, I know you’re not giving numerical revenue guidance for that line item. So if we look at last year, $700,000 or so, do you expect to exceed that in 2024, bearing in mind this kind of reengineering of the product?

天氣問題。好的。也許在二氧化碳製冷機會方面，我知道您沒有為該訂單項提供數位收入指導。因此，如果我們看看去年的 70 萬美元左右，考慮到這種產品的重新設計，您預計 2024 年會超過這個數字嗎？

I think -- good afternoon. This is David Moon. Nice to talk to you again. Look, I think, it’s going to be $1 million to $2 million. And I think that’s a reasonable target, as you think about 30 to 50 locations. Margin-wise, it’s not going to be much to the margin line if we’re going to continue to see some of these validation sites to continue to get traction. So $1 million to $2 million is probably the range at this point.

我想——下午好。這是大衛·穆恩。很高興再次與你交談。我認為，這將是 100 萬至 200 萬美元。我認為這是一個合理的目標，因為您可以考慮 30 到 50 個地點。從利潤角度來看，如果我們繼續看到其中一些驗證網站繼續受到關注，那麼利潤線不會太高。因此，目前的範圍可能是 100 萬至 200 萬美元。

Okay. That’s helpful. And then lastly, you talked about kind of rebuilding shareholder value and improving confidence. Given the amount of cash you have on the balance sheet, what are your thoughts about buyback, which you have a history of doing?

好的。這很有幫助。最後，您談到了重建股東價值和提高信心。考慮到您資產負債表上的現金金額，您對回購（您有回購歷史）有何看法？

Yeah. So good question. And so we’re mindful of the amount of cash that we’ve got. What I’d like to be able to do is to get through the Playbook development to better determine how much cash we’re going to need to accelerate not only growth in wastewater and those verticals, but also continue to drive our CO2 acceleration.

是的。好問題。因此，我們要注意我們擁有的現金數量。我希望能夠完成 Playbook 的開發，以便更好地確定我們需要多少現金來加速廢水和這些垂直行業的成長，同時繼續推動我們的二氧化碳排放加速。

And we’re going to -- as we do this and it’s part of the Playbook development, we’re going to be closely analyzing the ROIC, obviously, to ensure that we pick the best projects for our investors. And so, I would ask that you give us this year to be able to develop that plan and determine how much we’re going to need and then once we do that, then I think we’ll be in a good position to talk about what we’re going to do with the cash and what we don’t do with the cash.

作為 Playbook 開發的一部分，我們將密切分析投資報酬率，以確保為投資者選擇最佳項目。因此，我要求您今年能夠制定該計劃並確定我們需要多少資金，一旦我們做到了，我認為我們將處於有利地位討論我們將如何使用現金以及我們不如何使用現金。

Fair enough. Thanks very much.

很公平。非常感謝。

(Operator Instructions) Ryan Pfingst, B. Riley Securities.

（操作員指令）Ryan Pfingst，B. Riley Securities。

Hey, guys. Thanks for taking my questions. Can you just talk about what you’re seeing in the market for '25 and if you think high-teens desal revenue growth is achievable based on the visibility you have today?

大家好。感謝您回答我的問題。您能否談談您在 25 年的市場中看到的情況，以及您是否認為根據您今天的知名度可以實現高青少年的脫鹽收入增長？

Hey, Ryan. Yeah. I’d reference my commentary or our commentary last quarter, and we are seeing the potential, again, for double-digit growth in 2025. But there’s a lot of moving parts in the world today. We’ve been talking about a lot of them on our calls and we’ve seen some of them with some of the projects moving here and there. So we’re not getting too firm on giving targets for 2025 yet. But we are seeing some good potential there.

嘿，瑞安。是的。我會參考我的評論或我們上個季度的評論，我們再次看到了 2025 年兩位數成長的潛力。但當今世界有很多變化的部分。我們在電話會議中討論了其中的許多問題，我們已經看到其中一些項目正在四處移動。因此，我們在製定 2025 年目標方面還沒有太堅定。但我們在那裡看到了一些良好的潛力。

Got it. And then going back to something else from the last call, do you have an update on the macro environment in terms of the misalignment we’ve spoken about recently between developers, EPCs, and end users regarding water tariff expectations?

知道了。然後回到上次電話會議中的其他問題，您是否有關於我們最近談到的開發商、EPC 和最終用戶之間關於水費預期的不一致的宏觀環境的最新情況？

Yeah. I think we’re still seeing some of that play out. Obviously not everywhere, because we still have a really strong pipeline for this year. But we do know that a couple of projects that have shifted out have been due to that. We heard of one project that literally had one bidder initially, because the costs were too low versus what EPCs felt like they could build at, for example. So we are seeing some of that play out still, but we’re not expecting massive movements in our pipeline at this stage.

是的。我認為我們仍在看到其中的一些結果。顯然不是到處都是，因為今年我們仍然有非常強大的管道。但我們確實知道有幾個項目因此而被轉移。例如，我們聽說有一個專案最初只有一個投標人，因為與 EPC 認為可以建造的成本相比，成本太低。因此，我們看到其中一些仍在發揮作用，但我們預計現階段我們的管道不會出現大規模變動。

Got it. Thanks for that. And if I could just sneak in one more. Do you see the possibility for the PX Q400 to perhaps replace some of your existing devices operating today ahead of schedule given its performance?

知道了。感謝那。如果我能再偷偷溜進去一次就好了。鑑於 PX Q400 的性能，您是否認為 PX Q400 有可能提前取代您今天運行的一些現有設備？

I doubt it, Ryan. It is a better device. But that’s a tall ask to replace, for example, the Q300 that’s out there already this week, which is also a really good device. I’m not sure the payback would be there for whatever the life of a plant might be, and you’d have to reconfigure it because these are much bigger devices, right? So it’s not exactly just a switch them out type of play.

我對此表示懷疑，瑞安。這是一個更好的設備。但這是一個很高的要求，例如要取代本週已經上市的 Q300，它也是一款非常好的設備。我不確定無論植物的壽命如何，都會有回報，而且您必須重新配置它，因為這些設備要大得多，對吧？因此，這不僅僅是一種將他們排除在外的遊戲類型。

Got it. Makes sense. I’ll hop back in the queue. Thanks.

知道了。說得通。我會跳回到隊列中。謝謝。

Thanks, Ryan.

謝謝，瑞安。

Thank you. There are no further questions at this time. So I would like to turn the floor back to James Siccardi for closing remarks.

謝謝。目前沒有其他問題。因此，我想請詹姆斯·西卡迪 (James Siccardi) 致閉幕詞。

Thank you, Diego, and thank you everybody for joining us today. We look forward to talking to you next quarter, which is only a few months away. Take care, everyone.

謝謝迭戈，也謝謝大家今天加入我們。我們期待在下個季度與您交談，距離現在只有幾個月的時間了。大家保重。

Thank you. And ladies and gentlemen, that concludes today’s call. All parties may now disconnect. Have a good evening.

謝謝。女士們、先生們，今天的電話會議到此結束。所有各方現在都可以斷開連接。祝你晚上愉快。