Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-34112 | |
Entity Registrant Name | Energy Recovery, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 01-0616867 | |
Entity Address, Address Line One | 1717 Doolittle Drive | |
Entity Address, City or Town | San Leandro | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94577 | |
City Area Code | 510 | |
Local Phone Number | 483-7370 | |
Title of 12(b) Security | Common | |
Trading Symbol | ERII | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,681,881 | |
Entity Central Index Key | 0001421517 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 62,970 | $ 26,387 |
Short-term investments | 28,409 | 58,736 |
Accounts receivable, net | 12,816 | 12,979 |
Inventories, net | 9,915 | 10,317 |
Prepaid expenses and other current assets | 4,987 | 4,548 |
Total current assets | 119,097 | 112,967 |
Long-term investments | 5,510 | 15,419 |
Deferred tax assets, non-current | 12,231 | 16,897 |
Property and equipment, net | 18,838 | 18,843 |
Operating lease, right of use asset | 16,810 | 11,195 |
Goodwill | 12,790 | 12,790 |
Other intangible assets, net | 57 | 65 |
Other assets, non-current | 639 | 598 |
Total assets | 185,972 | 188,774 |
Current liabilities: | ||
Accounts payable | 1,860 | 1,192 |
Accrued expenses and other current liabilities | 6,771 | 9,869 |
Lease liabilities | 1,196 | 1,023 |
Contract liabilities | 980 | 15,746 |
Total current liabilities | 10,807 | 27,830 |
Lease liabilities, non-current | 17,155 | 11,533 |
Contract liabilities, non-current | 97 | 13,120 |
Other non-current liabilities | 496 | 278 |
Total liabilities | 28,555 | 52,761 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Common stock | 61 | 61 |
Additional paid-in capital | 173,729 | 170,028 |
Accumulated other comprehensive income (loss) | 119 | (37) |
Treasury stock | (30,486) | (30,486) |
Accumulated earnings (deficit) | 13,994 | (3,553) |
Total stockholders’ equity | 157,417 | 136,013 |
Total liabilities and stockholders’ equity | $ 185,972 | $ 188,774 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | $ 43,608 | $ 22,796 | $ 65,152 | $ 42,591 |
Revenue, Product and Service [Extensible List] | us-gaap:ProductMember | |||
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | |||
Operating expenses: | ||||
General and administrative | 5,599 | 5,500 | $ 12,480 | 11,079 |
Sales and marketing | 1,497 | 2,181 | 3,635 | 4,343 |
Research and development | 6,352 | 5,480 | 13,061 | 9,734 |
Amortization of intangible assets | 4 | 157 | 8 | 313 |
Impairment of long-lived assets | 2,332 | 0 | 2,332 | 0 |
Total operating expenses | 15,784 | 13,318 | 31,516 | 25,469 |
Income from operations | 21,275 | 3,995 | 21,403 | 6,704 |
Other income (expense): | ||||
Interest income | 255 | 528 | 675 | 1,051 |
Other non-operating expense, net | (18) | (48) | (30) | (72) |
Total other income, net | 237 | 480 | 645 | 979 |
Income before income taxes | 21,512 | 4,475 | 22,048 | 7,683 |
Provision for income taxes | 4,586 | 756 | 4,501 | 1,310 |
Net income | $ 16,926 | $ 3,719 | $ 17,547 | $ 6,373 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.30 | $ 0.07 | $ 0.32 | $ 0.12 |
Diluted (in dollars per share) | $ 0.30 | $ 0.07 | $ 0.31 | $ 0.11 |
Number of shares used in per share calculations: | ||||
Basic (in shares) | 55,614 | 54,681 | 55,513 | 54,400 |
Diluted (in shares) | 56,371 | 56,110 | 56,438 | 55,764 |
Product | ||||
Revenue | $ 19,256 | $ 19,226 | $ 38,257 | $ 35,298 |
Product cost of revenue | 6,549 | 5,483 | 12,233 | 10,418 |
Product gross profit | 12,707 | 13,743 | 26,024 | 24,880 |
License and development revenue | ||||
Revenue | $ 24,352 | $ 3,570 | $ 26,895 | $ 7,293 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 16,926 | $ 3,719 | $ 17,547 | $ 6,373 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustments | 10 | 7 | (15) | (1) |
Unrealized gain on investments | 441 | 64 | 171 | 132 |
Other comprehensive income, net of tax | 451 | 71 | 156 | 131 |
Comprehensive income | $ 17,377 | $ 3,790 | $ 17,703 | $ 6,504 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 17,547 | $ 6,373 |
Adjustments to reconcile net income to cash (used in) provided by operating activities | ||
Stock-based compensation | 2,595 | 3,071 |
Depreciation and amortization | 2,751 | 1,952 |
Amortization (accretion) of premiums and discounts on investments | 215 | (30) |
Deferred income taxes | 4,666 | 1,285 |
Provision for warranty claims | 173 | 242 |
Impairment of long-lived assets | 2,332 | 0 |
Other non-cash adjustments | 55 | 259 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 101 | (4,986) |
Contract assets | (198) | 2,147 |
Inventories, net | 260 | (725) |
Prepaid and other assets | (278) | 1,026 |
Accounts payable | 1,285 | 14 |
Accrued expenses and other liabilities | (4,012) | (2,942) |
Income taxes | 3 | 47 |
Contract liabilities | (27,789) | (7,730) |
Net cash (used in) provided by operating activities | (294) | 3 |
Cash flows from investing activities: | ||
Proceeds from sale of available-for sale securities | 9,767 | 0 |
Maturities of marketable securities | 43,286 | 47,993 |
Purchases of marketable securities | (12,855) | (46,549) |
Capital expenditures | (4,410) | (4,685) |
Net cash provided by (used in) investing activities | 35,788 | (3,241) |
Cash flows from financing activities: | ||
Net proceeds from issuance of common stock | 1,128 | 4,581 |
Tax payment for employee shares withheld | (23) | (62) |
Net cash provided by financing activities | 1,105 | 4,519 |
Effect of exchange rate differences on cash and cash equivalents | (15) | 0 |
Net change in cash, cash equivalents and restricted cash | 36,584 | 1,281 |
Cash, cash equivalents and restricted cash, beginning of year | 26,488 | 22,138 |
Cash, cash equivalents and restricted cash, end of period | $ 63,072 | $ 23,419 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Treasury stock | Accumulated earnings (deficit) |
Beginning balance (in shares) at Dec. 31, 2018 | 59,396 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock (in shares) | 964 | |||||
Ending balance (in shares) at Jun. 30, 2019 | 60,360 | 5,456 | ||||
Beginning Balance at Dec. 31, 2018 | $ 59 | $ 158,404 | $ (133) | $ (14,466) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock, net | 1 | 4,518 | ||||
Stock-based compensation | 3,059 | |||||
Foreign currency translation adjustments | (1) | |||||
Unrealized gain on investments | 132 | |||||
Total other comprehensive income, net | $ 131 | 131 | ||||
Net income | 6,373 | 6,373 | ||||
Ending Balance at Jun. 30, 2019 | 127,460 | $ 60 | 165,981 | (2) | $ (30,486) | (8,093) |
Beginning balance (in shares) at Mar. 31, 2019 | 59,919 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock (in shares) | 441 | |||||
Ending balance (in shares) at Jun. 30, 2019 | 60,360 | 5,456 | ||||
Beginning Balance at Mar. 31, 2019 | $ 60 | 162,231 | (73) | (11,812) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock, net | 0 | 2,362 | ||||
Stock-based compensation | 1,388 | |||||
Foreign currency translation adjustments | 23 | |||||
Unrealized gain on investments | 48 | |||||
Total other comprehensive income, net | 71 | 71 | ||||
Net income | 3,719 | 3,719 | ||||
Ending Balance at Jun. 30, 2019 | 127,460 | $ 60 | 165,981 | (2) | $ (30,486) | (8,093) |
Beginning balance (in shares) at Dec. 31, 2019 | 60,718 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock (in shares) | 415 | |||||
Ending balance (in shares) at Jun. 30, 2020 | 61,133 | 5,456 | ||||
Beginning Balance at Dec. 31, 2019 | 136,013 | $ 61 | 170,028 | (37) | (3,553) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock, net | 0 | 1,105 | ||||
Stock-based compensation | 2,596 | |||||
Foreign currency translation adjustments | (15) | |||||
Unrealized gain on investments | 171 | |||||
Total other comprehensive income, net | 156 | 156 | ||||
Net income | 17,547 | 17,547 | ||||
Ending Balance at Jun. 30, 2020 | 157,417 | $ 61 | 173,729 | 119 | $ (30,486) | 13,994 |
Beginning balance (in shares) at Mar. 31, 2020 | 60,999 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock (in shares) | 134 | |||||
Ending balance (in shares) at Jun. 30, 2020 | 61,133 | 5,456 | ||||
Beginning Balance at Mar. 31, 2020 | $ 61 | 171,954 | (332) | (2,932) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock, net | 0 | 687 | ||||
Stock-based compensation | 1,088 | |||||
Foreign currency translation adjustments | 10 | |||||
Unrealized gain on investments | 441 | |||||
Total other comprehensive income, net | 451 | 451 | ||||
Net income | 16,926 | 16,926 | ||||
Ending Balance at Jun. 30, 2020 | $ 157,417 | $ 61 | $ 173,729 | $ 119 | $ (30,486) | $ 13,994 |
Description of Business and Sig
Description of Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Description of Business and Significant Accounting Policies | Description of Business and Significant Accounting Policies Energy Recovery, Inc. and its wholly-owned subsidiaries (the “Company” or “Energy Recovery”) has, for more than 20 years, created technologies that solve complex challenges for industrial fluid flow markets worldwide . The Company design s and manufacture s solutions that reduce waste, improve operational efficiency, and lower the production costs of clean water and oil & gas . The Company’s solutions are marketed and sold in fluid flow markets such as water, oil & gas and chemical processing under the trademarks ERI ® , PX ® , Pressure Exchanger ® , PX Pressure Exchanger ® , VorTeq ™ , IsoBoost ® , IsoGen ® , AT ™ and AquaBold ™ . The Company owns, manufactures and/or develops its solutions, in whole or in part, in the United States of America (“U.S.”). Basis of Presentation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“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, 2019 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 June 30, 2020 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, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2020, as amended on June 10, 2020 (the “ 2019 Annual Report ”). In the opinion of management, all adjustments consisting of normal recurring adjustments that are necessary to present fairly the financial position, results of operations and cash flows for the interim periods have been made. 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. Use of Estimates The preparation of Condensed Consolidated Financial Statements, in conformity with U.S. 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 more 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; capitalization of research and development (“R&D”) assets; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; valuation adjustments for excess and obsolete inventory; 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. Due to the novel coronavirus (“ COVID-19”) pandemic, the reduced demand of oil and gas, as well as the oversupply of oil, there has been uncertainty and disruption in the global economy and financial markets. 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 July 31, 2020 , 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 update publicly these estimates for any reason after the date of this Quarterly Report on Form 10-Q, except as required by law. Significant Accounting Policies Except for adopting new accounting pronouncements, as noted under “ Recently Adopted Accounting Pronouncements ,” there have been no material changes to the Company’s significant accounting policies in Note 1, “ Description of Business and Significant Accounting Policies ,” of the Notes to Consolidated Financial Statements included in the 2019 Annual Report . Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends Accounting Standards Codification (“ASC”) 326, Financial Instruments-Credit Losses (“ASC 326”). Subsequent to the issuance of ASU 2016-13, ASC 326 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. The new guidance introduces the current expected credit loss (“CECL”) model, which requires an entity to record an allowance for credit losses for certain financial instruments and financial assets, including trade receivables, based on expected losses rather than incurred losses. Under this update, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2020-02”), which amended the language in Subtopic 326-20 and addressed questions primarily regarding documentation and company policies. ASU 2016-13 and its amendments are effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2019, on a modified retrospective basis. The adoption of ASU 2016-13 and its amendments on January 1, 2020 did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures. The Company will continue to actively monitor the impact of the recent COVID-19 pandemic, the reduced demand of oil and gas, as well as the oversupply of oil, on expected credit losses. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). This ASU improves and clarifies various financial instruments topics, including the CECL standard issued in 2016. ASU 2020-03 included seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The adoption of ASU 2020-03 on January 1, 2020 did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provided optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made ( i.e., as early as the first quarter of 2020). Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed. The Company is currently evaluating the impact of the provisions of ASU 2020-04 on its financial condition, results of operation, and cash flows. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | On June 24, 2020 , the Company entered into an agreement with Schlumberger Technology Corporation (“ Schlumberger ”) to terminate the existing agreement to license the VorTeq ™ technology (the “ VorTeq License Agreement ”). Pursuant to the terms of the agreement , each party’s rights, duties and obligations under the VorTeq License Agreement have been terminated effective June 1, 2020 . Accordingly, the Company (i) is entitled to retain all of the non-refundable upfront exclusivity payment, (ii) is not entitled to any further payments from Schlumberger , and (iii) has no future performance obligations under the VorTeq License Agreement . The Company accounted for the termination as a contract modification, which resulted in the Company recognizing the remaining amounts of the original $75.0 million non-refundable upfront exclusivity payment of $24.4 million during the three and six months ended June 30, 2020 as License and development revenue in the Condensed Consolidated Statements of Operations . See Note 12 , “ VorTeq Partnership and License Agreement ,” for additional discussion regarding the termination of the VorTeq License Agreement . Disaggregation of Revenue The following tables present the Company’s revenues disaggregated by geography based on the “shipped to” addresses of the Company’s customers and by major product/service line. Sales and usage-based taxes are excluded from revenues. Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Primary geographical market Middle East and Africa $ 16,504 $ — $ 16,504 $ 32,735 $ — $ 32,735 Americas 1,161 24,352 25,513 2,362 26,895 29,257 Europe 974 — 974 1,768 — 1,768 Asia 617 — 617 1,392 — 1,392 Total revenue $ 19,256 $ 24,352 $ 43,608 $ 38,257 $ 26,895 $ 65,152 Major product/service line PX Pressure Exchangers, pumps and turbo devices, and other $ 19,256 $ — $ 19,256 $ 38,257 — $ 38,257 License and development — 24,352 24,352 — 26,895 26,895 Total revenue $ 19,256 $ 24,352 $ 43,608 $ 38,257 $ 26,895 $ 65,152 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Water Oil and Gas Total Water Oil and Gas Total (In thousands) Primary geographical market Middle East and Africa $ 10,805 $ — $ 10,805 $ 19,502 $ 104 $ 19,606 Americas 1,728 3,570 5,298 5,751 7,293 13,044 Europe 1,651 — 1,651 2,765 — 2,765 Asia 5,042 — 5,042 7,176 — 7,176 Total revenue $ 19,226 $ 3,570 $ 22,796 $ 35,194 $ 7,397 $ 42,591 Major product/service line PX Pressure Exchangers, pumps and turbo devices, and other $ 19,226 $ — $ 19,226 $ 35,194 $ 104 $ 35,298 License and development — 3,570 3,570 — 7,293 7,293 Total revenue $ 19,226 $ 3,570 $ 22,796 $ 35,194 $ 7,397 $ 42,591 Contract Balances The following table presents contract balances by category. June 30, December 31, (In thousands) Accounts receivable, net $ 12,816 $ 12,979 Contract assets: Contract assets, current (included in prepaid expenses and other current assets) $ 890 $ 501 Contract assets, non-current (included in other assets, non-current) — 191 Total contract assets $ 890 $ 692 Current contract liabilities: Customer deposits $ 620 $ 1,506 Deferred revenue: License and development — 13,846 Product 79 78 Service 281 316 Total deferred revenue 360 14,240 Total current contract liability 980 15,746 Non-current contract liabilities, deferred revenue: License and development — 13,048 Service 97 72 Total non-current contract liability 97 13,120 Total contract liability $ 1,077 $ 28,866 The Company records unbilled receivables as contract assets. The following table presents significant changes in contract assets during the period. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Contract assets balance, beginning of period $ 936 $ 1,107 $ 692 $ 4,083 Transferred to trade receivables (4,266 ) — (9,845 ) (3,598 ) Additions to contract assets 4,220 829 10,043 1,451 Contract assets balance, end of period $ 890 $ 1,936 $ 890 $ 1,936 The Company records contract liabilities when cash payments are received in advance of the Company’s performance. The following table presents significant changes in contract liabilities during the period. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Contract liabilities balance, beginning of period $ 25,314 $ 38,887 $ 28,866 $ 42,809 Revenue recognized (25,751 ) (3,583 ) (29,731 ) (7,319 ) Cash received and adjustments, excluding amounts recognized as revenue during the period 1,514 (225 ) 1,942 (411 ) Contract liabilities balance, end of period $ 1,077 $ 35,079 $ 1,077 $ 35,079 Transaction Price Allocated to the Remaining Performance Obligation The following table presents the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied. June 30, (In thousands) Year: 2020 (remaining six months) $ 15,078 2021 10,363 2022 15 Total performance obligation $ 25,456 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Net income for the reported period is divided by the weighted average number of common shares outstanding during the reported period to calculate basic earnings per common share . Basic earnings per share exclude any dilutive effect of stock options and restricted stock units (“RSU”). Diluted earnings per common share reflects the potential dilution that would occur if outstanding stock options to purchase common stock were exercised for shares of common stock, using the treasury stock method, and the shares of common stock underlying each outstanding RSU were issued (collectively referred to as “stock awards”). Certain shares of common stock issuable under stock options and RSUs have been omitted from the diluted earnings per share calculations because their inclusion is considered anti-dilutive. The following table presents the computation of basic and diluted earnings per share . Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except per share amounts) Numerator: Net income $ 16,926 $ 3,719 $ 17,547 $ 6,373 Denominator (weighted average shares): Basic common shares outstanding 55,614 54,681 55,513 54,400 Dilutive stock awards 757 1,429 925 1,364 Diluted common shares outstanding 56,371 56,110 56,438 55,764 Earnings per share: Basic $ 0.30 $ 0.07 $ 0.32 $ 0.12 Diluted $ 0.30 $ 0.07 $ 0.31 $ 0.11 The following table presents the potential common shares issuable under stock awards that were excluded from the computation of diluted earnings per share , as their effect would have been anti-dilutive. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Anti-dilutive stock awards 2,893 1,650 1,989 2,197 |
Other Financial Information
Other Financial Information | 6 Months Ended |
Jun. 30, 2020 | |
Other Financial Information [Abstract] | |
Other Financial Information | Other Financial Information Cash, Cash Equivalents and Restricted Cash The Company’s Condensed Consolidated Statement of Cash Flows explains the change in the total of cash, cash equivalents and restricted cash. The following table presents a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of such amounts presented. June 30, December 31, June 30, (In thousands) Cash and cash equivalents $ 62,970 $ 26,387 $ 23,331 Restricted cash, non-current (included in other assets, non-current) 102 101 88 Total cash, cash equivalents and restricted cash $ 63,072 $ 26,488 $ 23,419 The Company pledged cash in connection with certain stand-by letters of credit and company credit cards. The Company deposited corresponding amounts into restricted accounts at several financial institutions. Accounts Receivable, net June 30, December 31, (In thousands) Accounts receivable, gross $ 13,186 $ 13,287 Allowance for doubtful accounts (370 ) (308 ) Accounts receivable, net $ 12,816 $ 12,979 Inventories June 30, December 31, (In thousands) Raw materials $ 3,872 $ 3,742 Work in process 2,737 2,141 Finished goods 3,306 4,434 Inventories, net $ 9,915 $ 10,317 Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method. Valuation adjustments for excess and obsolete inventory reflected as a reduction of inventory was $0.5 million and $0.4 million at June 30, 2020 and December 31, 2019 , respectively. During the three and six months ended June 30, 2020 , due to the COVID-19 pandemic, the Company expensed $0.7 million and $1.2 million , respectively, to product cost of revenue related to the reduced utilization of the Company’s manufacturing facilities during March and April 2020 prior to the Company’s return to full manufacturing in May 2020 , as well as the increased overhead costs of the Company’s Tracy, California facility . Property and Equipment Estimated useful lives are periodically reviewed, and when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset (asset group). If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses. On June 24, 2020 , the Company entered into an agreement with Schlumberger to terminate the existing VorTeq License Agreement effective June 1, 2020 . As a result, the Company conducted an analysis on certain VorTeq long-lived assets that were directly related to obligations under the VorTeq License Agreement and determined that certain of those assets were impaired. The net carrying value of the impaired long-lived assets of $2.3 million was recognized in the three and six months ended June 30, 2020 as Impairment of long-lived assets in the Condensed Consolidated Statements of Operations . See Note 12 , “ VorTeq Partnership and License Agreement ,” for additional discussion regarding the termination of the VorTeq License Agreement . Accrued Expenses and Other Current Liabilities June 30, December 31, (In thousands) Payroll, incentives and commissions payable $ 3,978 $ 6,040 Warranty reserve 673 631 Other accrued expenses and current liabilities 2,120 3,198 Total accrued expenses and other current liabilities $ 6,771 $ 9,869 |
Investments and Fair Value Meas
Investments and Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Fair Value Disclosure [Abstract] | |
Investments and Fair Value Measurements | Investments and Fair Value Measurements The following table presents the Company’s marketable securities in the form of cash equivalents, and short and long-term investments. June 30, December 31, (In thousands) Cash equivalents $ 48,094 $ 11,668 Short-term investments 28,409 58,736 Long-term investments 5,510 15,419 Total cash equivalents and marketable securities $ 82,013 $ 85,823 As of June 30, 2020 and December 31, 2019 , there were no available-for-sale investments reported in cash equivalents. Available-for-Sale Investments The Company’s short and long-term investments are all classified as available-for-sale. As of June 30, 2020 and December 31, 2019 , all available-for-sale investments were either classified as short-term with maturities less than 12 months or long-term with maturities over 12 months. The Company generally holds available-for-sale investments until maturity; however, from time-to-time, the Company may elect to sell certain available-for-sale investments prior to maturity. The following tables present available-for-sale investments and their related gross unrealized holding gains and losses as of June 30, 2020 and December 31, 2019 . June 30, 2020 Amortized Gross Gross Fair (In thousands) Short-term investments U.S. treasury securities $ 4,091 $ 28 $ — $ 4,119 Corporate notes and bonds 24,128 163 (1 ) 24,290 Total short-term investments 28,219 191 (1 ) 28,409 Long-term investments Corporate notes and bonds 5,438 72 — 5,510 Total long-term investments 5,438 72 — 5,510 Total available-for-sale investments $ 33,657 $ 263 $ (1 ) $ 33,919 December 31, 2019 Amortized Gross Gross Fair (In thousands) Short-term investments U.S. treasury securities $ 2,746 $ 1 $ — $ 2,747 Corporate notes and bonds 55,951 49 (11 ) 55,989 Total short-term investments 58,697 50 (11 ) 58,736 Long-term investments Corporate notes and bonds 15,415 9 (5 ) 15,419 Total long-term investments 15,415 9 (5 ) 15,419 Total available-for-sale investments $ 74,112 $ 59 $ (16 ) $ 74,155 The Company monitors investments for impairment. It was determined that unrealized gains and losses at June 30, 2020 and December 31, 2019 , were temporary in nature, because the changes in market value for these securities resulted from fluctuating interest rates, rather than a deterioration of the credit worthiness of the issuers. The Company is unlikely to experience gains or losses if these securities are held to maturity. In the event that the Company disposes of these securities before maturity, it is expected that the realized gains or losses, if any, will be immaterial. Expected maturities can differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. The following table presents the amortized cost and the related fair value of short and long-term available-for-sale securities with stated maturities shown by contractual maturity. June 30, 2020 Amortized Fair (In thousands) Due in one year or less $ 28,219 $ 28,409 Due in greater than one year 5,438 5,510 Total $ 33,657 $ 33,919 Sales of Available-for-Sale Investments The following table presents the sales of available-for-sale investments. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Corporate notes and bonds $ 4,793 $ — $ 9,767 $ — Gain on sales of securities were immaterial during the three and six months ended June 30, 2020 . Fair Value of Financial Instruments All of the Company’s financial assets and liabilities are remeasured and reported at fair value at each reporting period; and are classified and disclosed in one of the following three pricing category levels: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 — Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. The following table presents the fair value of financial assets measured on a recurring basis. As of June 30, 2020 and December 31, 2019 , the Company had no financial liabilities and no Level 3 financial assets. Pricing Category June 30, December 31, (In thousands) Cash equivalents Money market securities Level 1 $ 48,094 $ 86 U.S. treasury securities Level 2 — 11,582 Total cash equivalents 48,094 11,668 Short-term investments U.S. treasury securities Level 2 4,119 2,747 Corporate notes and bonds Level 2 24,290 55,989 Total short-term investments 28,409 58,736 Long-term investments Corporate notes and bonds Level 2 5,510 15,419 Total long-term investments 5,510 15,419 Total fair value of financial assets $ 82,013 $ 85,823 During the six months ended June 30, 2020 and year ended December 31, 2019 , the Company had no transfers of financial assets between any levels. The following table presents a summary of the fair value and gross unrealized holding losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument as of June 30, 2020 and December 31, 2019 . The available-for-sale for investments that were in an unrealized gain position have been excluded from the table. June 30, 2020 December 31, 2019 Fair Gross Fair Gross (In thousands) U.S. treasury securities $ — $ — $ 2,027 $ — Corporate notes and bonds 900 (1 ) 18,754 (16 ) Total available-for-sale investments with unrealized loss positions $ 900 $ (1 ) $ 20,781 $ (16 ) |
Goodwill Goodwill
Goodwill Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The net carrying amount of goodwill as of June 30, 2020 and December 31, 2019 was $12.8 million . Goodwill is tested for impairment annually in the third quarter (July 1) of the Company’s fiscal year or more frequently if indicators of potential impairment exist. The recoverability of goodwill is measured at the reporting unit level, which represents the operating segment. The Company continues to actively monitor the industries in which it operates and its businesses' performance for indicators of potential impairment. As of June 30, 2020 , the Company considered the impacts of the COVID-19 pandemic, as well as the termination of the VorTeq License Agreement , and determined as a result of the Company’s assessment that goodwill related to the Company’s Water and Oil & Gas segments was no t impaired. |
Lines of Credit
Lines of Credit | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Lines of Credit | Lines of Credit Loan and Pledge Agreement The Company entered into a loan and pledge agreement with a financial institution on January 27, 2017 . Since inception, this loan and pledge agreement has been amended multiple times to accommodate the growth of the Company (the amended loan and pledge agreement is hereinafter referred to as the “ Loan and Pledge Agreement ”). The Loan and Pledge Agreement , as amended, which will expire on June 30, 2022 , provides for a committed revolving credit line of $16.0 million and an uncommitted revolving credit line of $4.0 million . The covenants of the Loan and Pledge Agreement allow the Company to incur indebtedness owed to a foreign subsidiary in an aggregate amount not to exceed $66.0 million , which amount is subordinated to any amounts outstanding under the Loan and Pledge Agreement . As of June 30, 2020 and December 31, 2019 , there was no debt outstanding under the Loan and Pledge Agreement . Stand-By Letters of Credit Under the Loan and Pledge Agreement , the Company is allowed to issue stand-by letters of credit (“ SBLCs ”) up to one year past the expiration date of the Loan and Pledge Agreement and to hold SBLCs with other financial institutions up to $5.1 million . SBLCs have a term limit of three years , are secured by pledged U.S. investments, and do not have any cash collateral balance requirements. SBLCs are deducted from the total revolving credit line under the Loan and Pledge Agreement and are subject to a non-refundable quarterly fee that is in an amount equal to 0.7% per annum of the face amount of the outstanding SBLCs . As of June 30, 2020 and December 31, 2019 , there were $12.3 million and $11.8 million , respectively, of outstanding SBLCs . |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease Obligations The Company leases office facilities and equipment under operating leases that expire on various dates through fiscal year 2030 . On January 10, 2019 , the Company entered into an industrial lease agreement, which commenced on January 1, 2020 . This lease for a commercial development center for oil & gas field testing, manufacturing, and training, located in Katy, Texas (the “ Katy Lease ”), included an office and warehouse space of approximately 25,200 square feet (“sqft.”) and land of approximately 4.5 acres. The Company’s annual base rent obligation, paid monthly, is approximately $0.3 million with an increase of approximately 3% annually thereafter, totaling $3.6 million , over the term of the lease. The initial term of the Katy Lease is 120 months after the commencement date, and the Company has two options to extend the lease by an additional five -year term per option, which must be exercised by written notice at least six months prior to the end of the relevant term. On February 10, 2020 , the Company entered into a lease agreement, that commenced on March 1, 2020 , for an additional manufacturing and warehouse space of approximately 54,429 sqft., located in Tracy, California (the “ Tracy Lease ”). This lease supplements the existing manufacturing, warehouse and distribution of the Company’s energy recovery devices (“ ERDs ”) and other products. The Company’s annual base rent obligation, paid monthly, is approximately $0.4 million , with an increase of approximately 3% annually thereafter, totaling $5.0 million , over the term of the lease. The initial term of the Tracy Lease is 122 months after the commencement date, and the Company has one option to extend the lease by an additional five -year term, which must be exercised by written notice at least nine months prior to the end of the original lease term. The following table presents operating lease activities related to all leased properties. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Operating lease expense $ 668 $ 473 $ 1,271 $ 950 Cash payments 618 459 1,108 906 Non-cash lease liabilities arising from obtaining right-of-use assets — — 6,384 — The following table presents other information related to outstanding operating leases as of June 30, 2020 . Weighted average remaining lease term 8.9 years Weighted average discount rate 7.0% The following table presents the minimum lease payments under noncancelable operating leases, exclusive of executory costs as of June 30, 2020 . Lease Amounts (In thousands) Year: 2020 (remaining six months) $ 1,290 2021 2,431 2022 2,650 2023 2,580 2024 2,812 2025 and thereafter 13,197 Total 24,960 Less imputed lease interest (6,609 ) Total lease liabilities $ 18,351 Warranty The following table presents the changes in the Company’s accrued product warranty reserve. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Warranty reserve balance, beginning of period $ 665 $ 571 $ 631 $ 478 Warranty costs charged to cost of revenue 75 89 173 242 Utilization charges against reserve (1 ) (25 ) (2 ) (38 ) Release of accrual related to expired warranties (66 ) (36 ) (129 ) (83 ) Warranty reserve balance, end of period $ 673 $ 599 $ 673 $ 599 Purchase Obligations The Company has purchase order arrangements with its vendors for which the Company has not received the related goods or services as of June 30, 2020 . These arrangements are subject to change based on the Company’s sales demand forecasts. The Company has the right to cancel the arrangements prior to the date of delivery. The purchase order arrangements are related to various raw materials and components parts, as well as for capital equipment. As of June 30, 2020 , the Company had approximately $8.7 million of such open cancellable purchase order arrangements. Litigation The Company is named in and subject to various proceedings and claims in connection with its business. The outcome of matters the Company has been, and currently is, involved in cannot be determined at this time, and the results cannot be predicted with certainty. There can be no assurance that these matters will not have a material adverse effect on the Company’s results of operations in any future period, and a significant judgment could have a material impact on the Company’s financial condition, results of operations and cash flows. The Company may in the future become involved in additional litigation in the ordinary course of business, including litigation that could be material to its business. The Company considers all claims 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 June 30, 2020 , there were no material losses which were probable or reasonably possible. On September 10, 2014, the Company terminated the employment of its Senior Vice President, Sales, Borja Blanco, on the basis of breach of duty of trust and conduct leading to conflict of interest. On October 24, 2014, Mr. Blanco filed a labor claim against ERI Iberia in Madrid, Spain, challenging the fairness of his dismissal and seeking compensation. Multiple hearings were held from the initial hearing in November 2015 through February 2018, at which point, the labor court issued a ruling in favor of Mr. Blanco declaring the termination to be an unjustified dismissal and ordered the Company to pay a dismissed severance. The Company appealed the decision and received notice on March 18, 2019 that the appeals court had partially reversed the labor court’s order. The Company further appealed the decision and in July 2020, the Company received notice that the appeals court decided to confirm its prior ruling, and therefore, the matter is now closed. There is no reasonable possible loss in excess of amounts already accrued. On July 21, 2020, a purported securities class action lawsuit was filed in the United States District Court for the Southern District of New York ( Visser, et al. v. Energy Recovery, Inc., et al. , Case No. 1:20-cv-05647-VM (S.D.N.Y.)), naming as defendants, the Company and certain of the Company’s present and former executive officers. The Complaint alleges that the defendants violated Section 10(b) and 20 (a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, by making materially false and misleading statements, and failed to disclose material adverse facts about the Company’s business operations and financial health. The Complaint further alleges unspecified damages based on the decline in the market price of the Company’s shares following the announcement of the termination of the VorTeq License. The Company believes the complaint is without merit and intends to defend the case vigorously. At this time, the Company is not able to estimate any reasonable possible loss, if any, due to the early state of this matter. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except percentages) Provision for income taxes $ 4,586 $ 756 $ 4,501 $ 1,310 Effective tax rate 21.3 % 16.9 % 20.4 % 17.1 % Effective tax rate, excluding discrete items 20.1 % 21.8 % 20.0 % 21.6 % The Company’s tax provision for interim periods 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 update s 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, is 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, intercompany transactions, the applicability of special tax regimes, and changes in how the Company does business . For the three and six months ended June 30, 2020 , the recognized income tax expense included a discrete tax charge due primarily to the termination of the VorTeq License Agreement , partially offset by stock-based compensation windfalls . For the three and six months ended June 30, 2019 , the recognized income tax expense included a discrete tax benefit due primarily to stock-based compensation windfalls . The effective tax rate, excluding the discrete items for the three and six months ended June 30, 2020 , respectively, compared to the three and six months ended June 30, 2019 , was lower due primarily to higher anticipated R&D credits in fiscal year 2020 . |
Business Segment
Business Segment | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Business Segment | Business Segment The Company’s chief operating decision-maker (“CODM”) is the chief executive officer. The Company’s reportable segments consist of the Water segment and the Oil & Gas segment. These segments are based on the industries in which the products are sold, the type of products sold and the related products and services. The Water segment consists of revenue associated with products sold for use in reverse osmosis desalination as well as the related identifiable expenses. The Oil & Gas segment consists of revenue associated with products sold for use in gas processing, chemical processing and hydraulic fracturing as well as license and development revenue associated therewith. Operating income (loss) for each segment excludes other income and expenses and certain corporate expenses managed outside the operating segment such as income taxes and other separately managed general and administrative expenses not related to the identified segments. Assets and liabilities are reviewed at the consolidated level by the CODM and are not accounted for by segment. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income . The following tables present a summary of the Company’s financial information by segment and corporate operating expenses. Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Product revenue $ 19,256 $ — $ 19,256 $ 38,257 $ — $ 38,257 Product cost of revenue 6,549 — 6,549 12,233 — 12,233 Product gross profit 12,707 — 12,707 26,024 — 26,024 License and development revenue (1) — 24,352 24,352 — 26,895 26,895 Operating expenses General and administrative 456 421 877 861 1,162 2,023 Sales and marketing 1,124 18 1,142 2,800 76 2,876 Research and development 960 4,517 5,477 1,862 9,764 11,626 Amortization of intangible assets 4 — 4 8 — 8 Impairment of long-lived assets (2) — 2,332 2,332 — 2,332 2,332 Total operating expenses 2,544 7,288 9,832 5,531 13,334 18,865 Operating income $ 10,163 $ 17,064 27,227 $ 20,493 $ 13,561 34,054 Less: Corporate operating expenses 5,952 12,651 Income from operations 21,275 21,403 Other income, net 237 645 Income before income taxes $ 21,512 $ 22,048 (1 ) See Note 12 , “ VorTeq Partnership and License Agreement ,” for additional discussion regarding the termination of the VorTeq License Agreement . (2) See Note 4 , “ Other Financial Information – Property and Equipment ,” for additional discussion regarding the impairment of certain VorTeq long-lived assets that were directly related to obligations under the VorTeq License Agreement . Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Product revenue $ 19,226 $ — $ 19,226 $ 35,194 $ 104 $ 35,298 Product cost of revenue 5,483 — 5,483 10,230 188 10,418 Product gross profit (loss) 13,743 — 13,743 24,964 (84 ) 24,880 License and development revenue — 3,570 3,570 — 7,293 7,293 Operating expenses General and administrative 563 412 975 1,097 776 1,873 Sales and marketing 1,559 319 1,878 3,208 582 3,790 Research and development 1,103 4,305 5,408 1,908 7,668 9,576 Amortization of intangible assets 157 — 157 313 — 313 Total operating expenses 3,382 5,036 8,418 6,526 9,026 15,552 Operating income (loss) $ 10,361 $ (1,466 ) 8,895 $ 18,438 $ (1,817 ) 16,621 Less: Corporate operating expenses 4,900 9,917 Income from operations 3,995 6,704 Other income, net 480 979 Income before income taxes $ 4,475 $ 7,683 |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Concentrations Product Revenue The following table presents customers accounting for 10% or more of the Company’s product revenue by segment. 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 large engineering, procurement and construction (“EPC”) firms shifts regularly, depending on contract negotiations. The percentages by customer reflect specific relationships or contracts that would concentrate the Company’s revenue for the periods presented and does not indicate a trend specific to any one customer. Three Months Ended June 30, Six Months Ended June 30, Segment 2020 2019 2020 2019 Customer A Water 19% 12% 24% ** Customer B Water 22% 27% 21% 28% Customer C Water 22% ** 15% ** Customer D Water ** 13% ** 12% ** Zero or less than 10%. License and Development Revenue One international Oil & Gas segment customer accounted for 100% of the Company’s license and development revenue for each of the three and six months ended June 30, 2020 and 2019 . |
VorTeq Partnership and License
VorTeq Partnership and License Agreement | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VorTeq Partnership and License Agreement | VorTeq Partnership and License Agreement On October 14, 2015, the Company and Schlumberger entered into the VorTeq License Agreement , which provided Schlumberger with exclusive worldwide rights to the Company’s VorTeq technology for use in hydraulic fracturing onshore applications. In performing the obligations under the agreement, the Company provided research and development services to commercialize the technology in accordance with the Key Performance Indicators (“ KPIs ”), defined in the VorTeq License Agreement . The VorTeq License Agreement included up to $125.0 million in upfront consideration paid in the following stages: (i) a $75.0 million non-refundable upfront exclusivity payment; and (ii) two non-refundable milestone payments of $25.0 million each made upon achievement of successful tests in accordance with the KPIs specified in the VorTeq License Agreement (“ M1 ” and “ M2 ”). On June 24, 2020 , prior to activating the M1 test, the Company and Schlumberger entered into an agreement to terminate the VorTeq License Agreement effective June 1, 2020 . Prior to the termination of the VorTeq License Agreement , the Company had been recognizing license and development revenue related to the non-refundable exclusivity payment under the cost to total cost method of accounting. Pursuant to the terms of the agreement , each party’s rights, duties and obligations under the VorTeq License Agreement have been terminated . Accordingly, the Company (i) is entitled to retain all of the non-refundable upfront exclusivity payment, (ii) is not entitled to any further payments from Schlumberger , and (iii) has no future performance obligations under the VorTeq License Agreement . The Company accounted for the termination as a contract modification, which resulted in the Company recognizing the remaining amounts of the original $75.0 million non-refundable upfront exclusivity payment of $24.4 million during the three and six months ended June 30, 2020 as License and development revenue in the Condensed Consolidated Statements of Operations |
Description of Business and S_2
Description of Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“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, 2019 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 June 30, 2020 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, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2020, as amended on June 10, 2020 (the “ 2019 Annual Report ”). In the opinion of management, all adjustments consisting of normal recurring adjustments that are necessary to present fairly the financial position, results of operations and cash flows for the interim periods have been made. 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. |
Use of Estimates | Use of Estimates The preparation of Condensed Consolidated Financial Statements, in conformity with U.S. 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 more 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; capitalization of research and development (“R&D”) assets; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; valuation adjustments for excess and obsolete inventory; 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. Due to the novel coronavirus (“ COVID-19”) pandemic, the reduced demand of oil and gas, as well as the oversupply of oil, there has been uncertainty and disruption in the global economy and financial markets. 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 July 31, 2020 , 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 update publicly these estimates for any reason after the date of this Quarterly Report on Form 10-Q, except as required by law. |
New Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends Accounting Standards Codification (“ASC”) 326, Financial Instruments-Credit Losses (“ASC 326”). Subsequent to the issuance of ASU 2016-13, ASC 326 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. The new guidance introduces the current expected credit loss (“CECL”) model, which requires an entity to record an allowance for credit losses for certain financial instruments and financial assets, including trade receivables, based on expected losses rather than incurred losses. Under this update, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2020-02”), which amended the language in Subtopic 326-20 and addressed questions primarily regarding documentation and company policies. ASU 2016-13 and its amendments are effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2019, on a modified retrospective basis. The adoption of ASU 2016-13 and its amendments on January 1, 2020 did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures. The Company will continue to actively monitor the impact of the recent COVID-19 pandemic, the reduced demand of oil and gas, as well as the oversupply of oil, on expected credit losses. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). This ASU improves and clarifies various financial instruments topics, including the CECL standard issued in 2016. ASU 2020-03 included seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The adoption of ASU 2020-03 on January 1, 2020 did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provided optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made ( i.e., as early as the first quarter of 2020). Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have been completed. The Company is currently evaluating the impact of the provisions of ASU 2020-04 on its financial condition, results of operation, and cash flows. |
Fair Value of Financial Instruments | All of the Company’s financial assets and liabilities are remeasured and reported at fair value at each reporting period; and are classified and disclosed in one of the following three pricing category levels: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 — Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. |
Property and Equipment | Property and Equipment Estimated useful lives are periodically reviewed, and when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset (asset group). If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses. |
Goodwill | Goodwill is tested for impairment annually in the third quarter (July 1) of the Company’s fiscal year or more frequently if indicators of potential impairment exist. The recoverability of goodwill is measured at the reporting unit level, which represents the operating segment. The Company continues to actively monitor the industries in which it operates and its businesses' performance for indicators of potential impairment. |
Litigation | The Company considers all claims 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. |
Income Taxes | The Company’s tax provision for interim periods 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 update s 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, is 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, intercompany transactions, the applicability of special tax regimes, and changes in how the Company does business . |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Primary geographical market Middle East and Africa $ 16,504 $ — $ 16,504 $ 32,735 $ — $ 32,735 Americas 1,161 24,352 25,513 2,362 26,895 29,257 Europe 974 — 974 1,768 — 1,768 Asia 617 — 617 1,392 — 1,392 Total revenue $ 19,256 $ 24,352 $ 43,608 $ 38,257 $ 26,895 $ 65,152 Major product/service line PX Pressure Exchangers, pumps and turbo devices, and other $ 19,256 $ — $ 19,256 $ 38,257 — $ 38,257 License and development — 24,352 24,352 — 26,895 26,895 Total revenue $ 19,256 $ 24,352 $ 43,608 $ 38,257 $ 26,895 $ 65,152 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Water Oil and Gas Total Water Oil and Gas Total (In thousands) Primary geographical market Middle East and Africa $ 10,805 $ — $ 10,805 $ 19,502 $ 104 $ 19,606 Americas 1,728 3,570 5,298 5,751 7,293 13,044 Europe 1,651 — 1,651 2,765 — 2,765 Asia 5,042 — 5,042 7,176 — 7,176 Total revenue $ 19,226 $ 3,570 $ 22,796 $ 35,194 $ 7,397 $ 42,591 Major product/service line PX Pressure Exchangers, pumps and turbo devices, and other $ 19,226 $ — $ 19,226 $ 35,194 $ 104 $ 35,298 License and development — 3,570 3,570 — 7,293 7,293 Total revenue $ 19,226 $ 3,570 $ 22,796 $ 35,194 $ 7,397 $ 42,591 |
Contract with Customer, Asset and Liability | The following table presents contract balances by category. June 30, December 31, (In thousands) Accounts receivable, net $ 12,816 $ 12,979 Contract assets: Contract assets, current (included in prepaid expenses and other current assets) $ 890 $ 501 Contract assets, non-current (included in other assets, non-current) — 191 Total contract assets $ 890 $ 692 Current contract liabilities: Customer deposits $ 620 $ 1,506 Deferred revenue: License and development — 13,846 Product 79 78 Service 281 316 Total deferred revenue 360 14,240 Total current contract liability 980 15,746 Non-current contract liabilities, deferred revenue: License and development — 13,048 Service 97 72 Total non-current contract liability 97 13,120 Total contract liability $ 1,077 $ 28,866 |
Contract With Customer, Contract Asset, Contract Liability, Activity | The Company records unbilled receivables as contract assets. The following table presents significant changes in contract assets during the period. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Contract assets balance, beginning of period $ 936 $ 1,107 $ 692 $ 4,083 Transferred to trade receivables (4,266 ) — (9,845 ) (3,598 ) Additions to contract assets 4,220 829 10,043 1,451 Contract assets balance, end of period $ 890 $ 1,936 $ 890 $ 1,936 The Company records contract liabilities when cash payments are received in advance of the Company’s performance. The following table presents significant changes in contract liabilities during the period. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Contract liabilities balance, beginning of period $ 25,314 $ 38,887 $ 28,866 $ 42,809 Revenue recognized (25,751 ) (3,583 ) (29,731 ) (7,319 ) Cash received and adjustments, excluding amounts recognized as revenue during the period 1,514 (225 ) 1,942 (411 ) Contract liabilities balance, end of period $ 1,077 $ 35,079 $ 1,077 $ 35,079 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | The following table presents the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied. June 30, (In thousands) Year: 2020 (remaining six months) $ 15,078 2021 10,363 2022 15 Total performance obligation $ 25,456 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted earnings per share . Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except per share amounts) Numerator: Net income $ 16,926 $ 3,719 $ 17,547 $ 6,373 Denominator (weighted average shares): Basic common shares outstanding 55,614 54,681 55,513 54,400 Dilutive stock awards 757 1,429 925 1,364 Diluted common shares outstanding 56,371 56,110 56,438 55,764 Earnings per share: Basic $ 0.30 $ 0.07 $ 0.32 $ 0.12 Diluted $ 0.30 $ 0.07 $ 0.31 $ 0.11 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the potential common shares issuable under stock awards that were excluded from the computation of diluted earnings per share , as their effect would have been anti-dilutive. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Anti-dilutive stock awards 2,893 1,650 1,989 2,197 |
Other Financial Information (Ta
Other Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Financial Information [Abstract] | |
Restrictions on Cash and Cash Equivalents | The Company’s Condensed Consolidated Statement of Cash Flows explains the change in the total of cash, cash equivalents and restricted cash. The following table presents a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of such amounts presented. June 30, December 31, June 30, (In thousands) Cash and cash equivalents $ 62,970 $ 26,387 $ 23,331 Restricted cash, non-current (included in other assets, non-current) 102 101 88 Total cash, cash equivalents and restricted cash $ 63,072 $ 26,488 $ 23,419 |
Schedule of Accounts, Notes, Loans and Financing Receivable | Accounts Receivable, net June 30, December 31, (In thousands) Accounts receivable, gross $ 13,186 $ 13,287 Allowance for doubtful accounts (370 ) (308 ) Accounts receivable, net $ 12,816 $ 12,979 |
Schedule of Inventory, Current | Inventories June 30, December 31, (In thousands) Raw materials $ 3,872 $ 3,742 Work in process 2,737 2,141 Finished goods 3,306 4,434 Inventories, net $ 9,915 $ 10,317 |
Schedule of Accrued Liabilities | Accrued Expenses and Other Current Liabilities June 30, December 31, (In thousands) Payroll, incentives and commissions payable $ 3,978 $ 6,040 Warranty reserve 673 631 Other accrued expenses and current liabilities 2,120 3,198 Total accrued expenses and other current liabilities $ 6,771 $ 9,869 |
Investments and Fair Value Me_2
Investments and Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Fair Value Disclosure [Abstract] | |
Debt Securities, Available-For-Sale, Proceeds From Sale | The Company generally holds available-for-sale investments until maturity; however, from time-to-time, the Company may elect to sell certain available-for-sale investments prior to maturity. The following table presents the sales of available-for-sale investments. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Corporate notes and bonds $ 4,793 $ — $ 9,767 $ — |
Cash, Cash Equivalents and Investments | The following table presents the Company’s marketable securities in the form of cash equivalents, and short and long-term investments. June 30, December 31, (In thousands) Cash equivalents $ 48,094 $ 11,668 Short-term investments 28,409 58,736 Long-term investments 5,510 15,419 Total cash equivalents and marketable securities $ 82,013 $ 85,823 |
Available-for-sale Securities | The following tables present available-for-sale investments and their related gross unrealized holding gains and losses as of June 30, 2020 and December 31, 2019 . June 30, 2020 Amortized Gross Gross Fair (In thousands) Short-term investments U.S. treasury securities $ 4,091 $ 28 $ — $ 4,119 Corporate notes and bonds 24,128 163 (1 ) 24,290 Total short-term investments 28,219 191 (1 ) 28,409 Long-term investments Corporate notes and bonds 5,438 72 — 5,510 Total long-term investments 5,438 72 — 5,510 Total available-for-sale investments $ 33,657 $ 263 $ (1 ) $ 33,919 December 31, 2019 Amortized Gross Gross Fair (In thousands) Short-term investments U.S. treasury securities $ 2,746 $ 1 $ — $ 2,747 Corporate notes and bonds 55,951 49 (11 ) 55,989 Total short-term investments 58,697 50 (11 ) 58,736 Long-term investments Corporate notes and bonds 15,415 9 (5 ) 15,419 Total long-term investments 15,415 9 (5 ) 15,419 Total available-for-sale investments $ 74,112 $ 59 $ (16 ) $ 74,155 |
Schedule Of Amortized Cost And Fair Value Of Available For Sale Securities | The following table presents the amortized cost and the related fair value of short and long-term available-for-sale securities with stated maturities shown by contractual maturity. June 30, 2020 Amortized Fair (In thousands) Due in one year or less $ 28,219 $ 28,409 Due in greater than one year 5,438 5,510 Total $ 33,657 $ 33,919 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the fair value of financial assets measured on a recurring basis. As of June 30, 2020 and December 31, 2019 , the Company had no financial liabilities and no Level 3 financial assets. Pricing Category June 30, December 31, (In thousands) Cash equivalents Money market securities Level 1 $ 48,094 $ 86 U.S. treasury securities Level 2 — 11,582 Total cash equivalents 48,094 11,668 Short-term investments U.S. treasury securities Level 2 4,119 2,747 Corporate notes and bonds Level 2 24,290 55,989 Total short-term investments 28,409 58,736 Long-term investments Corporate notes and bonds Level 2 5,510 15,419 Total long-term investments 5,510 15,419 Total fair value of financial assets $ 82,013 $ 85,823 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | The following table presents a summary of the fair value and gross unrealized holding losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument as of June 30, 2020 and December 31, 2019 . The available-for-sale for investments that were in an unrealized gain position have been excluded from the table. June 30, 2020 December 31, 2019 Fair Gross Fair Gross (In thousands) U.S. treasury securities $ — $ — $ 2,027 $ — Corporate notes and bonds 900 (1 ) 18,754 (16 ) Total available-for-sale investments with unrealized loss positions $ 900 $ (1 ) $ 20,781 $ (16 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | The following table presents operating lease activities related to all leased properties. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Operating lease expense $ 668 $ 473 $ 1,271 $ 950 Cash payments 618 459 1,108 906 Non-cash lease liabilities arising from obtaining right-of-use assets — — 6,384 — |
Lease, Term And Discount Rate | The following table presents other information related to outstanding operating leases as of June 30, 2020 . Weighted average remaining lease term 8.9 years Weighted average discount rate 7.0% |
Lessee, Operating Lease, Liability, Maturity | The following table presents the minimum lease payments under noncancelable operating leases, exclusive of executory costs as of June 30, 2020 . Lease Amounts (In thousands) Year: 2020 (remaining six months) $ 1,290 2021 2,431 2022 2,650 2023 2,580 2024 2,812 2025 and thereafter 13,197 Total 24,960 Less imputed lease interest (6,609 ) Total lease liabilities $ 18,351 |
Schedule of Product Warranty Liability | The following table presents the changes in the Company’s accrued product warranty reserve. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands) Warranty reserve balance, beginning of period $ 665 $ 571 $ 631 $ 478 Warranty costs charged to cost of revenue 75 89 173 242 Utilization charges against reserve (1 ) (25 ) (2 ) (38 ) Release of accrual related to expired warranties (66 ) (36 ) (129 ) (83 ) Warranty reserve balance, end of period $ 673 $ 599 $ 673 $ 599 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In thousands, except percentages) Provision for income taxes $ 4,586 $ 756 $ 4,501 $ 1,310 Effective tax rate 21.3 % 16.9 % 20.4 % 17.1 % Effective tax rate, excluding discrete items 20.1 % 21.8 % 20.0 % 21.6 % |
Business Segment (Tables)
Business Segment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following tables present a summary of the Company’s financial information by segment and corporate operating expenses. Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Product revenue $ 19,256 $ — $ 19,256 $ 38,257 $ — $ 38,257 Product cost of revenue 6,549 — 6,549 12,233 — 12,233 Product gross profit 12,707 — 12,707 26,024 — 26,024 License and development revenue (1) — 24,352 24,352 — 26,895 26,895 Operating expenses General and administrative 456 421 877 861 1,162 2,023 Sales and marketing 1,124 18 1,142 2,800 76 2,876 Research and development 960 4,517 5,477 1,862 9,764 11,626 Amortization of intangible assets 4 — 4 8 — 8 Impairment of long-lived assets (2) — 2,332 2,332 — 2,332 2,332 Total operating expenses 2,544 7,288 9,832 5,531 13,334 18,865 Operating income $ 10,163 $ 17,064 27,227 $ 20,493 $ 13,561 34,054 Less: Corporate operating expenses 5,952 12,651 Income from operations 21,275 21,403 Other income, net 237 645 Income before income taxes $ 21,512 $ 22,048 (1 ) See Note 12 , “ VorTeq Partnership and License Agreement ,” for additional discussion regarding the termination of the VorTeq License Agreement . (2) See Note 4 , “ Other Financial Information – Property and Equipment ,” for additional discussion regarding the impairment of certain VorTeq long-lived assets that were directly related to obligations under the VorTeq License Agreement . Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Water Oil & Gas Total Water Oil & Gas Total (In thousands) Product revenue $ 19,226 $ — $ 19,226 $ 35,194 $ 104 $ 35,298 Product cost of revenue 5,483 — 5,483 10,230 188 10,418 Product gross profit (loss) 13,743 — 13,743 24,964 (84 ) 24,880 License and development revenue — 3,570 3,570 — 7,293 7,293 Operating expenses General and administrative 563 412 975 1,097 776 1,873 Sales and marketing 1,559 319 1,878 3,208 582 3,790 Research and development 1,103 4,305 5,408 1,908 7,668 9,576 Amortization of intangible assets 157 — 157 313 — 313 Total operating expenses 3,382 5,036 8,418 6,526 9,026 15,552 Operating income (loss) $ 10,361 $ (1,466 ) 8,895 $ 18,438 $ (1,817 ) 16,621 Less: Corporate operating expenses 4,900 9,917 Income from operations 3,995 6,704 Other income, net 480 979 Income before income taxes $ 4,475 $ 7,683 |
Concentrations (Tables)
Concentrations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedules of Concentration of Risk, by Risk Factor | The following table presents customers accounting for 10% or more of the Company’s product revenue by segment. 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 large engineering, procurement and construction (“EPC”) firms shifts regularly, depending on contract negotiations. The percentages by customer reflect specific relationships or contracts that would concentrate the Company’s revenue for the periods presented and does not indicate a trend specific to any one customer. Three Months Ended June 30, Six Months Ended June 30, Segment 2020 2019 2020 2019 Customer A Water 19% 12% 24% ** Customer B Water 22% 27% 21% 28% Customer C Water 22% ** 15% ** Customer D Water ** 13% ** 12% ** Zero or less than 10%. |
Revenue - Schlumberger Technolo
Revenue - Schlumberger Technology Corporation (Details) - USD ($) $ in Thousands | Oct. 14, 2015 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Revenue from External Customer [Line Items] | |||||
Revenue | $ 43,608 | $ 22,796 | $ 65,152 | $ 42,591 | |
License and development revenue | |||||
Revenue from External Customer [Line Items] | |||||
Revenue | 24,352 | $ 3,570 | 26,895 | $ 7,293 | |
VorTeq License Agreement | Affiliated Entity | License and development revenue | Schlumberger Technology Corporation | |||||
Revenue from External Customer [Line Items] | |||||
Up front non-refundable payment | $ 75,000 | ||||
Revenue | $ 24,400 | $ 24,400 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 43,608 | $ 22,796 | $ 65,152 | $ 42,591 |
PX Pressure Exchangers, pumps and turbo devices, and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,298 |
License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,298 |
Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 16,504 | 10,805 | 32,735 | 19,606 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 25,513 | 5,298 | 29,257 | 13,044 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 974 | 1,651 | 1,768 | 2,765 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 617 | 5,042 | 1,392 | 7,176 |
Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,194 |
Water | PX Pressure Exchangers, pumps and turbo devices, and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,194 |
Water | License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Water | Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 16,504 | 10,805 | 32,735 | 19,502 |
Water | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,161 | 1,728 | 2,362 | 5,751 |
Water | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 974 | 1,651 | 1,768 | 2,765 |
Water | Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 617 | 5,042 | 1,392 | 7,176 |
Oil & Gas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,397 |
Oil & Gas | PX Pressure Exchangers, pumps and turbo devices, and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 104 |
Oil & Gas | License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
Oil & Gas | Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 104 |
Oil & Gas | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
Oil & Gas | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Oil & Gas | Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Operating Segments | License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
Operating Segments | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,298 |
Operating Segments | Water | License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Operating Segments | Water | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,194 |
Operating Segments | Oil & Gas | License and development revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
Operating Segments | Oil & Gas | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 104 |
Revenue - Contract Assets and L
Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||||||
Accounts receivable, net | $ 12,816 | $ 12,979 | ||||
Contract assets, current (included in prepaid expenses and other current assets) | 890 | 501 | ||||
Contract assets, non-current (included in other assets, non-current) | 0 | 191 | ||||
Total contract assets | 890 | $ 936 | 692 | $ 1,936 | $ 1,107 | $ 4,083 |
Current contract liabilities: | ||||||
Customer deposits | 620 | 1,506 | ||||
Deferred revenue: | ||||||
License and development | 0 | 13,846 | ||||
Product | 79 | 78 | ||||
Service | 281 | 316 | ||||
Total deferred revenue | 360 | 14,240 | ||||
Total current contract liability | 980 | 15,746 | ||||
Non-current contract liabilities, deferred revenue: | ||||||
License and development | 0 | 13,048 | ||||
Service | 97 | 72 | ||||
Total non-current contract liability | 97 | 13,120 | ||||
Total contract liability | $ 1,077 | $ 25,314 | $ 28,866 | $ 35,079 | $ 38,887 | $ 42,809 |
Revenue - Significant Changes i
Revenue - Significant Changes in Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Change In Contract With Customer, Asset [Roll Forward] | ||||
Contract assets balance, beginning of period | $ 936 | $ 1,107 | $ 692 | $ 4,083 |
Transferred to trade receivables | (4,266) | 0 | (9,845) | (3,598) |
Additions to contract assets | 4,220 | 829 | 10,043 | 1,451 |
Contract assets balance, end of period | 890 | 1,936 | 890 | 1,936 |
Change In Contract With Customer, Liability [Roll Forward] | ||||
Contract liabilities balance, beginning of period | 25,314 | 38,887 | 28,866 | 42,809 |
Revenue recognized | (25,751) | (3,583) | (29,731) | (7,319) |
Increase due to cash received, excluding amounts recognized as revenue during the period | 1,514 | (225) | 1,942 | (411) |
Contract liabilities balance, end of period | $ 1,077 | $ 35,079 | $ 1,077 | $ 35,079 |
Revenue - Remaining Performance
Revenue - Remaining Performance Obligation (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 25,456 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 15,078 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 10,363 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 15 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Earnings per Share - Computatio
Earnings per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net income | $ 16,926 | $ 3,719 | $ 17,547 | $ 6,373 |
Denominator (weighted average shares): | ||||
Basic weighted average common shares outstanding (in shares) | 55,614 | 54,681 | 55,513 | 54,400 |
Weighted average effect of dilutive stock awards (in shares) | 757 | 1,429 | 925 | 1,364 |
Diluted weighted average common shares outstanding (in shares) | 56,371 | 56,110 | 56,438 | 55,764 |
Net income (loss) per share - basic (in dollars per share) | $ 0.30 | $ 0.07 | $ 0.32 | $ 0.12 |
Net income (loss) per share - diluted (in dollars per share) | $ 0.30 | $ 0.07 | $ 0.31 | $ 0.11 |
Earnings per Share - Antidiluti
Earnings per Share - Antidilutive Securities Excluded From Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive shares excluded from net income per share calculation (in shares) | 2,893 | 1,650 | 1,989 | 2,197 |
Other Financial Information - C
Other Financial Information - Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Other Financial Information [Abstract] | ||||
Cash and cash equivalents | $ 62,970 | $ 26,387 | $ 23,331 | |
Restricted cash, non-current | 102 | 101 | 88 | |
Total cash, cash equivalents and restricted cash | $ 63,072 | $ 26,488 | $ 23,419 | $ 22,138 |
Other Financial Information - A
Other Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Other Financial Information [Abstract] | ||
Accounts receivable, gross | $ 13,186 | $ 13,287 |
Allowance for doubtful accounts | (370) | (308) |
Accounts receivable, net | $ 12,816 | $ 12,979 |
Other Financial Information - I
Other Financial Information - Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Other Financial Information [Abstract] | ||
Raw materials | $ 3,872 | $ 3,742 |
Work in process | 2,737 | 2,141 |
Finished goods | 3,306 | 4,434 |
Inventories, net | $ 9,915 | $ 10,317 |
Other Financial Information -_2
Other Financial Information - Inventory Valuation Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | |||
Inventory valuation reserves | $ 0.5 | $ 0.5 | $ 0.4 |
COVID-19 | |||
Loss Contingencies [Line Items] | |||
Expense to product cost of revenue | $ 0.7 | $ 1.2 |
Other Financial Information - P
Other Financial Information - Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Line Items] | ||||
Impairment of long-lived assets | $ 2,332 | $ 0 | $ 2,332 | $ 0 |
Schlumberger Technology Corporation | VorTeq License Agreement | Affiliated Entity | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment of long-lived assets | $ 2,300 | $ 2,300 |
Other Financial Information -_3
Other Financial Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Other Financial Information [Abstract] | ||||||
Payroll, incentives and commissions payable | $ 3,978 | $ 6,040 | ||||
Warranty reserve | 673 | $ 665 | 631 | $ 599 | $ 571 | $ 478 |
Other accrued expenses and current liabilities | 2,120 | 3,198 | ||||
Total accrued expenses and other current liabilities | $ 6,771 | $ 9,869 |
Investments and Fair Value Me_3
Investments and Fair Value Measurements - Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents | $ 48,094 | $ 11,668 |
Short-term investments | 28,409 | 58,736 |
Long-term investments | 5,510 | 15,419 |
Total cash equivalents and marketable securities | 82,013 | 85,823 |
Available-for-sale Securities | ||
Debt Securities, Available-for-sale | ||
Available-for-sale securities reported in cash equivalents | $ 0 | $ 0 |
Investments and Fair Value Me_4
Investments and Fair Value Measurements - Available-for-sale Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | $ 33,657 | $ 33,657 | $ 74,112 | ||
Gross Unrealized Gains | 263 | 263 | 59 | ||
Gross Unrealized Losses | (1) | (1) | (16) | ||
Fair Value | 33,919 | 33,919 | 74,155 | ||
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale | |||||
Proceeds from sale of available-for sale securities | 9,767 | $ 0 | |||
Corporate notes and bonds | |||||
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale | |||||
Proceeds from sale of available-for sale securities | 4,793 | $ 0 | 9,767 | $ 0 | |
Short-term Investments | |||||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | 28,219 | 28,219 | 58,697 | ||
Gross Unrealized Gains | 191 | 191 | 50 | ||
Gross Unrealized Losses | (1) | (1) | (11) | ||
Fair Value | 28,409 | 28,409 | 58,736 | ||
Short-term Investments | U.S. Treasury securities | |||||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | 4,091 | 4,091 | 2,746 | ||
Gross Unrealized Gains | 28 | 28 | 1 | ||
Gross Unrealized Losses | 0 | 0 | 0 | ||
Fair Value | 4,119 | 4,119 | 2,747 | ||
Short-term Investments | Corporate notes and bonds | |||||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | 24,128 | 24,128 | 55,951 | ||
Gross Unrealized Gains | 163 | 163 | 49 | ||
Gross Unrealized Losses | (1) | (1) | (11) | ||
Fair Value | 24,290 | 24,290 | 55,989 | ||
Long-term Investments | |||||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | 5,438 | 5,438 | 15,415 | ||
Gross Unrealized Gains | 72 | 72 | 9 | ||
Gross Unrealized Losses | 0 | 0 | (5) | ||
Fair Value | 5,510 | 5,510 | 15,419 | ||
Long-term Investments | Corporate notes and bonds | |||||
Debt Securities, Available-for-sale, Unrealized Gain (Loss) [Abstract] | |||||
Amortized Cost | 5,438 | 5,438 | 15,415 | ||
Gross Unrealized Gains | 72 | 72 | 9 | ||
Gross Unrealized Losses | 0 | 0 | (5) | ||
Fair Value | $ 5,510 | $ 5,510 | $ 15,419 |
Investments and Fair Value Me_5
Investments and Fair Value Measurements - Amortized Cost and Fair Value of Available-for-sale Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investments, Fair Value Disclosure [Abstract] | ||
Due in one year or less, amortized cost | $ 28,219 | |
Due in greater than one year, amortized cost | 5,438 | |
Amortized Cost | 33,657 | $ 74,112 |
Due in one year or less, fair value | 28,409 | |
Due in greater than one year, fair value | 5,510 | |
Fair Value | $ 33,919 | $ 74,155 |
Investments and Fair Value Me_6
Investments and Fair Value Measurements - Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Short-term investments | $ 28,409,000 | $ 58,736,000 |
Long-term investments | 5,510,000 | 15,419,000 |
Fair Value, Transfers Between Level 1 and Level 2, Description and Policy [Abstract] | ||
Transfer between Level 1 and Level 2 | 0 | 0 |
Transfers between Level 2 and Level 1 | 0 | 0 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Cash equivalents | 48,094,000 | 11,668,000 |
Short-term investments | 28,409,000 | 58,736,000 |
Long-term investments | 5,510,000 | 15,419,000 |
Total fair value of financial assets | 82,013,000 | 85,823,000 |
Fair Value, Measurements, Recurring | Level 3 Inputs | ||
Assets: | ||
Total fair value of financial assets | 0 | 0 |
Liabilities: | ||
Total fair value of financial liabilities | 0 | 0 |
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 2 Inputs | ||
Assets: | ||
Short-term investments | 24,290,000 | 55,989,000 |
Long-term investments | 5,510,000 | 15,419,000 |
U.S. Treasury securities | Fair Value, Measurements, Recurring | Level 2 Inputs | ||
Assets: | ||
Short-term investments | 4,119,000 | 2,747,000 |
Money Market Funds | Fair Value, Measurements, Recurring | Level 1 Inputs | ||
Assets: | ||
Cash equivalents | 48,094,000 | 86,000 |
U.S. Treasury securities | Fair Value, Measurements, Recurring | Level 2 Inputs | ||
Assets: | ||
Cash equivalents | $ 0 | $ 11,582,000 |
Investments and Fair Value Me_7
Investments and Fair Value Measurements - Gross Unrealized Losses and Fair Values of Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | $ 900 | $ 20,781 |
Gross Unrealized Losses | (1) | (16) |
U.S. Treasury securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 2,027 |
Gross Unrealized Losses | 0 | 0 |
Corporate notes and bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 900 | 18,754 |
Gross Unrealized Losses | $ (1) | $ (16) |
Goodwill - Goodwill (Details)
Goodwill - Goodwill (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill [Line Items] | ||
Goodwill | $ 12,790,000 | $ 12,790,000 |
Oil & Gas | ||
Goodwill [Line Items] | ||
Accumulated impairment loss | $ 0 |
Lines of Credit - Loan Agreemen
Lines of Credit - Loan Agreements and Stand-by Letters of Credit (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Jan. 27, 2017 | |
Standby Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding, amount | $ 12,300,000 | $ 11,800,000 | |
Loan and Pledge Agreement | |||
Line of Credit Facility [Line Items] | |||
Long-term debt | $ 0 | $ 0 | |
Loan and Pledge Agreement | Standby Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Term past expiration of agreement | 1 year | ||
Debt instrument, term | 3 years | ||
Line of Credit | Loan and Pledge Agreement | Committed Revolving Credit Line | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 16,000,000 | ||
Line of Credit | Loan and Pledge Agreement | Uncommitted Revolving Credit Line | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 4,000,000 | ||
Line of Credit | Loan and Pledge Agreement | Standby Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Commitment fee percentage | 0.70% | ||
Line of Credit | Foreign Subsidiary | Loan and Pledge Agreement | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 66,000,000 | ||
Other Financial Institution | Line of Credit | Loan and Pledge Agreement | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 5,100,000 |
- Operating Lease Obligations (
- Operating Lease Obligations (Details) $ in Millions | Mar. 01, 2020USD ($)ft²term | Jan. 01, 2020USD ($)ft²aterm |
Office And Warehouse, Katy, TX | ||
Loss Contingencies [Line Items] | ||
Area of leased space | ft² | 25,200 | |
Area of land | a | 4.5 | |
Operating leases, rent expense (per month) | $ 0.3 | |
Operating leases, rent expense, annual increase, percent | 3.00% | |
Operating leases, rent expense, term of contract | $ 3.6 | |
Lease initial term | 120 months | |
Operating lease, number of renewal terms | term | 2 | |
Operating lease, renewal term | 5 years | |
Operating lease, renewal to extend lease, written notice period | 6 months | |
Tracy, California | Office And Warehouse Space, Tracy Lease | ||
Loss Contingencies [Line Items] | ||
Area of leased space | ft² | 54,429 | |
Operating leases, rent expense (per month) | $ 0.4 | |
Operating leases, rent expense, annual increase, percent | 3.00% | |
Operating leases, rent expense, term of contract | $ 5 | |
Lease initial term | 122 months | |
Operating lease, number of renewal terms | term | 1 | |
Operating lease, renewal term | 5 years | |
Operating lease, renewal to extend lease, written notice period | 9 months |
Commitments and Contingencies -
Commitments and Contingencies - Lease Cost and Terms (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating lease expense | $ 668 | $ 473 | $ 1,271 | $ 950 |
Cash payments | 618 | 459 | 1,108 | 906 |
Non-cash lease liabilities arising from obtaining right-of-use assets | $ 0 | $ 0 | $ 6,384 | $ 0 |
Weighted average remaining lease term | 8 years 10 months 24 days | 8 years 10 months 24 days | ||
Weighted average discount rate | 7.00% | 7.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2020 (remaining six months) | $ 1,290 |
2021 | 2,431 |
2022 | 2,650 |
2023 | 2,580 |
2024 | 2,812 |
2025 and thereafter | 13,197 |
Total | 24,960 |
Less imputed lease interest | (6,609) |
Total lease liabilities | $ 18,351 |
Commitments and Contingencies_3
Commitments and Contingencies - Product Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Provision for warranty claims | $ 173 | $ 242 | ||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Warranty reserve balance, beginning of period | $ 665 | $ 571 | 631 | 478 |
Warranty costs charged to cost of revenue | 75 | 89 | 173 | 242 |
Utilization charges against reserve | (1) | (25) | (2) | (38) |
Release of accrual related to expired warranties | (66) | (36) | (129) | (83) |
Warranty reserve balance, end of period | $ 673 | $ 599 | $ 673 | $ 599 |
Commitments and Contingencies_4
Commitments and Contingencies - Purchase Obligations (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Long-term purchase commitment | $ 8.7 |
Income Taxes - Provision and Ef
Income Taxes - Provision and Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Provision for (benefit from) income taxes | $ 4,586 | $ 756 | $ 4,501 | $ 1,310 |
Effective tax rate | 21.30% | 16.90% | 20.40% | 17.10% |
Effective tax rate, excluding discrete items | 20.10% | 21.80% | 20.00% | 21.60% |
Business Segment - Summary of F
Business Segment - Summary of Financial Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 43,608 | $ 22,796 | $ 65,152 | $ 42,591 |
General and administrative | 5,599 | 5,500 | 12,480 | 11,079 |
Sales and marketing | 1,497 | 2,181 | 3,635 | 4,343 |
Research and development | 6,352 | 5,480 | 13,061 | 9,734 |
Amortization of intangible assets | 4 | 157 | 8 | 313 |
Impairment of long-lived assets | 2,332 | 0 | 2,332 | 0 |
Total operating expenses | 15,784 | 13,318 | 31,516 | 25,469 |
Income from operations | 21,275 | 3,995 | 21,403 | 6,704 |
Other income | 237 | 480 | 645 | 979 |
Income before income taxes | 21,512 | 4,475 | 22,048 | 7,683 |
Water | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,194 |
Oil & Gas | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,397 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
General and administrative | 877 | 975 | 2,023 | 1,873 |
Sales and marketing | 1,142 | 1,878 | 2,876 | 3,790 |
Research and development | 5,477 | 5,408 | 11,626 | 9,576 |
Amortization of intangible assets | 4 | 157 | 8 | 313 |
Impairment of long-lived assets | 2,332 | 2,332 | ||
Total operating expenses | 9,832 | 8,418 | 18,865 | 15,552 |
Income from operations | 27,227 | 8,895 | 34,054 | 16,621 |
Operating Segments | Water | ||||
Segment Reporting Information [Line Items] | ||||
General and administrative | 456 | 563 | 861 | 1,097 |
Sales and marketing | 1,124 | 1,559 | 2,800 | 3,208 |
Research and development | 960 | 1,103 | 1,862 | 1,908 |
Amortization of intangible assets | 4 | 157 | 8 | 313 |
Impairment of long-lived assets | 0 | 0 | ||
Total operating expenses | 2,544 | 3,382 | 5,531 | 6,526 |
Income from operations | 10,163 | 10,361 | 20,493 | 18,438 |
Operating Segments | Oil & Gas | ||||
Segment Reporting Information [Line Items] | ||||
General and administrative | 421 | 412 | 1,162 | 776 |
Sales and marketing | 18 | 319 | 76 | 582 |
Research and development | 4,517 | 4,305 | 9,764 | 7,668 |
Amortization of intangible assets | 0 | 0 | 0 | |
Impairment of long-lived assets | 2,332 | 2,332 | ||
Total operating expenses | 7,288 | 5,036 | 13,334 | 9,026 |
Income from operations | 17,064 | (1,466) | 13,561 | (1,817) |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total operating expenses | 5,952 | 4,900 | 12,651 | 9,917 |
Product | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,298 |
Product cost of revenue | 6,549 | 5,483 | 12,233 | 10,418 |
Product gross profit | 12,707 | 13,743 | 26,024 | 24,880 |
Product | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,298 |
Product cost of revenue | 6,549 | 5,483 | 12,233 | 10,418 |
Product gross profit | 12,707 | 13,743 | 26,024 | 24,880 |
Product | Operating Segments | Water | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 19,256 | 19,226 | 38,257 | 35,194 |
Product cost of revenue | 6,549 | 5,483 | 12,233 | 10,230 |
Product gross profit | 12,707 | 13,743 | 26,024 | 24,964 |
Product | Operating Segments | Oil & Gas | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 104 |
Product cost of revenue | 0 | 0 | 0 | 188 |
Product gross profit | 0 | 0 | 0 | (84) |
License and development revenue | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
License and development revenue | Water | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
License and development revenue | Oil & Gas | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
License and development revenue | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 24,352 | 3,570 | 26,895 | 7,293 |
License and development revenue | Operating Segments | Water | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
License and development revenue | Operating Segments | Oil & Gas | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 24,352 | $ 3,570 | $ 26,895 | $ 7,293 |
Concentrations - Product Revenu
Concentrations - Product Revenue Concentrations (Details) - Product Revenue - Customer Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Water | Customer A | ||||
Concentration Risk [Line Items] | ||||
Percentage of product revenue | 19.00% | 12.00% | 24.00% | |
Water | Customer B | ||||
Concentration Risk [Line Items] | ||||
Percentage of product revenue | 22.00% | 27.00% | 21.00% | 28.00% |
Water | Customer C | ||||
Concentration Risk [Line Items] | ||||
Percentage of product revenue | 22.00% | 15.00% | ||
Water | Customer D | ||||
Concentration Risk [Line Items] | ||||
Percentage of product revenue | 13.00% | 12.00% | ||
License and Development Revenue | One Customer | ||||
Concentration Risk [Line Items] | ||||
Percentage of product revenue | 100.00% | 100.00% |
VorTeq Partnership and Licens_2
VorTeq Partnership and License Agreement (Details) $ in Thousands | Oct. 14, 2015USD ($)payment | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Revenue | $ 43,608 | $ 22,796 | $ 65,152 | $ 42,591 | |
VorTeq License Agreement | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
VorTeq license agreement payments | $ 125,000 | ||||
Number of milestone payments | payment | 2 | ||||
VorTeq milestone payment to be received | $ 25,000 | ||||
License and development revenue | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Revenue | 24,352 | $ 3,570 | 26,895 | $ 7,293 | |
License and development revenue | Affiliated Entity | Schlumberger Technology Corporation | VorTeq License Agreement | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Up front non-refundable payment | $ 75,000 | ||||
Revenue | $ 24,400 | $ 24,400 |