Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | Energy Recovery, Inc. | |
Entity Central Index Key | 1,421,517 | |
Trading Symbol | erii | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 53,595,035 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 19,245,000 | $ 61,364,000 |
Restricted cash | 2,908,000 | 2,297,000 |
Short-term investments | 72,241,000 | 39,073,000 |
Accounts receivable, net of allowance for doubtful accounts of $96 and $130 at September 30, 2017 and December 31, 2016, respectively | 11,929,000 | 11,759,000 |
Unbilled receivables, current | 573,000 | 190,000 |
Cost and estimated earnings in excess of billings | 4,453,000 | 1,825,000 |
Inventories | 6,283,000 | 4,550,000 |
Prepaid expenses and other current assets | 1,663,000 | 1,311,000 |
Total current assets | 119,295,000 | 122,369,000 |
Restricted cash, non-current | 182,000 | 2,087,000 |
Deferred tax assets, non-current | 1,711,000 | 1,270,000 |
Property and equipment, net of accumulated depreciation of $23,352 and $21,385 at September 30, 2017 and December 31, 2016, respectively | 13,632,000 | 8,643,000 |
Goodwill | 12,790,000 | 12,790,000 |
Other intangible assets, net | 1,427,000 | 1,900,000 |
Other assets, non-current | 2,000 | 4,000 |
Total assets | 149,039,000 | 149,063,000 |
Current liabilities: | ||
Accounts payable | 3,336,000 | 1,505,000 |
Accrued expenses and other current liabilities | 7,657,000 | 9,019,000 |
Income taxes payable | 142,000 | 16,000 |
Accrued warranty reserve | 314,000 | 406,000 |
Deferred revenue | 6,230,000 | 6,201,000 |
Current portion of long-term debt | 11,000 | 11,000 |
Total current liabilities | 17,690,000 | 17,158,000 |
Long-term debt, net of current portion | 19,000 | 27,000 |
Deferred tax liabilities, non-current | 2,428,000 | 2,233,000 |
Deferred revenue, non-current | 60,223,000 | 63,958,000 |
Other non-current liabilities | 411,000 | 554,000 |
Total liabilities | 80,771,000 | 83,930,000 |
Commitments and Contingencies (Note 9) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.001 par value; 200,000,000 shares authorized; 57,855,263 shares issued and 53,592,430 shares outstanding at September 30, 2017, and 56,884,207 shares issued and 53,162,551, shares outstanding at December 31, 2016 | 58,000 | 57,000 |
Additional paid-in capital | 146,320,000 | 139,676,000 |
Accumulated other comprehensive loss | (77,000) | (118,000) |
Treasury stock, at cost, 4,262,833 repurchased at September 30, 2017 and 3,721,656 repurchased at December 31, 2016 | (20,486,000) | (16,210,000) |
Accumulated deficit | (57,547,000) | (58,272,000) |
Total stockholders’ equity | 68,268,000 | 65,133,000 |
Total liabilities and stockholders’ equity | $ 149,039,000 | $ 149,063,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 96 | $ 130 |
Accumulated depreciation | $ 23,352 | $ 21,385 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 57,855,263 | 56,884,207 |
Common stock, shares outstanding (in shares) | 53,592,430 | 53,162,551 |
Treasury stock (in shares) | 4,262,833 | 3,721,656 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Product revenue | $ 13,834 | $ 11,024 | $ 37,017 | $ 33,048 |
Product cost of revenue | 4,254 | 3,968 | 12,394 | 11,878 |
Product gross profit | 9,580 | 7,056 | 24,623 | 21,170 |
License and development revenue | 1,250 | 1,250 | 3,750 | 3,750 |
Operating expenses: | ||||
General and administrative | 4,034 | 3,971 | 12,369 | 12,847 |
Sales and marketing | 2,061 | 2,512 | 6,688 | 6,517 |
Research and development | 3,038 | 2,319 | 8,624 | 7,406 |
Amortization of intangible assets | 157 | 158 | 473 | 473 |
Total operating expenses | 9,290 | 8,960 | 28,154 | 27,243 |
Income (loss) from operations | 1,540 | (654) | 219 | (2,323) |
Other (expense) income: | ||||
Interest expense | (1) | (1) | (2) | (2) |
Other non-operating income | 233 | 79 | 462 | 137 |
Income (loss) before income taxes | 1,772 | (576) | 679 | (2,188) |
Provision for (benefit from) income taxes | 66 | 3 | (46) | (99) |
Net income (loss) | $ 1,706 | $ (579) | $ 725 | $ (2,089) |
Basic net income (loss) per share (in dollars per share) | $ 0.03 | $ (0.01) | $ 0.01 | $ (0.04) |
Diluted net income (loss) per share (in dollars per share) | $ 0.03 | $ (0.01) | $ 0.01 | $ (0.04) |
Shares used in basic per share calculation (in shares) | 53,580 | 52,106 | 53,717 | 52,227 |
Shares used in diluted per share calculation (in shares) | 55,140 | 52,106 | 55,571 | 52,227 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,706 | $ (579) | $ 725 | $ (2,089) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | 13 | 5 | 48 | (1) |
Unrealized (loss) income on investments | (3) | 5 | (7) | (26) |
Other comprehensive income (loss) | 10 | 10 | 41 | (27) |
Comprehensive income (loss) | $ 1,716 | $ (569) | $ 766 | $ (2,116) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net loss | $ 725 | $ (2,089) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Share-based compensation | 3,136 | 2,640 |
Depreciation and amortization | 2,704 | 2,771 |
Amortization of premiums on investments | 379 | 94 |
Provision for warranty claims | 145 | 134 |
Unrealized loss on foreign currency transactions | 69 | 65 |
Provision for doubtful accounts | 16 | 68 |
Change in fair value of put options | 0 | 33 |
Other non-cash adjustments | (145) | (120) |
Valuation adjustments for excess or obsolete inventory | (230) | (175) |
Reversal of accruals related to expired warranties | (237) | (201) |
Deferred income taxes | (244) | (270) |
Changes in operating assets and liabilities: | ||
Accounts payable | 1,831 | (69) |
Income taxes payable | 126 | 135 |
Deferred revenue, product | 81 | 557 |
Accounts receivable | (186) | 3,330 |
Prepaid and other assets | (350) | (598) |
Unbilled receivables | (383) | 971 |
Inventories | (1,503) | 839 |
Accrued expenses and other liabilities | (1,728) | (1,598) |
Cost and estimated earnings in excess of billings | (2,628) | (440) |
Deferred revenue, license and development | (3,750) | (3,750) |
Net cash (used in) provided by operating activities | (2,172) | 2,327 |
Cash Flows From Investing Activities | ||
Maturities of marketable securities | 30,977 | 1,000 |
Restricted cash | 1,294 | (15) |
Capital expenditures | (6,843) | (900) |
Purchases of marketable securities | (64,530) | (15,912) |
Net cash used in investing activities | (39,102) | (15,827) |
Cash Flows From Financing Activities | ||
Net proceeds from issuance of common stock | 3,722 | 3,708 |
Repayment of long-term debt | (8) | (7) |
Tax payment for employee shares withheld | (228) | 0 |
Repurchase of common stock | (4,276) | (9,375) |
Net cash used in financing activities | (790) | (5,674) |
Effect of exchange rate differences on cash and cash equivalents | (55) | (66) |
Net change in cash and cash equivalents | (42,119) | (19,240) |
Cash and cash equivalents, beginning of period | 61,364 | 99,931 |
Cash and cash equivalents, end of period | $ 19,245 | $ 80,691 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
The Company and Summary of Significant Accounting Policies | The Company and Summary of Significant Accounting Policies The Company Energy Recovery, Inc. (the “Company,” “Energy Recovery,” “our,” “us,” and “we”) is an energy solutions provider to industrial fluid flow markets worldwide. Our core competencies are fluid dynamics and advanced material science. Our products make industrial processes more operationally and capital expenditure efficient. Our solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. Our 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 ™ , MTeq ™ , IsoBoost ® , IsoGen ® , AT ™ , and AquaBold ™ . We own, manufacture, and/or develop our solutions, in whole or in part, in the United States of America, (“U.S.”) and the Republic of Ireland. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our 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 our more significant estimates and judgments and that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are revenue recognition; capitalization of research and development assets; allowance for doubtful accounts; allowance for product warranty; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; useful lives for depreciation and amortization; 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. Basis of Presentation The condensed consolidated financial statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The December 31, 2016 condensed consolidated balance sheet was derived from audited financial statements, and may not include all disclosures required by GAAP; however, we believe that the disclosures are adequate to make the information presented not misleading. The September 30, 2017 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, 2016 included in our Annual Report on Form 10-K filed with the SEC on March 10, 2017. 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. Recent Accounting Pronouncements Recently issued accounting pronouncement not yet adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance in GAAP when it becomes effective. The update also requires more detailed disclosures to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was originally effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. On July 9, 2015, the FASB voted to approve a one-year deferral of the effective date of ASU 2014-09. Additionally, the FASB decided to permit early adoption, but not before the original effective date (that is, annual periods beginning after December 15, 2016). ASU 2014-09 permits the use of either the full retrospective or cumulative effect transition (modified retrospective) method. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing, respectively . The amendments in these updates are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The effective date and transition requirements for both ASU 2016-08 and ASU 2016-10 are the same as those for ASU 2014-09 as deferred. To assess the impact of and to implement Topic 606, the Company formed a project team, which has operated since 2014, to evaluate internal processes. We plan to adopt Topic 606 as of January 1, 2018 using the full retrospective transition method. We continue to evaluate the effect that ASU 2014-09 will have on our financial statements and related disclosures. For revenue streams related to water desalination products, we do not expect the impact to be material based on our analysis performed to date; however, we are continuing to assess. For transactions accounted for under the percentage-of-completion method, we are still assessing whether these contracts may be accounted for over time under the new revenue standard. For license and development revenue, there may be a material difference in the timing of revenue recognition under the new standard, with the most likely impact being an overall acceleration of the recognition of deferred revenue, since under existing guidance revenue is recognized on a straight-line basis over the fifteen-year term of the license. At this time, we are still performing our analysis and we will continue to assess the impact on our revenue streams in 2017. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 impacts any entity that enters into a lease with some specified scope exceptions. The guidance updates and supersedes Topic 840, Leases. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We continue to determine the impact of this guidance on our financial statements; as a lessee, we expect a material impact on the balance sheet to reflect the impact of operating leases and no material impact on the income statement. We plan to early adopt this standard on January 1, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 impacts all entities that are required to present a statement of cash flows under Topic 230. The amendment provides guidance on eight specific cash flow issues. For public entities, ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to current GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective on January 1, 2018, with early adoption permitted. The update is required to be adopted on a modified retrospective basis with the cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash on the Consolidated Statement of Cash Flows. ASU 2016-18 requires that the Consolidated Statement of Cash Flows explain the change in total cash and equivalents and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The standard also requires reconciliation between the total cash and equivalents and restricted cash presented on the Consolidated Statement of Cash Flows and the cash and cash equivalents balance presented on the Consolidated Balance Sheet. ASU 2016-18 is effective retrospectively on January 1, 2018, with early adoption permitted. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment quantitative test and allows for the determination of impairment by comparing the fair value of the reporting unit with its carrying amount. The amendments in this updates should be applied on a prospective basis. For public entities which are SEC filers, this amendment is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. We expect to adopt this standard January 1, 2020 and do not expect the adoption of this standard to have a material impact on our financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-base payment award require an entity to apply modification accounting under Topic 718. ASU 2017-09 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial position or results of operations. Recently adopted accounting pronouncement In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires excess tax benefits and tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes) be recognized as income tax expense or benefit in the income statement. Previously, these amounts were recognized directly to shareholder’s equity. The excess tax benefit from share-based compensation, previously classified as a financing activity, will be classified as an operating activity. Additionally, cash paid when directly withholding shares on an employee’s behalf for tax withholding purposes, is classified as a financing activity. For public entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this guidance effective January 1, 2017. The adoption resulted in an increase to the net operating loss carryforward deferred tax asset and a corresponding increase in valuation allowance of $6.9 million attributable to excess tax benefits not previously recognized as they did not reduce income taxes payable. We elected to continue to estimate forfeitures as part of the recognition of cost associated with equity awards. We applied prospectively all excess tax benefits and tax deficiencies resulting from settlement of awards after the date of adoption. No adjustments were recorded for any windfall benefits previously recorded in additional paid-in capital. We withheld shares valued at $0.2 million for tax withholding purposes for the nine months ended September 30, 2017 and reflected this in the cash flow statement as a financing activity. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill was $12.8 million as of September 30, 2017 and December 31, 2016, which was the result of our acquisition of Pump Engineering, LLC in December 2009. In July 2015 with the adoption of a new organizational and reporting structure based on our operating segments, Water and Oil & Gas, we changed the measurement date of our annual goodwill impairment test from December to July. As a result, we completed the required annual testing of goodwill for impairment for all reporting units as of July 1, 2017 and determined that goodwill was not impaired. During the three and nine months ended September 30, 2017 , there were no changes in the recognized amount of goodwill, and there has been no impairment of goodwill to date. The components of identifiable other intangible assets, all of which are finite-lived, as of the dates indicated were as follows (in thousands): September 30, 2017 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Losses Net Carrying Amount Developed technology $ 6,100 $ (4,778 ) $ — $ 1,322 Non-compete agreements 1,310 (1,310 ) — — Backlog 1,300 (1,300 ) — — Trademarks 1,200 (180 ) (1,020 ) — Customer relationships 990 (990 ) — — Patents 585 (438 ) (42 ) 105 Total $ 11,485 $ (8,996 ) $ (1,062 ) $ 1,427 December 31, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Losses Net Carrying Amount Developed technology $ 6,100 $ (4,321 ) $ — $ 1,779 Non-compete agreements 1,310 (1,310 ) — — Backlog 1,300 (1,300 ) — — Trademarks 1,200 (180 ) (1,020 ) — Customer relationships 990 (990 ) — — Patents 585 (422 ) (42 ) 121 Total $ 11,485 $ (8,523 ) $ (1,062 ) $ 1,900 Accumulated impairment losses at September 30, 2017 and December 31, 2016 include impairment charges for trademarks in 2012 and impairment charges for patents in 2007 and 2010. |
Income (loss) per Share
Income (loss) per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Income (loss) per Share | Income (loss) per Share Basic and diluted net income (loss) per share is based on the weighted average number of common shares outstanding during the period. Potential dilutive securities are excluded from the calculation of loss per share, as their inclusion would be anti-dilutive. The following table shows the computation of basic and diluted income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income (loss) $ 1,706 $ (579 ) $ 725 $ (2,089 ) Denominator: Basic weighted average common shares outstanding 53,580 52,106 53,717 52,227 Weighted average effect of dilutive stock awards 1,560 — 1,854 — Diluted weighted average common shares outstanding 55,140 52,106 55,571 52,227 Basic net income (loss) per share $ 0.03 $ (0.01 ) $ 0.01 $ (0.04 ) Diluted net income (loss) per share $ 0.03 $ (0.01 ) $ 0.01 $ (0.04 ) The following potential common shares were excluded from the computation of diluted income (loss) per share because their effect would have been anti-dilutive (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock options 3,858 6,938 3,565 6,938 Restricted stock units 286 214 285 214 |
Other Financial Information
Other Financial Information | 9 Months Ended |
Sep. 30, 2017 | |
Other Financial Information [Abstract] | |
Other Financial Information | Other Financial Information Restricted Cash We have pledged cash in connection with certain stand-by letters of credit and company credit cards. We have deposited corresponding amounts into accounts at several financial institutions for these items as follows (in thousands): September 30, December 31, Collateral for stand-by letters of credit $ 2,908 $ 2,297 Current restricted cash $ 2,908 $ 2,297 Collateral for credit cards $ 85 $ — Collateral for stand-by letters of credit 97 2,087 Non-current restricted cash $ 182 $ 2,087 Total restricted cash $ 3,090 $ 4,384 Inventories Our inventories are stated at the lower of cost (using the first-in, first-out method) or market and consisted of the following (in thousands): September 30, December 31, Raw materials $ 2,034 $ 1,783 Work in process 1,483 1,146 Finished goods 2,766 1,621 Inventories, net $ 6,283 $ 4,550 Prepaid and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, Supplier advances $ 188 $ 73 Interest receivable 388 272 Other prepaid expenses and current assets 1,087 966 Total prepaid expenses and other current assets $ 1,663 $ 1,311 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, December 31, Unbilled project costs 1,556 1,069 Other accrued expenses and current liabilities 2,035 2,253 Payroll and commissions payable 4,066 5,697 Total accrued expenses and other current liabilities $ 7,657 $ 9,019 Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss for the nine months ended September 30, 2017, were as follows (in thousands): Foreign Currency Translation Adjustments Net of Tax Benefit Unrealized Losses on Investments Total Accumulated Other Comprehensive Loss Balance, December 31, 2016 $ (90 ) $ (28 ) $ (118 ) Net other comprehensive income (loss) 48 (7 ) 41 Balance, September 30, 2017 $ (42 ) $ (35 ) $ (77 ) There were no reclassifications of amounts out of accumulated other comprehensive loss, as there have been no sales of securities or translation adjustments that impacted other comprehensive loss during the quarter. The tax impact of the changes in accumulated other comprehensive loss was not material. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments [Abstract] | |
Investments | Investments Our short-term investments are all classified as available-for-sale. There were no sales of available-for-sale securities during the three and nine months ended September 30, 2017 . Available-for-sale securities as of the dates indicated consisted of the following (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Corporate notes and bonds $ 72,276 $ 59 $ (94 ) $ 72,241 Total short-term investments $ 72,276 $ 59 $ (94 ) $ 72,241 December 31, 2016 Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Corporate notes and bonds $ 39,100 $ 6 $ (33 ) $ 39,073 Total short-term investments $ 39,100 $ 6 $ (33 ) $ 39,073 Gross unrealized losses and fair values of our investments in an unrealized loss position as of the dates indicated, aggregated by investment category and length of time that the security has been in a continuous loss position, were as follows (in thousands): September 30, 2017 Less than 12 months 12 months or greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate notes and bonds $ 57,393 $ (94 ) $ — $ — $ 57,393 $ (94 ) Total $ 57,393 $ (94 ) $ — $ — $ 57,393 $ (94 ) December 31, 2016 Less than 12 months 12 months or greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate notes and bonds $ 29,667 $ (33 ) $ — $ — $ 29,667 $ (33 ) Total $ 29,667 $ (33 ) $ — $ — $ 29,667 $ (33 ) Expected maturities can differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. The amortized cost and fair value of available-for-sale securities that had stated maturities as of September 30, 2017 are shown below by contractual maturity (in thousands): September 30, 2017 Amortized Cost Fair Value Due in one year or less $ 72,276 $ 72,241 Total $ 72,276 $ 72,241 |
Long-Term Debt and Line of Cred
Long-Term Debt and Line of Credit | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Line of Credit | Long-Term Debt and Line of Credit Debt In March 2015, we entered into a loan agreement with a financial institution for a $55,000 fixed-rate installment loan carrying an annual interest rate of 6.35% . The loan is payable in equal monthly installments and matures on April 2, 2020. The note is secured by the asset purchased. Long-term debt consisted of the following (in thousands): September 30, 2017 December 31, 2016 Loan payable $ 30 $ 38 Less: current portion (11 ) (11 ) Total long-term debt $ 19 $ 27 Future minimum principal payments due under long-term debt arrangements consist of the following (in thousands): September 30, 2017 2017 (remaining three months) $ 3 2018 11 2019 12 2020 4 Total debt $ 30 Line of Credit In June 2012, we entered into a loan agreement with a financial institution (“Financial Institution 1”). The loan agreement was amended in June 2015, (as amended, the “Loan Agreement”). The Loan Agreement provided for a total available credit line of $16.0 million . Under the Loan Agreement, we were allowed to draw advances not to exceed the lesser of the $16 million credit line or the credit line minus all outstanding revolving loans. Revolving loans could be in the form of a base rate loan that bore interest equal to the prime rate or a Eurodollar loan that bore interest equal to the adjusted LIBOR rate plus 1.25% . Stand-by letters of credit were subject to customary fees and expenses for issuance or renewal. The unused portion of the credit facility was subject to a facility fee in an amount equal to 0.25% per annum of the average unused portion of the revolving line. The Loan Agreement also required us to maintain a cash collateral balance equal to 101% of all outstanding advances and all outstanding stand-by letters of credit collateralized by the line of credit. This Loan Agreement was terminated on January 24, 2017. With the termination of the Loan Agreement, the cash collateral requirement was increased to 105% on all stand-by letters of credit and all corporate credit cards outstanding at termination. At December 31, 2016, there were no advances drawn under the Loan Agreement. Stand-by letters of credit collateralized by restricted cash at Financial Institution 1 totaled $1.9 million and $3.1 million as of September 30, 2017 and December 31, 2016, respectively. Restricted cash related to stand-by letters of credit at Financial Institution 1 totaled $2.0 million and $3.1 million as of September 30, 2017 and December 31, 2016, respectively. On January 27, 2017, we entered into a loan and pledge agreement (the “Loan and Pledge Agreement”) with another financial institution (“Financial Institution 2”). The Loan and Pledge Agreement provides for a committed revolving credit line of $16.0 million and an uncommitted revolving credit line of $4.0 million . Under the Loan and Pledge Agreement we are allowed to borrow and request letters of credit against the eligible assets held from time to time in the pledged account maintained with the financial institution. Stand-by letters of credit are secured by pledged U.S. investments and there is no cash collateral balance required. Stand-by letters of credit are subject to fees, in an amount equal to 0.7% per annum of the face amount of the letter of credit, that are payable quarterly and are non-refundable. Revolving loans incur interest per annum at a base rate equal to the LIBOR rate plus 1.5% . Any default bears the aforementioned interest rate plus an additional 2% . The unused portion of the credit line is subject to a fee equal to the product of 0.2% per annum multiplied by the difference, if positive, between $16.0 million and the average daily balance of all advances under the committed facility plus aggregate average daily undrawn amounts of all letters of credit issued under the committed facility during the immediately preceding month or portion thereof. The Loan and Pledge Agreement was amended on March 17, 2017 to increase the amount of allowable stand-by letters of credit held with other financial institutions from $4.1 million to $5.1 million . At September 30, 2017 and December 31, 2016, we had stand-by letters of credit at Financial Institution 2 totaling $5.5 million and $0.3 million , respectively. Restricted cash related to stand-by letters of credit at Financial Institution 2 totaled $0 and $0.3 million at September 30, 2017 and December 31, 2016, respectively. At September 30, 2017 and December 31, 2016, we also had stand-by letters of credit collateralized by restricted cash at another financial institution (“Financial Institution 3”) totaling $1.0 million and $1.0 million , respectively. Restricted cash related to stand-by letters of credit at Financial Institution 3 totaled $1.0 million and $1.0 million as of September 30, 2017 and December 31, 2016, respectively. At September 30, 2017 and December 31, 2016, total stand-by letters of credit at all financing institutions totaled $8.4 million and $4.4 million, respectively. Restricted cash related to all stand-by letters of credit at September 30, 2017 and December 31, 2016 totaled $3.0 million and $4.4 million , respectively. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Equity | Equity Stock Repurchase Program In March 2017, our Board of Directors authorized a stock repurchase program under which the Company, at the discretion of management, could repurchase up to $15.0 million in aggregate cost of our outstanding common stock through September 30, 2017. This authorization has expired. As of September 30, 2017 , 541,177 shares, at an aggregate cost of $4.3 million had been repurchased under the authorization. We account for stock repurchases using the cost method. Cost includes fees charged in connection with acquiring the outstanding common stock. In January 2016, our Board of Directors authorized a stock repurchase program under which the Company, at the discretion of management, could repurchase up to $6.0 million in aggregate cost of our outstanding common stock through June 30, 2016 (the “January Authorization”). In May 2016, our Board of Directors rescinded the January Authorization and authorized a new stock repurchase program under which the Company, at the discretion of management, could repurchase up to $10.0 million in aggregate cost of our outstanding common stock through October 31, 2016 (the “May Authorization”). At December 31, 2016, 673,700 shares, at an aggregate cost of $4.1 million , had been repurchased under the January Authorization and 568,500 shares, at an aggregate cost of $5.3 million , had been repurchased under the May Authorization. The May Authorization expired in October 2016. Share-Based Compensation Expense For the three and nine months ended September 30, 2017 and 2016, we recognized share-based compensation expense related to employees as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenue $ 41 $ 16 $ 117 $ 78 General and administrative 580 378 1,698 1,635 Sales and marketing 191 218 628 502 Research and development 204 163 693 425 Total share-based compensation expense $ 1,016 $ 775 $ 3,136 $ 2,640 Stock Option Plan In June 2016, our stockholders approved the 2016 Incentive Plan (the “Plan”), that permits the grant of stock options, stock appreciation rights (“SARs”), restricted stock (“RS” or “RSA”), restricted stock units (“RSUs”), performance units, performance shares, and other stock-based awards to employees, officers, directors, and consultants. Prior to the approval of the Plan, we maintained the Amended and Restated 2008 Equity Incentive Plan (the “Prior Plan”). Stock-based awards granted under the Plan and the Prior Plan, generally vest over four years and expire no more than ten years after the date of grant. Subject to adjustments, as provided in the Plan, the number of shares of common stock initially authorized for issuance under the Plan was 4,441,083 (which consist of 3,830,000 new shares plus 611,083 shares that were authorized and unissued under the Prior Plan) plus up to 7,635,410 shares that were set aside for awards granted under the Prior Plan that were subsequently forfeited. The Plan supersedes all previously issued stock incentive plans (including the Prior Plan) and is currently the only available plan from which equity awards may be granted. Stock Option Activity The following table summarizes the stock option activity under the Plan and includes options granted under all previous plans. Options Outstanding Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life(in Years) Aggregate Intrinsic Value (2) Balance, December 31, 2016 5,882,861 $ 4.81 6.3 $ 32,683,000 Granted 673,062 $ 9.57 — — Exercised (920,662 ) $ 4.04 — — Forfeited (217,617 ) $ 6.47 — — Balance, September 30, 2017 5,417,644 $ 5.46 6.6 $ 15,100,000 Vested and exercisable as of September 30, 2017 3,570,351 $ 4.75 5.7 $ 11,672,000 Vested and exercisable as of September 30, 2017 and expected to vest thereafter (1) 5,121,800 $ 5.34 6.5 $ 14,686,000 (1) Options that are expected to vest are net of estimated future option forfeitures in accordance with the provisions of ASC 718. “ Compensation – Stock Compensation.” (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of our common stock as of September 30, 2017 and December 31, 2016 of $7.90 and $10.35 per share, respectively. As of September 30, 2017 , total unrecognized compensation cost related to non-vested option awards, net of estimated forfeitures, was $5.5 million , which is expected to be recognized as expense over a weighted average period of approximately 2.5 years . Restricted Stock Unit Activity The following table summarizes the restricted stock unit activity under the Plan and includes restricted stock units granted under all previous plans. Units Weighted Average Grant- Date Fair Value Per Unit Unvested at December 31, 2016 213,514 $ 8.65 Awarded 161,415 $ 10.15 Vested (78,095 ) $ 8.65 Forfeited (10,681 ) $ 8.52 Unvested at September 30, 2017 286,153 $ 9.50 As of September 30, 2017 , total unrecognized compensation cost related to non-vested restricted stock units, net of estimated forfeitures, was $1.9 million , which is expected to be recognized as expense over a weighted average period of approximately 3.0 years . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease Obligations We lease facilities under fixed non-cancellable operating leases that expire on various dates through July 2021. Future minimum lease payments consist of the following (in thousands): September 30, 2017 2017 (remaining three months) $ 432 2018 1,668 2019 1,461 2020 59 2021 34 Total future minimum lease payments $ 3,654 Product Warranty The following table summarizes the activity related to the product warranty liability during the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance, beginning of period $ 374 $ 411 $ 406 $ 461 Warranty costs charged to cost of revenue 54 38 145 134 Release of accrual for expired warranties (114 ) (55 ) (237 ) (201 ) Balance, end of period $ 314 $ 394 $ 314 $ 394 Purchase Obligations We enter into purchase order arrangements with our vendors. As of September 30, 2017 , there were open purchase orders for which we had not yet received the related goods or services. These arrangements are subject to change based on our sales demand forecasts, and we have the right to cancel the arrangements prior to the date of delivery. As of September 30, 2017 , we had approximately $3.1 million of cancellable open purchase order arrangements related primarily to materials and parts. Guarantees We enter into indemnification provisions under our agreements with other companies in the ordinary course of business, typically with customers. Under these provisions, we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities, generally limited to personal injury and property damage caused by our employees at a customer’s desalination plant in proportion to the employee’s percentage of fault for the accident. Damages incurred for these indemnifications would be covered by our general liability insurance to the extent provided by the policy limitations. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the estimated fair value of these agreements is not material. Accordingly, we have no liabilities recorded for these agreements as of September 30, 2017 and December 31, 2016. In certain cases, we issue warranty and product performance guarantees to our customers for amounts generally equal to 10% or less of the total sales agreement to endorse the execution of product delivery and the warranty of design work, fabrication, and operating performance. These guarantees are generally stand-by letters of credit that typically remain in place for periods ranging up to twenty-four ( 24 ) months, and in some cases up to forty-seven ( 47 ) months. All stand-by letters of credit at September 30, 2017 and December 31, 2016, totaled $8.4 million and $4.4 million , respectively. Litigation The Company is named in and subject to various proceedings and claims in connection with our business. We are contesting the allegations in these claims, and we believe that there are meritorious defenses in each of these matters. The outcome of matters we have been and currently are 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 our results of operations in any future period and a significant judgment could have a material adverse impact on our financial condition, results of operations and cash flows. We may in the future become involved in additional litigation in the ordinary course of our business, including litigation that could be material to our business. Based on currently available information and review with outside counsel, management does not believe that the currently known actions or threats against the Company will result in any material adverse effect on our financial condition, results of operations, or cash flows. 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 (“Case 1”). A hearing was held on November 13, 2015, after which the labor court ruled that it did not have jurisdiction over the matter. Mr. Blanco has appealed and the Company has filed statements of counter appeal. Based on currently available information and review with outside counsel, the Company has determined that an award to Mr. Blanco is not probable. While a loss may be reasonably possible, an estimate of loss, if any, cannot reasonably be determined at this time. On November 24, 2014, Mr. Blanco filed a second action based on breach of contract theories in the same court as Case 1, but the cases are separate. In Case 2, Mr. Blanco seeks payment of an unpaid bonus, stock options, and non-compete compensation. The court ruled that this case is stayed until a final ruling is issued in Case 1. Based on currently available information and review with outside counsel, the Company has determined that an award to Mr. Blanco is not probable. While a loss may be reasonably possible, an estimate of loss, if any, cannot reasonably be determined at this time. On February 18 and July 27, 2016, two derivative action complaints were filed in connection with the Company's previously reported stockholder class action lawsuit in the Superior Court for the State of California, County of Alameda where the Company was named as a nominal defendant under the captions, Goldberg v. Rooney, et al ., HG 16804359, and Gerald McManiman v. Gay, et al ., RG 16824960. The complaints have been consolidated under the caption, In Re Energy Recovery, Inc. Derivative Litigation , HG16804359. The consolidated complaint alleges breach of fiduciary duty, waste of corporate assets, and unjust enrichment causes of action against the individually named defendants. Based on currently available information and review with outside counsel, the Company is not able to estimate a potential loss, if any, due to the early stage of the matter. The previously reported consolidated stockholder class action lawsuit - In Re Energy Recovery Inc. Securities Litigation, Case No.3:15cv-00265 EMC - was dismissed with prejudice by the United States District Court of the Northern District of California on August 28, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate for the nine months ended September 30, 2017 and 2016 was (6.57)% and 4.5% , respectively. As of December 31, 2016, a valuation allowance of approximately $21.1 million reduced our deferred income tax assets to the amount expected to be realized. The tax benefit recognized for the nine months ended September 30, 2017, was primarily related to losses in our Ireland subsidiary. |
Business Segment and Geographic
Business Segment and Geographic Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segment and Geographic Information | Business Segment and Geographic Information We are an energy solutions provider to industrial fluid flow markets worldwide. We manufacture and sell high-efficiency energy recovery devices and pumps as well as related products and services. Our chief operating decision-maker (“CODM”) is the chief executive officer (“CEO”). Our reportable operating 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 energy recovery device sold, and the related products and services. The Water Segment consists of revenue associated with products sold for use in reverse osmosis water desalination, as well as the related identifiable expenses. The Oil & Gas Segment consists of product revenue associated with products sold for use in gas processing, chemical processing, and hydraulic fracturing and license and development revenue associated with hydraulic fracturing, as well as related identifiable expenses. Operating income for each segment excludes other income and expenses and certain expenses managed outside the operating segment. Costs excluded from operating income include various corporate expenses 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 (loss). The following summarizes financial information by segment for the periods presented (in thousands): Three Months Ended Three Months Ended Water Oil &Gas Total Water Oil &Gas Total Product revenue $ 13,227 $ 607 $ 13,834 $ 10,568 $ 456 $ 11,024 Product cost of revenue 3,818 436 4,254 3,647 321 3,968 Product gross profit 9,409 171 9,580 6,921 135 7,056 License and development revenue — 1,250 1,250 — 1,250 1,250 Operating expenses: General and administrative 334 361 695 346 278 624 Sales and marketing 1,296 431 1,727 1,434 750 2,184 Research and development 316 2,669 2,985 262 2,023 2,285 Amortization of intangibles 157 — 157 158 — 158 Total operating expenses 2,103 3,461 5,564 2,200 3,051 5,251 Operating income (loss) $ 7,306 $ (2,040 ) 5,266 $ 4,721 $ (1,666 ) 3,055 Less: Corporate operating expenses 3,726 3,709 Consolidated operating income (loss) 1,540 (654 ) Non-operating income 232 78 Income (loss) before income taxes $ 1,772 $ (576 ) Nine Months Ended Nine Months Ended Water Oil &Gas Total Water Oil &Gas Total Product revenue $ 33,707 $ 3,310 $ 37,017 $ 32,592 $ 456 $ 33,048 Product cost of revenue 10,003 2,391 12,394 11,557 321 11,878 Product gross profit 23,704 919 24,623 21,035 135 21,170 License and development revenue — 3,750 3,750 — 3,750 3,750 Operating expenses: General and administrative 965 1,085 2,050 828 650 1,478 Sales and marketing 4,039 1,635 5,674 3,663 2,133 5,796 Research and development 810 7,734 8,544 954 6,394 7,348 Amortization of intangibles 473 — 473 473 — 473 Total operating expenses 6,287 10,454 16,741 5,918 9,177 15,095 Operating income (loss) $ 17,417 $ (5,785 ) 11,632 $ 15,117 $ (5,292 ) 9,825 Less: Corporate operating expenses 11,413 12,148 Consolidated operating income (loss) 219 (2,323 ) Non-operating income 460 135 Income (loss) before income taxes $ 679 $ (2,188 ) The following geographic information includes net revenue from our domestic and international customers based on the customers’ requested delivery locations, except for certain cases in which the customer directed us to deliver our products to a location that differs from the known ultimate location of use. In such cases, the ultimate location of use, rather than the delivery location, is reflected in the table below (in thousands, except percentages): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Domestic product revenue $ 365 $ 268 $ 1,349 $ 672 International product revenue 13,469 10,756 35,668 32,376 Total product revenue $ 13,834 $ 11,024 $ 37,017 $ 33,048 Product revenue by country: Saudi Arabia 20 % 24 % 17 % 10 % China 14 % 4 % 8 % 11 % Spain 13 % 4 % 9 % 6 % Egypt 13 % 1 % 15 % 8 % United States 3 % 2 % 4 % 2 % Oman 2 % 2 % 13 % 2 % Singapore — % 22 % — % 8 % Qatar — % — % — % 12 % Other * 35 % 41 % 34 % 41 % Total 100 % 100 % 100 % 100 % * Includes remaining countries not separately disclosed. No country in this line item accounted for more than 10% of our product revenue during the periods presented. Primarily all of our long-lived assets were located in the United States at September 30, 2017 and December 31, 2016. |
Concentrations
Concentrations | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Concentrations Customers accounting for 10% or more of our accounts receivable and unbilled receivables were as follows: September 30, 2017 December 31, 2016 Customer A 26 % 16 % Customer B 19 % 6 % Customer C 11 % 5 % Customer D 10 % — % Customer E — % 13 % Percentages with — are less than 1% or none. Revenue from customers representing 10% or more of product revenue varies from period to period. For the periods indicated, customers representing 10% or more of product revenue were: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Customer C 14 % — % 5 % — % Customer D 12 % — % 4 % — % Customer B 9 % 2 % 11 % 5 % Customer F — % 2 % 11 % 1 % Customer G — % 23 % — % 9 % Customer H — % 15 % — % 5 % Customer I — % 1 % 1 % 13 % Percentages with — are less than 1% or none. No other customer accounted for more than 10% of our product revenue during any period presented. One customer, Customer J, accounts for 100% of our license and development revenue for the three and nine months ended September 30, 2017 and 2016. Vendors accounting for 10% or more of our accounts payable were as follows: September 30, December 31, Vendor A 10 % — % Vendor B 10 % — % Vendor C 10 % 18 % Percentages with — are less than 1% or none. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The authoritative guidance for measuring fair value provides a hierarchy that prioritizes the inputs to valuation techniques used in measuring fair value as follows: 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 carrying values of cash and cash equivalents, restricted cash, accounts receivable, unbilled receivables, cost and estimated earnings in excess of billings, accounts payable, and other accrued expenses approximate fair value due to the short-term maturity of those instruments. For our investments in available-for-sale securities, if quoted prices in active markets for identical investments are not available to determine fair value (Level 1), then we use quoted prices for similar assets or inputs other than quoted prices that are observable either directly or indirectly (Level 2). The investments included in Level 2 consist of corporate agency obligations. The fair value of financial assets and liabilities measured on a recurring basis for the indicated periods was as follows (in thousands): 9/30/2017 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Available-for-sale securities $ 72,241 $ — $ 72,241 $ — Total assets $ 72,241 $ — $ 72,241 $ — 12/31/2016 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Available-for-sale securities $ 39,073 $ — $ 39,073 $ — Total assets $ 39,073 $ — $ 39,073 $ — |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In the first quarter of 2017, the Company extended an employee loan to one of its employees for $21,786 . The loan is repayable to the Company in equal monthly installments over six months and is non-interest bearing. As of September 30, 2017 the loan balance was $0 . In the third quarter of 2017, another loan was extended to this employee for $21,781 . The new loan is repayable to the Company in equal monthly installments over six months and is non-interest bearing. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On October 27, 2017, the Company entered into a Sublease Agreement for office space in Houston, Texas. The Sublease Agreement is for a term of three years commencing on November 16, 2017. The Company will pay gross monthly rent of $8,127 plus monthly parking fees. Future minimum lease payments due under this arrangement consist of the following (in thousands): October 27, 2017 2017 (remaining three months) $ 13 2018 105 2019 105 2020 91 Total future minimum lease payments $ 314 |
The Company and Summary of Si21
The Company and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our 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 our more significant estimates and judgments and that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are revenue recognition; capitalization of research and development assets; allowance for doubtful accounts; allowance for product warranty; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; useful lives for depreciation and amortization; 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. |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The December 31, 2016 condensed consolidated balance sheet was derived from audited financial statements, and may not include all disclosures required by GAAP; however, we believe that the disclosures are adequate to make the information presented not misleading. The September 30, 2017 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, 2016 included in our Annual Report on Form 10-K filed with the SEC on March 10, 2017. 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently issued accounting pronouncement not yet adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance in GAAP when it becomes effective. The update also requires more detailed disclosures to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was originally effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. On July 9, 2015, the FASB voted to approve a one-year deferral of the effective date of ASU 2014-09. Additionally, the FASB decided to permit early adoption, but not before the original effective date (that is, annual periods beginning after December 15, 2016). ASU 2014-09 permits the use of either the full retrospective or cumulative effect transition (modified retrospective) method. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing, respectively . The amendments in these updates are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The effective date and transition requirements for both ASU 2016-08 and ASU 2016-10 are the same as those for ASU 2014-09 as deferred. To assess the impact of and to implement Topic 606, the Company formed a project team, which has operated since 2014, to evaluate internal processes. We plan to adopt Topic 606 as of January 1, 2018 using the full retrospective transition method. We continue to evaluate the effect that ASU 2014-09 will have on our financial statements and related disclosures. For revenue streams related to water desalination products, we do not expect the impact to be material based on our analysis performed to date; however, we are continuing to assess. For transactions accounted for under the percentage-of-completion method, we are still assessing whether these contracts may be accounted for over time under the new revenue standard. For license and development revenue, there may be a material difference in the timing of revenue recognition under the new standard, with the most likely impact being an overall acceleration of the recognition of deferred revenue, since under existing guidance revenue is recognized on a straight-line basis over the fifteen-year term of the license. At this time, we are still performing our analysis and we will continue to assess the impact on our revenue streams in 2017. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 impacts any entity that enters into a lease with some specified scope exceptions. The guidance updates and supersedes Topic 840, Leases. For public entities, ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We continue to determine the impact of this guidance on our financial statements; as a lessee, we expect a material impact on the balance sheet to reflect the impact of operating leases and no material impact on the income statement. We plan to early adopt this standard on January 1, 2018. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 impacts all entities that are required to present a statement of cash flows under Topic 230. The amendment provides guidance on eight specific cash flow issues. For public entities, ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted and should be applied using a retrospective transition method to each period presented. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to current GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective on January 1, 2018, with early adoption permitted. The update is required to be adopted on a modified retrospective basis with the cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash on the Consolidated Statement of Cash Flows. ASU 2016-18 requires that the Consolidated Statement of Cash Flows explain the change in total cash and equivalents and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The standard also requires reconciliation between the total cash and equivalents and restricted cash presented on the Consolidated Statement of Cash Flows and the cash and cash equivalents balance presented on the Consolidated Balance Sheet. ASU 2016-18 is effective retrospectively on January 1, 2018, with early adoption permitted. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-04, Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment quantitative test and allows for the determination of impairment by comparing the fair value of the reporting unit with its carrying amount. The amendments in this updates should be applied on a prospective basis. For public entities which are SEC filers, this amendment is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. We expect to adopt this standard January 1, 2020 and do not expect the adoption of this standard to have a material impact on our financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-base payment award require an entity to apply modification accounting under Topic 718. ASU 2017-09 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. We plan to adopt this standard on January 1, 2018. We do not expect the adoption of this standard to have a material impact on our financial position or results of operations. Recently adopted accounting pronouncement In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires excess tax benefits and tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes) be recognized as income tax expense or benefit in the income statement. Previously, these amounts were recognized directly to shareholder’s equity. The excess tax benefit from share-based compensation, previously classified as a financing activity, will be classified as an operating activity. Additionally, cash paid when directly withholding shares on an employee’s behalf for tax withholding purposes, is classified as a financing activity. For public entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this guidance effective January 1, 2017. The adoption resulted in an increase to the net operating loss carryforward deferred tax asset and a corresponding increase in valuation allowance of $6.9 million attributable to excess tax benefits not previously recognized as they did not reduce income taxes payable. We elected to continue to estimate forfeitures as part of the recognition of cost associated with equity awards. We applied prospectively all excess tax benefits and tax deficiencies resulting from settlement of awards after the date of adoption. No adjustments were recorded for any windfall benefits previously recorded in additional paid-in capital. We withheld shares valued at $0.2 million for tax withholding purposes for the nine months ended September 30, 2017 and reflected this in the cash flow statement as a financing activity. |
Goodwill and Other Intangible22
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The components of identifiable other intangible assets, all of which are finite-lived, as of the dates indicated were as follows (in thousands): September 30, 2017 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Losses Net Carrying Amount Developed technology $ 6,100 $ (4,778 ) $ — $ 1,322 Non-compete agreements 1,310 (1,310 ) — — Backlog 1,300 (1,300 ) — — Trademarks 1,200 (180 ) (1,020 ) — Customer relationships 990 (990 ) — — Patents 585 (438 ) (42 ) 105 Total $ 11,485 $ (8,996 ) $ (1,062 ) $ 1,427 December 31, 2016 Gross Carrying Amount Accumulated Amortization Accumulated Impairment Losses Net Carrying Amount Developed technology $ 6,100 $ (4,321 ) $ — $ 1,779 Non-compete agreements 1,310 (1,310 ) — — Backlog 1,300 (1,300 ) — — Trademarks 1,200 (180 ) (1,020 ) — Customer relationships 990 (990 ) — — Patents 585 (422 ) (42 ) 121 Total $ 11,485 $ (8,523 ) $ (1,062 ) $ 1,900 |
Income (loss) per Share (Tables
Income (loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table shows the computation of basic and diluted income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net income (loss) $ 1,706 $ (579 ) $ 725 $ (2,089 ) Denominator: Basic weighted average common shares outstanding 53,580 52,106 53,717 52,227 Weighted average effect of dilutive stock awards 1,560 — 1,854 — Diluted weighted average common shares outstanding 55,140 52,106 55,571 52,227 Basic net income (loss) per share $ 0.03 $ (0.01 ) $ 0.01 $ (0.04 ) Diluted net income (loss) per share $ 0.03 $ (0.01 ) $ 0.01 $ (0.04 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potential common shares were excluded from the computation of diluted income (loss) per share because their effect would have been anti-dilutive (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock options 3,858 6,938 3,565 6,938 Restricted stock units 286 214 285 214 |
Other Financial Information (Ta
Other Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Financial Information [Abstract] | |
Restrictions on Cash and Cash Equivalents | We have pledged cash in connection with certain stand-by letters of credit and company credit cards. We have deposited corresponding amounts into accounts at several financial institutions for these items as follows (in thousands): September 30, December 31, Collateral for stand-by letters of credit $ 2,908 $ 2,297 Current restricted cash $ 2,908 $ 2,297 Collateral for credit cards $ 85 $ — Collateral for stand-by letters of credit 97 2,087 Non-current restricted cash $ 182 $ 2,087 Total restricted cash $ 3,090 $ 4,384 |
Schedule of Inventory, Current | Our inventories are stated at the lower of cost (using the first-in, first-out method) or market and consisted of the following (in thousands): September 30, December 31, Raw materials $ 2,034 $ 1,783 Work in process 1,483 1,146 Finished goods 2,766 1,621 Inventories, net $ 6,283 $ 4,550 |
Schedule of Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, Supplier advances $ 188 $ 73 Interest receivable 388 272 Other prepaid expenses and current assets 1,087 966 Total prepaid expenses and other current assets $ 1,663 $ 1,311 |
Schedule of Accrued Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, December 31, Unbilled project costs 1,556 1,069 Other accrued expenses and current liabilities 2,035 2,253 Payroll and commissions payable 4,066 5,697 Total accrued expenses and other current liabilities $ 7,657 $ 9,019 |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive loss for the nine months ended September 30, 2017, were as follows (in thousands): Foreign Currency Translation Adjustments Net of Tax Benefit Unrealized Losses on Investments Total Accumulated Other Comprehensive Loss Balance, December 31, 2016 $ (90 ) $ (28 ) $ (118 ) Net other comprehensive income (loss) 48 (7 ) 41 Balance, September 30, 2017 $ (42 ) $ (35 ) $ (77 ) |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments [Abstract] | |
Available-for-sale Securities | Available-for-sale securities as of the dates indicated consisted of the following (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Corporate notes and bonds $ 72,276 $ 59 $ (94 ) $ 72,241 Total short-term investments $ 72,276 $ 59 $ (94 ) $ 72,241 December 31, 2016 Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Corporate notes and bonds $ 39,100 $ 6 $ (33 ) $ 39,073 Total short-term investments $ 39,100 $ 6 $ (33 ) $ 39,073 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | Gross unrealized losses and fair values of our investments in an unrealized loss position as of the dates indicated, aggregated by investment category and length of time that the security has been in a continuous loss position, were as follows (in thousands): September 30, 2017 Less than 12 months 12 months or greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate notes and bonds $ 57,393 $ (94 ) $ — $ — $ 57,393 $ (94 ) Total $ 57,393 $ (94 ) $ — $ — $ 57,393 $ (94 ) December 31, 2016 Less than 12 months 12 months or greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate notes and bonds $ 29,667 $ (33 ) $ — $ — $ 29,667 $ (33 ) Total $ 29,667 $ (33 ) $ — $ — $ 29,667 $ (33 ) |
Investments Classified by Contractual Maturity Date | The amortized cost and fair value of available-for-sale securities that had stated maturities as of September 30, 2017 are shown below by contractual maturity (in thousands): September 30, 2017 Amortized Cost Fair Value Due in one year or less $ 72,276 $ 72,241 Total $ 72,276 $ 72,241 |
Long-Term Debt and Line of Cr26
Long-Term Debt and Line of Credit (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following (in thousands): September 30, 2017 December 31, 2016 Loan payable $ 30 $ 38 Less: current portion (11 ) (11 ) Total long-term debt $ 19 $ 27 |
Schedule of Maturities of Long-term Debt | Future minimum principal payments due under long-term debt arrangements consist of the following (in thousands): September 30, 2017 2017 (remaining three months) $ 3 2018 11 2019 12 2020 4 Total debt $ 30 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | For the three and nine months ended September 30, 2017 and 2016, we recognized share-based compensation expense related to employees as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenue $ 41 $ 16 $ 117 $ 78 General and administrative 580 378 1,698 1,635 Sales and marketing 191 218 628 502 Research and development 204 163 693 425 Total share-based compensation expense $ 1,016 $ 775 $ 3,136 $ 2,640 |
Share-based Compensation, Stock Options, Activity | The following table summarizes the stock option activity under the Plan and includes options granted under all previous plans. Options Outstanding Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life(in Years) Aggregate Intrinsic Value (2) Balance, December 31, 2016 5,882,861 $ 4.81 6.3 $ 32,683,000 Granted 673,062 $ 9.57 — — Exercised (920,662 ) $ 4.04 — — Forfeited (217,617 ) $ 6.47 — — Balance, September 30, 2017 5,417,644 $ 5.46 6.6 $ 15,100,000 Vested and exercisable as of September 30, 2017 3,570,351 $ 4.75 5.7 $ 11,672,000 Vested and exercisable as of September 30, 2017 and expected to vest thereafter (1) 5,121,800 $ 5.34 6.5 $ 14,686,000 (1) Options that are expected to vest are net of estimated future option forfeitures in accordance with the provisions of ASC 718. “ Compensation – Stock Compensation.” (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of our common stock as of September 30, 2017 and December 31, 2016 of $7.90 and $10.35 per share, respectively. |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes the restricted stock unit activity under the Plan and includes restricted stock units granted under all previous plans. Units Weighted Average Grant- Date Fair Value Per Unit Unvested at December 31, 2016 213,514 $ 8.65 Awarded 161,415 $ 10.15 Vested (78,095 ) $ 8.65 Forfeited (10,681 ) $ 8.52 Unvested at September 30, 2017 286,153 $ 9.50 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lessee, Operating Lease, Disclosure | We lease facilities under fixed non-cancellable operating leases that expire on various dates through July 2021. Future minimum lease payments consist of the following (in thousands): September 30, 2017 2017 (remaining three months) $ 432 2018 1,668 2019 1,461 2020 59 2021 34 Total future minimum lease payments $ 3,654 |
Schedule of Product Warranty Liability | The following table summarizes the activity related to the product warranty liability during the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance, beginning of period $ 374 $ 411 $ 406 $ 461 Warranty costs charged to cost of revenue 54 38 145 134 Release of accrual for expired warranties (114 ) (55 ) (237 ) (201 ) Balance, end of period $ 314 $ 394 $ 314 $ 394 |
Business Segment and Geograph29
Business Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following summarizes financial information by segment for the periods presented (in thousands): Three Months Ended Three Months Ended Water Oil &Gas Total Water Oil &Gas Total Product revenue $ 13,227 $ 607 $ 13,834 $ 10,568 $ 456 $ 11,024 Product cost of revenue 3,818 436 4,254 3,647 321 3,968 Product gross profit 9,409 171 9,580 6,921 135 7,056 License and development revenue — 1,250 1,250 — 1,250 1,250 Operating expenses: General and administrative 334 361 695 346 278 624 Sales and marketing 1,296 431 1,727 1,434 750 2,184 Research and development 316 2,669 2,985 262 2,023 2,285 Amortization of intangibles 157 — 157 158 — 158 Total operating expenses 2,103 3,461 5,564 2,200 3,051 5,251 Operating income (loss) $ 7,306 $ (2,040 ) 5,266 $ 4,721 $ (1,666 ) 3,055 Less: Corporate operating expenses 3,726 3,709 Consolidated operating income (loss) 1,540 (654 ) Non-operating income 232 78 Income (loss) before income taxes $ 1,772 $ (576 ) Nine Months Ended Nine Months Ended Water Oil &Gas Total Water Oil &Gas Total Product revenue $ 33,707 $ 3,310 $ 37,017 $ 32,592 $ 456 $ 33,048 Product cost of revenue 10,003 2,391 12,394 11,557 321 11,878 Product gross profit 23,704 919 24,623 21,035 135 21,170 License and development revenue — 3,750 3,750 — 3,750 3,750 Operating expenses: General and administrative 965 1,085 2,050 828 650 1,478 Sales and marketing 4,039 1,635 5,674 3,663 2,133 5,796 Research and development 810 7,734 8,544 954 6,394 7,348 Amortization of intangibles 473 — 473 473 — 473 Total operating expenses 6,287 10,454 16,741 5,918 9,177 15,095 Operating income (loss) $ 17,417 $ (5,785 ) 11,632 $ 15,117 $ (5,292 ) 9,825 Less: Corporate operating expenses 11,413 12,148 Consolidated operating income (loss) 219 (2,323 ) Non-operating income 460 135 Income (loss) before income taxes $ 679 $ (2,188 ) |
Revenue from External Customers by Geographic Areas | The following geographic information includes net revenue from our domestic and international customers based on the customers’ requested delivery locations, except for certain cases in which the customer directed us to deliver our products to a location that differs from the known ultimate location of use. In such cases, the ultimate location of use, rather than the delivery location, is reflected in the table below (in thousands, except percentages): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Domestic product revenue $ 365 $ 268 $ 1,349 $ 672 International product revenue 13,469 10,756 35,668 32,376 Total product revenue $ 13,834 $ 11,024 $ 37,017 $ 33,048 Product revenue by country: Saudi Arabia 20 % 24 % 17 % 10 % China 14 % 4 % 8 % 11 % Spain 13 % 4 % 9 % 6 % Egypt 13 % 1 % 15 % 8 % United States 3 % 2 % 4 % 2 % Oman 2 % 2 % 13 % 2 % Singapore — % 22 % — % 8 % Qatar — % — % — % 12 % Other * 35 % 41 % 34 % 41 % Total 100 % 100 % 100 % 100 % * Includes remaining countries not separately disclosed. No country in this line item accounted for more than 10% of our product revenue during the periods presented. |
Concentrations (Tables)
Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Payable, Major Suppliers | Supplier Concentration Risk | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | Customers accounting for 10% or more of our accounts receivable and unbilled receivables were as follows: September 30, 2017 December 31, 2016 Customer A 26 % 16 % Customer B 19 % 6 % Customer C 11 % 5 % Customer D 10 % — % Customer E — % 13 % |
Sales Revenue, Net | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | Revenue from customers representing 10% or more of product revenue varies from period to period. For the periods indicated, customers representing 10% or more of product revenue were: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Customer C 14 % — % 5 % — % Customer D 12 % — % 4 % — % Customer B 9 % 2 % 11 % 5 % Customer F — % 2 % 11 % 1 % Customer G — % 23 % — % 9 % Customer H — % 15 % — % 5 % Customer I — % 1 % 1 % 13 % Percentages with — are less than 1% or none. |
Accounts Receivable | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | Vendors accounting for 10% or more of our accounts payable were as follows: September 30, December 31, Vendor A 10 % — % Vendor B 10 % — % Vendor C 10 % 18 % Percentages with — are less than 1% or none. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair value of financial assets and liabilities measured on a recurring basis for the indicated periods was as follows (in thousands): 9/30/2017 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Available-for-sale securities $ 72,241 $ — $ 72,241 $ — Total assets $ 72,241 $ — $ 72,241 $ — 12/31/2016 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Available-for-sale securities $ 39,073 $ — $ 39,073 $ — Total assets $ 39,073 $ — $ 39,073 $ — |
Subsequent Event (Tables)
Subsequent Event (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments due under this arrangement consist of the following (in thousands): October 27, 2017 2017 (remaining three months) $ 13 2018 105 2019 105 2020 91 Total future minimum lease payments $ 314 |
The Company and Summary of Si33
The Company and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Jan. 01, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred tax assets, valuation allowance | $ 21,100 | |||
Tax payment for employee shares withheld | $ 228 | $ 0 | ||
Accounting Standards Update 2016-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred tax assets, operating loss carryforwards | $ 6,900 | |||
Deferred tax assets, valuation allowance | $ 6,900 |
Goodwill and Other Intangible34
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 12,790,000 | $ 12,790,000 | $ 12,790,000 |
Goodwill, period increase (decrease) | 0 | 0 | |
Goodwill accumulated impairment loss | $ 0 | $ 0 |
Goodwill and Other Intangible35
Goodwill and Other Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Gross Carrying Amount | $ 11,485 | $ 11,485 |
Accumulated Amortization | (8,996) | (8,523) |
Accumulated Impairment Losses | (1,062) | (1,062) |
Net Carrying Amount | 1,427 | 1,900 |
Developed technology | ||
Gross Carrying Amount | 6,100 | 6,100 |
Accumulated Amortization | (4,778) | (4,321) |
Accumulated Impairment Losses | 0 | 0 |
Net Carrying Amount | 1,322 | 1,779 |
Non-compete agreements | ||
Gross Carrying Amount | 1,310 | 1,310 |
Accumulated Amortization | (1,310) | (1,310) |
Accumulated Impairment Losses | 0 | 0 |
Net Carrying Amount | 0 | 0 |
Backlog | ||
Gross Carrying Amount | 1,300 | 1,300 |
Accumulated Amortization | (1,300) | (1,300) |
Accumulated Impairment Losses | 0 | 0 |
Net Carrying Amount | 0 | 0 |
Trademarks | ||
Gross Carrying Amount | 1,200 | 1,200 |
Accumulated Amortization | (180) | (180) |
Accumulated Impairment Losses | (1,020) | (1,020) |
Net Carrying Amount | 0 | 0 |
Customer relationships | ||
Gross Carrying Amount | 990 | 990 |
Accumulated Amortization | (990) | (990) |
Accumulated Impairment Losses | 0 | 0 |
Net Carrying Amount | 0 | 0 |
Patents | ||
Gross Carrying Amount | 585 | 585 |
Accumulated Amortization | (438) | (422) |
Accumulated Impairment Losses | (42) | (42) |
Net Carrying Amount | $ 105 | $ 121 |
Income (loss) per Share - Compu
Income (loss) per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net income (loss) | $ 1,706 | $ (579) | $ 725 | $ (2,089) |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 53,580 | 52,106 | 53,717 | 52,227 |
Weighted average effect of dilutive stock awards (in shares) | 1,560 | 0 | 1,854 | 0 |
Diluted weighted average common shares outstanding (in shares) | 55,140 | 52,106 | 55,571 | 52,227 |
Basic net income (loss) per share (in dollars per share) | $ 0.03 | $ (0.01) | $ 0.01 | $ (0.04) |
Diluted net income (loss) per share (in dollars per share) | $ 0.03 | $ (0.01) | $ 0.01 | $ (0.04) |
Income (loss) per Share - Antid
Income (loss) per Share - Antidilutive Securities Excluded From Computation of Diluted (Loss) Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock options | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 3,858 | 6,938 | 3,565 | 6,938 |
Restricted stock units | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 286 | 214 | 285 | 214 |
Other Financial Information - R
Other Financial Information - Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Current restricted cash | $ 2,908 | $ 2,297 |
Non-current restricted cash | 182 | 2,087 |
Total restricted cash | 3,090 | 4,384 |
Collateral for credit cards | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Non-current restricted cash | 85 | 0 |
Collateral for stand-by letters of credit | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Current restricted cash | 2,908 | 2,297 |
Non-current restricted cash | 97 | 2,087 |
Total restricted cash | $ 3,000 | $ 4,400 |
Other Financial Information - I
Other Financial Information - Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Other Financial Information [Abstract] | ||
Raw materials | $ 2,034 | $ 1,783 |
Work in process | 1,483 | 1,146 |
Finished goods | 2,766 | 1,621 |
Inventories, net | $ 6,283 | $ 4,550 |
Other Financial Information - P
Other Financial Information - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Other Financial Information [Abstract] | ||
Supplier advances | $ 188 | $ 73 |
Interest receivable | 388 | 272 |
Other prepaid expenses and current assets | 1,087 | 966 |
Total prepaid expenses and other current assets | $ 1,663 | $ 1,311 |
Other Financial Information - A
Other Financial Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Other Financial Information [Abstract] | ||
Unbilled project costs | $ 1,556 | $ 1,069 |
Other accrued expenses and current liabilities | 2,035 | 2,253 |
Payroll and commissions payable | 4,066 | 5,697 |
Total accrued expenses and other current liabilities | $ 7,657 | $ 9,019 |
Other Financial Information -42
Other Financial Information - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, December 31, 2016 | $ 65,133 | |||
Net other comprehensive income (loss) | $ 10 | $ 10 | 41 | $ (27) |
Balance, September 30, 2017 | 68,268 | 68,268 | ||
Foreign Currency Translation Adjustments Net of Tax Benefit | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, December 31, 2016 | (90) | |||
Net other comprehensive income (loss) | 48 | |||
Balance, September 30, 2017 | (42) | (42) | ||
Unrealized Losses on Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, December 31, 2016 | (28) | |||
Net other comprehensive income (loss) | (7) | |||
Balance, September 30, 2017 | (35) | (35) | ||
Total Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, December 31, 2016 | (118) | |||
Net other comprehensive income (loss) | 41 | |||
Balance, September 30, 2017 | $ (77) | $ (77) |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Investments [Abstract] | ||
Sale of available-for-sale securities | $ 0 | $ 0 |
Investments - Available-for-sal
Investments - Available-for-sale Securities (Details) - Total short-term investments - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 72,276 | $ 39,100 |
Gross Unrealized Holding Gains | 59 | 6 |
Gross Unrealized Holding Losses | (94) | (33) |
Fair Value | 72,241 | 39,073 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 72,276 | 39,100 |
Gross Unrealized Holding Gains | 59 | 6 |
Gross Unrealized Holding Losses | (94) | (33) |
Fair Value | $ 72,241 | $ 39,073 |
Investments - Gross Unrealized
Investments - Gross Unrealized Losses and Fair Values of Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value, less than 12 months | $ 57,393 | $ 29,667 |
Gross Unrealized Losses, less than 12 months | (94) | (33) |
Fair Value, 12 months or greater | 0 | 0 |
Gross Unrealized Losses, 12 months or greater | 0 | 0 |
Fair Value, Total | 57,393 | 29,667 |
Gross Unrealized Losses, Total | (94) | (33) |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value, less than 12 months | 57,393 | 29,667 |
Gross Unrealized Losses, less than 12 months | (94) | (33) |
Fair Value, 12 months or greater | 0 | 0 |
Gross Unrealized Losses, 12 months or greater | 0 | 0 |
Fair Value, Total | 57,393 | 29,667 |
Gross Unrealized Losses, Total | $ (94) | $ (33) |
Investments - Maturity of Avail
Investments - Maturity of Available-for-sale Securities (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Investments [Abstract] | |
Due in one year or less, amortized cost | $ 72,276 |
Due in one year or less, fair value | 72,241 |
Total available-for-sale securities, amortized cost | 72,276 |
Total available-for-sale securities, fair value | $ 72,241 |
Long-Term Debt and Line of Cr47
Long-Term Debt and Line of Credit - Long-Term Debt (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2015 |
Debt Instrument [Line Items] | |||
Loan payable | $ 30,000 | ||
Less: current portion | (11,000) | $ (11,000) | |
Total long-term debt | 19,000 | 27,000 | |
Loans Payable | March 2015 Installment Loan | |||
Debt Instrument [Line Items] | |||
Loan payable | 30,000 | 38,000 | $ 55,000 |
Less: current portion | (11,000) | (11,000) | |
Total long-term debt | $ 19,000 | $ 27,000 |
Long-Term Debt and Line of Cr48
Long-Term Debt and Line of Credit - Future Minimum Principal Payments Due Under Long-term Debt Arrangements (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Debt Disclosure [Abstract] | |
2017 (remaining three months) | $ 3 |
2,018 | 11 |
2,019 | 12 |
2,020 | 4 |
Loan payable | $ 30 |
Long-Term Debt and Line of Cr49
Long-Term Debt and Line of Credit - Additional Information (Details) - USD ($) | Jan. 27, 2017 | Jun. 30, 2015 | Sep. 30, 2017 | Mar. 17, 2017 | Mar. 16, 2017 | Jan. 24, 2017 | Dec. 31, 2016 | Mar. 31, 2015 |
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 30,000 | |||||||
Restricted cash | 3,090,000 | $ 4,384,000 | ||||||
Collateral for stand-by letters of credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Restricted cash | 3,000,000 | 4,400,000 | ||||||
Standby Letters of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | 8,400,000 | 4,400,000 | ||||||
The 2012 Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 16,000,000 | |||||||
Cash collateral balance required by credit agreement | 101.00% | 105.00% | ||||||
The 2012 Agreement | Collateral for stand-by letters of credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Restricted cash | 2,000,000 | 3,100,000 | ||||||
The 2012 Agreement | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Unused capacity, commitment fee percentage | 0.25% | |||||||
The 2012 Agreement | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.25% | |||||||
The 2012 Agreement | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | 0 | |||||||
The 2012 Agreement | Standby Letters of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | 1,900,000 | 3,100,000 | ||||||
Loan and Pledge Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Unused capacity, commitment fee percentage | 0.20% | |||||||
Standby letters of credit, fee percentage | 0.70% | |||||||
Default, additional interest rate | 2.00% | |||||||
Loan and Pledge Agreement | Collateral for stand-by letters of credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Restricted cash | 0 | 300,000 | ||||||
Loan and Pledge Agreement | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.50% | |||||||
Loan and Pledge Agreement | Standby Letters of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 5,100,000 | $ 4,100,000 | ||||||
Long-term line of credit | 5,500,000 | 300,000 | ||||||
Loan and Pledge Agreement | Committed Revolving Credit Line | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 16,000,000 | |||||||
Loan and Pledge Agreement | Uncommitted Revolving Credit Line | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 4,000,000 | |||||||
Agreement with Unspecified Financial Institution | Collateral for stand-by letters of credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Restricted cash | 1,000,000 | 1,000,000 | ||||||
Agreement with Unspecified Financial Institution | Standby Letters of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | 1,000,000 | 1,000,000 | ||||||
Loans Payable | March 2015 Installment Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 30,000 | $ 38,000 | $ 55,000 | |||||
Interest rate, stated percentage | 6.35% |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | May 31, 2016 | Jan. 30, 2016 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Non-vested awards, compensation cost not yet recognized | $ 5,500,000 | ||||
Non-vested awards, compensation cost not yet recognized, period for recognition | 2 years 186 days | ||||
Restricted stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Non-vested awards, compensation cost not yet recognized | $ 1,900,000 | ||||
Non-vested awards, compensation cost not yet recognized, period for recognition | 2 years 354 days | ||||
The 2016 Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period | 4 years | ||||
Expiration period | 10 years | ||||
Number of shares authorized (in shares) | 4,441,083 | ||||
Capital shares reserved for future issuance (in shares) | 3,830,000 | ||||
The 2016 Incentive Plan | Employee Stock Options Created under New Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Capital shares reserved for future issuance (in shares) | 611,083 | ||||
The 2016 Incentive Plan | Employee Stock Options Unissued under Prior Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Capital shares reserved for future issuance (in shares) | 7,635,410 | ||||
March 2017 Authorization | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock repurchase program, authorized amount | $ 15,000,000 | ||||
Treasury stock, shares, acquired (in shares) | 541,177 | ||||
Treasury stock, value, acquired, cost method | $ 4,300,000 | ||||
May 2016 Authorization | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock repurchase program, authorized amount | $ 10,000,000 | ||||
Treasury stock, shares, acquired (in shares) | 568,500 | ||||
Treasury stock, value, acquired, cost method | $ 5,300,000 | ||||
January 2016 Authorization | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock repurchase program, authorized amount | $ 6,000,000 | ||||
Treasury stock, shares, acquired (in shares) | 673,700 | ||||
Treasury stock, value, acquired, cost method | $ 4,100,000 |
Equity - Share-based Compensati
Equity - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 1,016 | $ 775 | $ 3,136 | $ 2,640 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 41 | 16 | 117 | 78 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 580 | 378 | 1,698 | 1,635 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 191 | 218 | 628 | 502 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 204 | $ 163 | $ 693 | $ 425 |
Equity - Stock Option Activity
Equity - Stock Option Activity (Details) - The 2016 Incentive Plan - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Balance beginning of period (in shares) | 5,882,861 | |
Options Granted (in shares) | 673,062 | |
Options Exercised (in shares) | (920,662) | |
Options Forfeited (in shares) | (217,617) | |
Balance end of period (in shares) | 5,417,644 | 5,882,861 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Beginning balance, Weighted Average Exercise Price (in dollars per share) | $ 4.81 | |
Granted, Weighted Average Exercise Price (in dollars per share) | 9.57 | |
Exercised, Weighted Average Exercise Price (in dollars per share) | 4.04 | |
Forfeited, Weighted Average Exercise Price (in dollars per share) | 6.47 | |
Ending balance, Weighted Average Exercise Price (in dollars per share) | $ 5.46 | $ 4.81 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Beginning balance, Weighted Average Remaining Contractual Life | 6 years 7 months 6 days | 6 years 3 months 18 days |
Ending balance, Weighted Average Remaining Contractual Life | 6 years 7 months 6 days | 6 years 3 months 18 days |
Beginning balance, Aggregate Intrinsic Value | $ 15,100 | $ 32,683 |
Ending balance, Aggregate Intrinsic Value | $ 15,100 | $ 32,683 |
Vested and exercisable as of ending balance, Options (in shares) | 3,570,351 | |
Vested and exercisable as of ending balance, Weighted Average Exercise Price (in dollars per share) | $ 4.75 | |
Vested and exercisable as of ending balance, Weighted Average Remaining Contractual Term | 5 years 8 months 12 days | |
Vested and exercisable as of ending balance, Aggregate Intrinsic Value | $ 11,672 | |
Vested and exercisable as of September 30, 2017 and expected to vest thereafter, Options (in shares) | 5,121,800 | |
Vested and exercisable as of September 30, 2017 and expected to vest thereafter, Weighted Average Exercise Price (in dollars per share) | $ 5.34 | |
Vested and exercisable as of September 30, 2017 and expected to vest thereafter, Weighted Average Remaining Contractual Term | 6 years 6 months | |
Vested and exercisable as of September 30, 2017 and expected to vest thereafter, Aggregate Intrinsic Value | $ 14,686 | |
Share price | $ 7.90 | $ 10.35 |
Equity - Restricted Stock Activ
Equity - Restricted Stock Activity (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Units, Beginning balance, Unvested (in shares) | shares | 213,514 |
Units, Awarded (in shares) | shares | 161,415 |
Units, Vested (in shares) | shares | (78,095) |
Units, Forfeited (in shares) | shares | (10,681) |
Units, Beginning balance, Unvested (in shares) | shares | 286,153 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Beginning balance, Weighted Average Grant-Date Fair Value Per Unit (in dollars per unit) | $ / shares | $ 8.65 |
Awarded, Weighted Average Grant-Date Fair Value Per Unit (in dollars per unit) | $ / shares | 10.15 |
Vested, Weighted Average Grant-Date Fair Value Per Unit (in dollars per unit) | $ / shares | 8.65 |
Forfeited, Weighted Average Grant-Date Fair Value Per Unit (in dollars per unit) | $ / shares | 8.52 |
Beginning balance, Weighted Average Grant-Date Fair Value Per Unit (in dollars per unit) | $ / shares | $ 9.50 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | (6.57%) | 4.50% | |
Deferred tax assets, valuation allowance | $ 21.1 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 5 Months Ended | 9 Months Ended | |
Jul. 27, 2016complain | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Loss Contingencies [Line Items] | |||
Long-term purchase commitment amount | $ 3,100,000 | ||
Warranty and product performance guarantees as percentage of total sales agreement | 10.00% | ||
Two Derivative Action Complaints | |||
Loss Contingencies [Line Items] | |||
Number of derivative action complaints filed | complain | 2 | ||
Standby Letters of Credit | |||
Loss Contingencies [Line Items] | |||
Letters of credit outstanding, amount | $ 8,400,000 | $ 4,400,000 | |
Minimum | Standby Letters of Credit | |||
Loss Contingencies [Line Items] | |||
Warranty and product performance guarantees, period | 24 months | ||
Maximum | Standby Letters of Credit | |||
Loss Contingencies [Line Items] | |||
Warranty and product performance guarantees, period | 47 months | ||
Indemnification Agreement | |||
Loss Contingencies [Line Items] | |||
Guarantor obligations, current carrying value | $ 0 | $ 0 |
Commitments and Contingencies56
Commitments and Contingencies - Operating Lease Obligations (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2017 (remaining three months) | $ 432 |
2,018 | 1,668 |
2,019 | 1,461 |
2,020 | 59 |
2,021 | 34 |
Total future minimum lease payments | $ 3,654 |
Commitments and Contingencies57
Commitments and Contingencies - Product Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Balance, beginning of period | $ 374 | $ 411 | $ 406 | $ 461 |
Warranty costs charged to cost of revenue | 54 | 38 | 145 | 134 |
Release of accrual for expired warranties | (114) | (55) | (237) | (201) |
Balance, end of period | $ 314 | $ 394 | $ 314 | $ 394 |
Business Segment and Geograph58
Business Segment and Geographic Information - Summary of Financial Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Product revenue | $ 13,834 | $ 11,024 | $ 37,017 | $ 33,048 |
Product cost of revenue | 4,254 | 3,968 | 12,394 | 11,878 |
Product gross profit | 9,580 | 7,056 | 24,623 | 21,170 |
License and development revenue | 1,250 | 1,250 | 3,750 | 3,750 |
General and administrative | 4,034 | 3,971 | 12,369 | 12,847 |
Sales and marketing | 2,061 | 2,512 | 6,688 | 6,517 |
Research and development | 3,038 | 2,319 | 8,624 | 7,406 |
Amortization of intangible assets | 157 | 158 | 473 | 473 |
Total operating expenses | 9,290 | 8,960 | 28,154 | 27,243 |
Income (loss) from operations | 1,540 | (654) | 219 | (2,323) |
Non-operating income | 232 | 78 | 460 | 135 |
Income (loss) before income taxes | 1,772 | (576) | 679 | (2,188) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Product revenue | 13,834 | 11,024 | 37,017 | 33,048 |
Product cost of revenue | 4,254 | 3,968 | 12,394 | 11,878 |
Product gross profit | 9,580 | 7,056 | 24,623 | 21,170 |
License and development revenue | 1,250 | 1,250 | 3,750 | 3,750 |
General and administrative | 695 | 624 | 2,050 | 1,478 |
Sales and marketing | 1,727 | 2,184 | 5,674 | 5,796 |
Research and development | 2,985 | 2,285 | 8,544 | 7,348 |
Amortization of intangible assets | 157 | 158 | 473 | 473 |
Total operating expenses | 5,564 | 5,251 | 16,741 | 15,095 |
Income (loss) from operations | 5,266 | 3,055 | 11,632 | 9,825 |
Corporate, Non-Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total operating expenses | 3,726 | 3,709 | 11,413 | 12,148 |
Water | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Product revenue | 13,227 | 10,568 | 33,707 | 32,592 |
Product cost of revenue | 3,818 | 3,647 | 10,003 | 11,557 |
Product gross profit | 9,409 | 6,921 | 23,704 | 21,035 |
License and development revenue | 0 | 0 | 0 | 0 |
General and administrative | 334 | 346 | 965 | 828 |
Sales and marketing | 1,296 | 1,434 | 4,039 | 3,663 |
Research and development | 316 | 262 | 810 | 954 |
Amortization of intangible assets | 157 | 158 | 473 | 473 |
Total operating expenses | 2,103 | 2,200 | 6,287 | 5,918 |
Income (loss) from operations | 7,306 | 4,721 | 17,417 | 15,117 |
Oil &Gas | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Product revenue | 607 | 456 | 3,310 | 456 |
Product cost of revenue | 436 | 321 | 2,391 | 321 |
Product gross profit | 171 | 135 | 919 | 135 |
License and development revenue | 1,250 | 1,250 | 3,750 | 3,750 |
General and administrative | 361 | 278 | 1,085 | 650 |
Sales and marketing | 431 | 750 | 1,635 | 2,133 |
Research and development | 2,669 | 2,023 | 7,734 | 6,394 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Total operating expenses | 3,461 | 3,051 | 10,454 | 9,177 |
Income (loss) from operations | $ (2,040) | $ (1,666) | $ (5,785) | $ (5,292) |
Business Segment and Geograph59
Business Segment and Geographic Information - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Product revenue | $ 13,834 | $ 11,024 | $ 37,017 | $ 33,048 |
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Saudi Arabia | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 20.00% | 24.00% | 17.00% | 10.00% |
China | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 14.00% | 4.00% | 8.00% | 11.00% |
Spain | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 13.00% | 4.00% | 9.00% | 6.00% |
Egypt | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 13.00% | 1.00% | 15.00% | 8.00% |
United States | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 3.00% | 2.00% | 4.00% | 2.00% |
Oman | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 2.00% | 2.00% | 13.00% | 2.00% |
Singapore | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 0.00% | 22.00% | 0.00% | 8.00% |
Qatar | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 0.00% | 0.00% | 0.00% | 12.00% |
Other | Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 35.00% | 41.00% | 34.00% | 41.00% |
Domestic product revenue | ||||
Segment Reporting Information [Line Items] | ||||
Product revenue | $ 365 | $ 268 | $ 1,349 | $ 672 |
International product revenue | ||||
Segment Reporting Information [Line Items] | ||||
Product revenue | $ 13,469 | $ 10,756 | $ 35,668 | $ 32,376 |
Concentrations - Additional Inf
Concentrations - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
License and Development Revenue | Customer Concentration Risk | Customer J | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Concentrations - Accounts Recei
Concentrations - Accounts Receivable Concentrations (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
Customer A | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 26.00% | 16.00% | |||
Customer B | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 19.00% | 6.00% | |||
Customer C | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 11.00% | 5.00% | |||
Customer D | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 0.00% | |||
Customer E | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 0.00% | 13.00% |
Concentrations - Revenue Concen
Concentrations - Revenue Concentrations (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer C | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 14.00% | 0.00% | 5.00% | 0.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer D | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 12.00% | 0.00% | 4.00% | 0.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer B | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 9.00% | 2.00% | 11.00% | 5.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer F | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 0.00% | 2.00% | 11.00% | 1.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer G | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 0.00% | 23.00% | 0.00% | 9.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer H | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 0.00% | 15.00% | 0.00% | 5.00% |
Customer Concentration Risk | Sales Revenue, Net | Customer I | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 0.00% | 1.00% | 1.00% | 13.00% |
Concentrations - Supplier Conce
Concentrations - Supplier Concentrations (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
Accounts Payable, Major Suppliers | Supplier Concentration Risk | Vendor A | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 0.00% | |||
Accounts Payable, Major Suppliers | Supplier Concentration Risk | Vendor B | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 0.00% | |||
Accounts Payable, Major Suppliers | Supplier Concentration Risk | Vendor C | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 18.00% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Available-for-sale securities | $ 72,241 | $ 39,073 |
Total assets | 72,241 | 39,073 |
Level 1 Inputs | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Total assets | 0 | 0 |
Level 2 Inputs | ||
Assets: | ||
Available-for-sale securities | 72,241 | 39,073 |
Total assets | 72,241 | 39,073 |
Level 3 Inputs | ||
Assets: | ||
Available-for-sale securities | 0 | 0 |
Total assets | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - Unspecified Employee | 3 Months Ended | |
Sep. 30, 2017USD ($) | Mar. 31, 2017USD ($)party | |
Non-interest Bearing Loan | ||
Related Party Transaction [Line Items] | ||
Number of related parties | party | 1 | |
Notes receivable, related parties, current | $ 0 | $ 21,786 |
Due from related parties, repayment term | 180 days | |
Non-interest Bearing Loan Two | ||
Related Party Transaction [Line Items] | ||
Notes receivable, related parties, current | $ 21,781 | |
Due from related parties, repayment term | 6 months |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | Oct. 27, 2017 | Sep. 30, 2017 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2017 (remaining three months) | $ 432,000 | |
2,018 | 1,668,000 | |
2,019 | 1,461,000 | |
2,020 | 59,000 | |
Total future minimum lease payments | $ 3,654,000 | |
Houston, Texas | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Term of lease | 3 years | |
Monthly rent | $ 8,127 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2017 (remaining three months) | 13,000 | |
2,018 | 105,000 | |
2,019 | 105,000 | |
2,020 | 91,000 | |
Total future minimum lease payments | $ 314,000 |