Cash generation is heavily impacted by working capital swings, such as the $29.0M inflow in 2026Q1, while aggressive capital allocation through share repurchases, including $17.1M in 2025Q2, persists despite inconsistent operating cash flow.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 |
|---|
| Cash from Operations | 29.13M | 18.77M | 20.52M | 26.05M | 12.63M | 13.53M | 16.87M | 5.27M | 7.57M | 2.9M | 4.96M | 69.06M | -3.71M | 2.09M | -4.43M | -8.26M | 1.7M | 12.82M | 1.36M | -2.83M | 822K |
| Operating CF Margin % | - | 13.93% | 14.16% | 20.3% | 10.06% | 13.02% | 18.32% | 7.23% | 10.15% | 4.58% | 9.07% | 154.44% | -12.21% | 4.85% | -10.4% | -29.44% | 3.7% | 27.26% | 2.62% | -7.99% | 4.1% |
| Operating CF Growth % | 23.14% | -8.54% | -21.23% | 106.27% | -6.62% | -19.82% | 220.24% | -30.36% | 161.31% | -41.69% | -92.81% | 1958.82% | -277.92% | 147.11% | 46.32% | -586.22% | -86.75% | 839.66% | 148.21% | -444.16% | - |
| Net Income | 20.59M | 22.96M | 23.05M | 21.5M | 24.05M | 14.27M | 26.39M | 10.91M | 22.09M | 12.35M | 1.03M | -11.64M | -18.7M | -3.11M | -8.25M | -26.44M | -3.61M | 3.69M | 8.66M | 5.79M | 2.38M |
| Depreciation & Amortization | 11.43M | 3.43M | 5.82M | 5.75M | 6.3M | 5.94M | 5.3M | 4.39M | 3.87M | 3.67M | 3.68M | 3.84M | 4.03M | 3.8M | 3.8M | 4.79M | 5.2M | 1.18M | 522K | 323K | 231K |
| Stock-Based Compensation | 19.69M | 7.72M | 10.32M | 8.04M | 6.51M | 6.06M | 4.79M | 5.68M | 5.24M | 4.09M | 3.26M | 4.06M | 2.1M | 2.18M | 2.62M | 2.54M | 2.77M | 2.41M | 0 | 0 | 0 |
| Deferred Taxes | -3.15M | 737K | 1.32M | -61K | 1.16M | -391K | 5.87M | 1.42M | -10.38M | -8.87M | -459K | -326K | 273K | 227K | 150K | 2.84M | 1.08M | -39K | -674K | -341K | -859K |
| Other Non-Cash Items | -13.63M | 55K | -1.25M | 164K | 479K | 1.52M | 3.12M | 559K | 1.44M | 710K | -257K | -1.91M | 1.38M | 666K | 3.46M | 4.47M | -1.35M | -94K | 557K | 1.83M | 1.2M |
| Working Capital Changes | -5.79M | -16.14M | -18.74M | -9.34M | -25.86M | -13.87M | -28.59M | -17.7M | -14.69M | -9.05M | -2.3M | 75.03M | 7.2M | -1.67M | -6.21M | 3.54M | -2.4M | 5.67M | -8.08M | -10.08M | -2.14M |
| Change in Receivables | -5.9M | -11.56M | -17.21M | -12.87M | -13.48M | -8.82M | 1.1M | -2.68M | 1.92M | -761K | -244K | -743K | 4M | -2.3M | -6.78M | 2.94M | 3.11M | 8.96M | 0 | 0 | 0 |
| Change in Inventory | -748K | 7K | 1.2M | 1.35M | -8.28M | -8.77M | -1.62M | -3.26M | -1.87M | -1.25M | 2.29M | 1.95M | -3.57M | -117K | 1.83M | 950K | -506K | 1.88M | -3.73M | -1.95M | -960K |
| Change in Payables | -1.08M | -1.46M | 787K | 2.63M | 138K | -155K | -205K | -373K | -2.27M | 2.12M | -360K | 48K | 628K | -866K | 583K | 108K | -140K | -1.72M | 0 | 0 | 0 |
| Cash from Investing | 13.71M | 33.98M | -15.65M | -19.11M | -6.95M | -20.56M | 46.6M | -6.88M | -10.16M | -37.37M | -40.71M | 14.02M | 6.5M | -4.85M | 6.66M | -28.27M | -5.54M | -31.89M | 650K | -2.04M | -511K |
| Capital Expenditures | -1.95M | -1.33M | -1.3M | -2.57M | -3.13M | -6.68M | -6.79M | -7.38M | -5.24M | -7.38M | -1.11M | -572K | -2.56M | -1.13M | -2.81M | -1.97M | -9.53M | -7.69M | -667K | -918K | -328K |
| CapEx % of Revenue | 1.43% | 0.99% | 0.9% | 2% | 2.49% | 6.43% | 7.37% | 10.14% | 7.03% | 11.68% | 2.03% | 1.28% | 8.42% | 2.63% | 6.59% | 7.01% | 20.78% | 16.35% | 1.28% | 2.59% | 1.64% |
| Acquisitions | 13K | 0 | 0 | 0 | 1.1M | 6.68M | 6.79M | 7.38M | 5.24M | 0 | 0 | 0 | -1.43M | 1.68M | 0 | 0 | 0 | -13.64M | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -84.41M | 10K | 133K | 87K | -40.86M | -6.68M | -6.79M | -7.38M | -5.24M | 1.54M | -577K | 1.67M | 4.74M | 307K | 1.32M | -3.27M | 36K | -10.57M | 1.32M | -1.13M | -183K |
| Cash from Financing | -42.04M | -34.53M | -43.28M | 4.79M | -23.67M | -12.79M | 4.37M | 5.96M | -5.89M | 951K | -2.79M | 1.37M | -1.8M | 486K | -4.11M | -267K | 121K | -1.06M | 77.07M | 5.08M | -530K |
| Debt Issued (Net) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -27K | -11K | -10K | 48K | 0 | -18K | -167K | -332K | -566K | -1.93M | -209K | 65K | -664K |
| Equity Issued (Net) | -40.61M | -33.83M | -43.28M | 4.79M | -23.67M | -12.79M | 4.4M | 6.07M | -5.71M | 1.23M | -2.77M | 1.33M | -430K | 504K | -3.97M | 49K | 557K | 384K | 76.71M | 5.12M | 5K |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -41.79M | -35.62M | -50.38M | 0 | -26.65M | -23.35M | 0 | 0 | -10M | -4.28M | -9.38M | 0 | -2.83M | 0 | -4M | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Financing | -1.42M | -707K | 0 | 0 | 0 | 0 | -23K | -110K | -150K | -270K | 0 | 0 | -1.38M | 0 | 24K | 16K | 130K | 484K | 574K | -106K | 129K |
| Net Change in Cash | 979K | 18.32M | -38.47M | 11.77M | -18M | -19.9M | 67.87M | 4.35M | -8.49M | -33.58M | -38.57M | 84.43M | 1.13M | -2.27M | -1.86M | -36.83M | -3.78M | -20.17M | 79.05M | 198K | -219K |
| Free Cash Flow | 27.18M | 17.44M | 19.22M | 23.49M | 9.5M | 6.85M | 10.09M | -2.11M | 2.33M | -4.48M | 3.85M | 68.48M | -6.28M | 956K | -7.24M | -10.22M | -7.83M | 5.13M | 697K | -3.75M | 494K |
| FCF Margin % | 19.93% | 12.95% | 13.26% | 18.3% | 7.56% | 6.59% | 10.95% | -2.9% | 3.13% | -7.1% | 7.04% | 153.16% | -20.63% | 2.22% | -16.99% | -36.45% | -17.07% | 10.91% | 1.34% | -10.58% | 2.46% |
| FCF Growth % | 13.05% | -9.28% | -18.15% | 147.21% | 38.76% | -32.11% | 577.06% | -190.73% | 152% | -216.3% | -94.37% | 1191.01% | -756.59% | 113.2% | 29.15% | -30.57% | -252.61% | 636.01% | 118.6% | -858.5% | - |
| FCF per Share | 0.52 | 0.32 | 0.33 | 0.41 | 0.16 | 0.12 | 0.18 | -0.04 | 0.04 | -0.08 | 0.07 | 1.31 | -0.12 | 0.02 | -0.14 | -0.19 | -0.15 | 0.10 | 0.01 | -0.09 | 0.01 |
| FCF Conversion (FCF/Net Income) | 1.32x | 0.82x | 0.89x | 1.21x | 0.53x | 0.95x | 0.64x | 0.48x | 0.34x | 0.23x | 4.80x | -5.93x | 0.20x | -0.67x | 0.54x | 0.31x | -0.47x | 3.48x | 0.16x | -0.49x | 0.35x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1K | 2K | 3K | 42K | 0 | 1K | 6K | 34K | 73K | 49K | 75K | 0 | 0 |
| Taxes Paid | 0 | 0 | 1.55M | 505K | 549K | 76K | 52K | 52K | 610K | 57K | 51K | 24K | 35K | 22K | 23K | 36K | 1.71M | 3.59M | 5.14M | 0 | 0 |
Project-based revenue volatility
As reported in financial statements, the relationship between net income and operating cash flow is highly erratic, evidenced by a 2026Q1 OCF/NI ratio of -1.72, which highlights a significant divergence between accounting profitability and the actual cash-generating capacity of the underlying business operations.
The frequent disconnect between GAAP net income and operating cash flow suggests that accrual-based accounting significantly obscures the timing of cash inflows from large-scale desalination projects. Investors should monitor this volatility, as it indicates that reported earnings may not reliably reflect the company's ability to fund its ongoing R&D and strategic pivots.
Based on recent SEC filings, working capital changes are the primary driver of quarterly cash flow fluctuations, with a notable $29.0M inflow in 2026Q1 contrasting sharply with the $21.6M outflow observed in 2025Q4, illustrating the lumpy nature of project-based milestone payments and inventory management.
The significant swings in working capital suggest that the company's cash position is highly sensitive to the timing of project commissioning and the associated collection cycles. This dependency on large, infrequent payments creates a structural risk where cash flow may appear robust in one quarter only to deteriorate rapidly due to project delays.
According to historical data, the company has prioritized share repurchases, such as the $17.1M outflow in 2025Q2, even while operating cash flow remains inconsistent, suggesting a management preference for returning capital despite the high-uncertainty phase of its transition into the CO2 refrigeration market.
The decision to allocate significant cash to buybacks during periods of negative or volatile operating cash flow warrants further investigation into management's long-term capital allocation strategy. This approach may limit the company's flexibility to invest in its emerging technology segments if the core water business faces a prolonged cyclical downturn.
As disclosed in recent financial statements, stock-based compensation remains a material non-cash expense, peaking at $13.6M in 2025Q4, which effectively inflates reported earnings while failing to account for the dilutive impact on shareholders and the true cost of talent acquisition in specialized engineering fields.
The reliance on stock-based compensation as a significant adjustment to net income suggests that the company's cash flow statement may be masking the true economic cost of its operations. Analysts should adjust for these non-cash charges to better understand the sustainability of the company's cash position and its ability to generate organic value.
Quick answers to the most common questions about buying ERII stock.
Energy Recovery, Inc. (ERII) generated $18.8M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Energy Recovery, Inc. (ERII) generated $17.4M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Energy Recovery, Inc. (ERII) spent $1.3M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Energy Recovery, Inc. (ERII) spent $35.6M on share repurchases. This shows the company's commitment to returning capital to its equity investors.