Sandhya Iyer

Sandhya Iyer asked about the pricing strategy for Energy Recovery's new PX Q650 product, its impact on ASP and gross margins, and the expected timeline and capital commitment for the manufacturing expansion outside the U.S. She also inquired about the revenue cadence for 2026 and potential new applications for the CO2 product.

Answer

CFO Joshua Ballard explained that the PX Q650 is priced based on cubic meter per day, leading to a higher effective ASP per unit and gross margin expansion due to its higher flow rate and better specific energy consumption. President and CEO David Moon outlined the manufacturing expansion timeline, aiming for site finalization by end of H1 2026 and phased production by Q1 2027, with CapEx guided at $3 million-$6 million for 2026 and a similar range for 2027. Joshua Ballard anticipated a similar back-end weighted revenue cadence for 2026 as in 2025. David Moon mentioned exploring CO2 product applications in other markets like heat pumps but noted it's too early for immediate plans.

Sandhya Iyer asked about the pricing strategy for the new PX Q650 product, its impact on ASP and gross margins, and the expected timeline and capital commitment for the manufacturing expansion outside the US. She also inquired about the revenue cadence for 2026 and potential new applications for the CO2 technology.

Answer

Joshua Ballard, Chief Financial Officer, explained that the PX Q650 is priced per cubic meter per day, leading to a higher effective ASP and gross margin expansion due to fewer units delivered and better specific energy consumption. David Moon, President and CEO, stated that site selection for the new manufacturing facility is expected by the end of H1, with production phasing in by Q1 2027, and Joshua Ballard added that capital costs for this expansion would be within the guided range for 2026 ($3M-$6M) and similar or lower in 2027. Ballard also confirmed a similar back-ended revenue cadence for 2026 as in 2025. Moon mentioned no immediate new products but potential applications for current CO2 technology in other markets like heat pumps, requiring further development.