Executive Summary

Q4 2024 revenue was $67.1M, up 17% year over year, with gross margin at 70.2% (+110 bps YoY) and net income of $23.5M; adjusted EBITDA was $31.3M .
Gross margin materially exceeded the company’s Q4 guidance range of 64–68% due to manufacturing transformation and efficiency improvements across kiln stacking, cycle times, and isopress throughput, per management commentary; operating income rose 24% YoY to $25.6M .
Management executed capital return: a $50M repurchase authorized in Nov-2024 was completed in Q4 (3.2M shares at $15.39), and a new $30M program was authorized on Feb-26, 2025, supported by strong cash flow visibility .
Outlook and catalysts: continued margin expansion from factory optimization, expanding CO2 PX G engagements (first order in Japan, new test site in South Africa), and resilient Water demand in MENA/India; note possible wastewater tariff risk tied to China exposure in 2025 .

What Went Well and What Went Wrong

What Went Well
- Strong execution: revenue +17% YoY to $67.1M; operating income +24%; adjusted operating margin +530 bps YoY to 45.2%; adjusted net income +29% YoY to $28.3M .
- Manufacturing transformation driving sustained cost and margin improvements; management outlined process optimizations across kiln stacking, cycle time and isopressing, underpinning 2025 gross margin confidence .
- Strategic momentum in CO2 PX G: OEM integrations underway; first official order in Japan and a new test site planned in South Africa, with measured COP peaks up to 30% and projected annual energy savings of ~15% (per white paper cited in Q3) .
What Went Wrong
- Aftermarket channel revenue fell 36% YoY in Q4 (to $4.3M), partially offset by OEM growth; Emerging Technologies segment had a Q4 operating loss of $6.5M .
- Q4 OpEx increased 13.9% YoY to $21.5M, driven by $2.5M restructuring and executive transition costs; total stock-based comp was $1.8M in Q4 .
- Wastewater 2025 guidance ($13–$16M) flagged for potential tariff headwinds due to China export exposure; management emphasized uncertainty but highlighted risk if ROI is impacted .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$57.2	$27.2	$38.6	$67.1
Gross Margin %	69.1%	64.6%	65.1%	70.2%
Operating Margin %	36.0%	(7.4%)	18.3%	38.2%
Net Income ($USD Millions)	$19.8	($0.6)	$8.5	$23.5
Diluted EPS ($USD)	$0.34	($0.01)	$0.15	$0.41
Adjusted EBITDA ($USD Millions)	$23.9	$5.2	$11.6	$31.3

Actual vs Guidance and Estimates (Q4 2024):

Metric	Actual	Company Guidance	S&P Global Consensus
Revenue ($USD Millions)	$67.1	$62–$72	N/A – S&P Global consensus unavailable
Gross Margin %	70.2%	64–68	N/A – S&P Global consensus unavailable
Operating Expenses ($USD Millions)	$21.5	FY OpEx $76–$78; Q4 implied $20–$22	N/A – S&P Global consensus unavailable

Channel Revenue (Q4 2024 vs Q4 2023):

Channel	Q4 2023 ($USD 000s)	Q4 2024 ($USD 000s)	YoY Change
Megaproject	$41,382	$46,475	+12%
OEM	$9,150	$16,315	+78%
Aftermarket	$6,657	$4,285	−36%
Total	$57,189	$67,075	+17%

Segment Activity (Q4 2024):

Segment	Revenue ($USD 000s)	Gross Profit ($USD 000s)	Operating Income ($USD 000s)
Water	$66,959	$47,203	$38,037
Emerging Technologies	$116	($83)	($6,451)
Corporate	—	—	($5,971)
Total	$67,075	$47,120	$25,615

KPIs and Non-GAAP (Q4 2024):

KPI	Q4 2024	Notes
Cash, Cash Equivalents + Investments ($USD Millions)	$99.9	Balance sheet line $99,851K
Cash Provided by Operations ($USD Millions)	$9.0	Per reconciliation table
Free Cash Flow ($USD Millions)	$8.9	Net CFO less capex
Adjusted Operating Margin %	45.2%	Excludes SBC, exec transition, restructuring
Adjusted Net Income ($USD Millions)	$28.3	Per reconciliation
Stock-Based Compensation (Q4) ($USD Millions)	$1.81	Total SBC in Q4
Effective Tax Rate (FY)	10.4%	FY 2024
AR + Contract Assets ($USD Millions)	$66.8	Year-end balance

Notes on non-GAAP: Adjusted metrics exclude stock-based comp, executive transition costs, restructuring charges, and related tax effects; adjusted EBITDA also excludes D&A, other income and taxes .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Update	Change
Revenue	FY 2024	$140–$150M (maintained in Q3)	Full-year revenue delivered at midpoint of guidance	Achieved midpoint
Revenue	Q4 2024	$62–$72M (Q3 call)	Actual $67.1M	Met range
Gross Margin %	Q4 2024	64–68% (Q3 call)	Actual 70.2%	Raised vs guide (actual above)
Gross Margin %	FY 2024	64–67% (Q3 call)	Full-year gross margin 66.9%	Within guide
Operating Expenses	FY 2024	$78–$80M (earlier)	Reduced to $76–$78M (Q3 call); Q4 implied $20–$22M	Lowered
Wastewater Revenue	FY 2024	$12–$15M (Q3 call; low end expected)	No change noted in Q4 materials	Maintained low end
Wastewater Revenue	FY 2025	$13–$16M (Nov webinar, pre-tariffs)	Flagged tariff risk due to China exposure	Risk flagged
Share Repurchase	Authorization	$50M (Nov-2024)	Completed in Q4 2024; 3.2M shares at $15.39	Executed
Share Repurchase	Authorization	New $30M (Feb-2025)	Authorized; rationale: cash flow visibility	Added program

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4 2024)	Trend
Manufacturing transformation & margins	Q3: Turned corner on Q400 ramp; Q4 GM guide 64–68%; FY GM 64–67%	Detail on process efficiencies (kiln stacking, cycle times, isopress), confidence in 2025 GM improvement	Improving
CO2 PX G commercialization	Q3: White paper shows COP peaks up to 30% and ~15% annual energy savings; 11 sites installed; OEM integrations underway	Interest expanding to Japan (first order) and South Africa (test site), ongoing OEM integration trajectory	Accelerating
Geographic mix (Water)	Q3: ~60% FY mix MENA; strong India, Morocco, UAE projects	2025 expected generally similar mix to 2024; still project-driven	Maintained
Capital allocation (buybacks)	Q3: To outline policy; strong cash ($140M–$150M year-end target)	$50M buyback completed; new $30M authorized; rationale: visibility and excess cash return	Shareholder return up
Wastewater outlook & tariffs	Q3: NEOM phased; FY 2024 at low end $12–$15M	2025 guidance $13–$16M flagged for tariff risk due to China export exposure	Risk rising
Product mix (Q400)	Q3: ~45% of Water PX demand in Q3; ~50% for FY	Transformation supports cost-down on Q400/Q300	Scaling efficiently

Management Commentary

“We should see a continuous improvement throughout the year of costs for the Q400 and Q300s… our manufacturing transformation plan is really just laying out all those steps of the process and going and attacking each one.” – Mike Mancini .
“There are 2 areas outside of Europe and the U.S. where we’re seeing some interest in the PX G… first official order [from Japan]… second area is South Africa… working on finding a test site this year.” – David Moon .
“Visibility on our cash flow… we pretty quickly went through our first $50 million [buyback]… felt comfortable increasing it… in line with our capital allocation strategy.” – Mike Mancini .
“About half or more of our business in wastewater does come from China… if it gets caught up in the trade war, it may impact the ROI to customers.” – David Moon .

Q&A Highlights

Gross margin drivers: detailed manufacturing efficiency initiatives underpin expected margin improvement in 2025; specific process optimizations cited .
CO2 PX G commercialization: new geographies (Japan order; South Africa test) via trade show-driven awareness; OEM integration remains the go-to-market .
Capital returns: $50M buyback quickly executed; new $30M authorized based on improved cash flow visibility and strong conviction in the playbook .
Geographic mix: 2025 Water revenue expected to mirror 2024’s MENA-heavy mix; diversification ongoing but project cadence drives variability .
Wastewater tariffs: 2025 guidance ($13–$16M) given pre-tariff clarity; management highlighted risk to ROI for Chinese export customers if tariffs change .

Estimates Context

Wall Street consensus via S&P Global for Q4 2024 and next quarter was unavailable due to access limitations; therefore, we cannot provide official consensus comparisons. As a proxy, Q4 revenue met company guidance ($67.1M vs $62–$72M) and gross margin exceeded guidance (70.2% vs 64–68%), which may prompt upward revisions to near-term margin and EPS trajectories once consensus is refreshed .

Key Takeaways for Investors

Q4 print was strong: revenue +17% YoY to $67.1M, GM 70.2%, EPS $0.41; adjusted EBITDA $31.3M, with Water segment operating income of $38.0M driving results .
The margin story improved materially vs guidance; the manufacturing transformation appears to be yielding tangible cost-down benefits and should persist into 2025 .
Capital allocation is a clear positive: $50M buyback completed and new $30M authorized, supported by cash/investment balance of ~$99.9M and confidence in cash generation .
Channel mix shows resilience in Megaproject and OEM, offset by aftermarket softness; continued project-driven variability is expected, but backlog and awards in MENA/India/UAE underpin visibility .
CO2 PX G momentum is building with OEM integration and new geography traction (Japan order, South Africa test), supported by independent M&V demonstrating COP gains and energy savings; commercialization steps are progressing .
Watch wastewater tariff exposure: 2025 guidance ($13–$16M) could face ROI pressure if China-related tariffs bite; management flagged uncertainty but no immediate impact observed .
Near-term trading lens: favor margin expansion narrative and buyback support; monitor aftermarket trends, Q400 cost-down execution cadence, and newsflow on CO2 OEM integrations and wastewater tariff developments .

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