Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (53918)	5/21/2014 7:32:40 PM
From: E_K_S	Read Replies (1) \| Respond to of 78590

Energy Recovery, Inc. (ERII) - small initial Buy @ $4.49/share I started a small position in ERII and plan to add more if I can buy under $4.50/share. I had a chance to listen to their last conference call (5/8) and came away quite satisfied that there is great potential for significant sales growth from both of their divisions: (1) Oil & Gas pumps and (2) Water. From the conference call, the company has just hired 6 new sales reps for their Oil & Gas pump lines. New orders should be coming in from trade shows and account calls. What surprised me was the number of potential foreign customers from Saudi Arabia to China. The big sell is that their technology has a less than three year pay back period from the savings and/or regeneration of energy. I also found the CEO to be very conservative in his guidance and especially liked their future R&D plans developing a new line of pumps w/ disruptive technology (the CEO's description). Sales should ramp up each quarter especially in the Oil & Gas division. There was a brief discussion regarding the current earnings shortfall. Some of the sales revenues were a timing thing and should hit next quarter. The company actually bought back shares from extra FCF and also wrote down some assets (depreciation one time charge) that currently generate revenues from pump rentals. These are good things (and one time issues) that resulted in lower EPS. The CEO stated that they are trying different customer sales programs from lease to own, rental leases, a % of the saved operating costs and long term installation/replacement contracts. The economics of these pumps pay for themselves in reduced operating costs but becomes a hard sell to a new customer w/ legacy working equipment. Therefore, w/ the new sales team to target "new" installations and back office reps responding to specific RFP's, the company appears to be working hard on new "firm" orders. The margins are extremely good almost 50% and based on their current public pricing the CEO says they are probably charging too little but intends to focus on new orders in size. The CEO has been working in the pump industry a long time and over 11 years in the water equipment sector. One of the beneficial owners, LORENTZEN OLE PETER just purchased 1mln shares at a price of $5.21/share on 5/14/2014. So the insiders have substantial skin in the game. EKS