Q2 2024 Energy Recovery Inc Earnings Call
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Unknown Attendee: Greetings and welcome to the Energy Recovery 2Q24 earnings call. At this time, all participants are in listening-only mode.
Operator: Greetings and welcome to the Energy Recovery 2Q24 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James Siccardi, Vice President of Industrial Relations.
Speaker Change: Greetings and welcome to the Energy Recovery 2Q24 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Unknown Attendee: A question and answer session will follow the formal presentation.
Unknown Attendee: If you want to require operators to turn the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, James Siccardi, Vice President of Investor Relations.
James Siccardi: I would now like to turn the conference over to your host, James Siccardi, Vice President of the Vesta Relations. Hello everyone and welcome to Energy Recovery's 2Q24 earnings conference call. My name is James Siccardi, Vice President of Vesta Relations Energy Recovery, and I'm here today with our President and Chief Executive Officer, David Moon, and Brandon Young, our Controller and Interim Chief Accounting Officer.
James Siccardi: Hello, everyone, and welcome to Energy Recovery's 2024 Second Quarter Earnings Conference Call. My name is Jim Siccardi, Vice President of Investor Relations at Energy Recovery, and I'm here today with our President and Chief Executive Officer, David Moon, and Brandon Young, our Comptroller and Interim Chief Accounting Officer.
James Siccardi: Hello everyone, and welcome to Energy Recovery's 2024 Second Quarter Earnings Conference Call. My name is Jim Siccardi, Vice President of Investment Relations at Energy Recovery, and I'm here today with our President and Chief Executive Officer, David Moon, and Brandon Young, our Controller and Interim Chief Accounting Officer.
James Siccardi: Third day's call. We may make projections and other forward-looking statements under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995, regarding future events or the future financial performance of the company. These statements may discuss our business, economic and market outlook, growth expectations, new products and performance, cost structure, and business strategy. Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, or projections. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors. We refer you to documents to the company files from time to time with the SEC specifically, the company's Form 10-K and Form 10-Q.
James Siccardi: During today's call, we may make projections and other forward-looking statements under the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events affecting the future financial performance of the company. These statements may discuss our business, economic, and market outlook, growth expectations, new products and their performance, cost structure, and business strategy. Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, or projections.
Speaker Change: During today's call, we may make projections and other forward-looking statements under the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company.
Speaker Change: These statements may discuss our business, economic, and market outlook, growth expectations, new products and their performance, cost structure, and business strategy. Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, or projections.
James Siccardi: Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors. We refer you to documents the company files from time to time with the SEC, specifically the company's Form 10-K and Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. All statements made during this call are made only as of today, July 31st, 2024, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law. At this point, I will turn the call over to our Chief Executive Officer and President, David Moon.
Speaker Change: Poor-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors.
Speaker Change: We refer you to documents the company files from time to time with the SEC, specifically the companies Form 10-K and Form 10-Q . These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.
James Siccardi: These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.
James Siccardi: All statements made during this call are made only as of today, July 31, 2024, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law.
Speaker Change: All statements made during this call are made only as of today, July 31st, 2024, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances.
David Moon: At this point, I will turn the call over to our Chief Executive Officer and President, David Moon. Thanks, Jam, and thank you all for joining us today. I am joined today by Brandon Young, our controller and interim chief accounting officer. Brandon has been an integral part of our financial leadership team for many years.
Speaker Change: unless otherwise required by law. At this point, I will turn the call over to our Chief Executive Officer and President, David Moon.
David W. Moon: Thanks, Jim. And thank you all for joining us today. I am joined today by Brandon Young, our Controller and Interim Chief Accounting Officer. Brandon has been an integral part of our financial leadership team for many years. Before I get into the second quarter results, I want to update you on our CFO search and our strategic planning process, or what we call the playbook process. First, I want to call your attention to the press release that went out earlier today regarding our new chief financial officer. I'm pleased to announce that Michael Mancini will become our new CFO effective August. Michael brings experience leading high growth engineering and technology focused startup companies, two of which he served as CEO.
David W. Moon: Thanks, Jim, and thank you all for joining us today.
Speaker Change: I am joined today by Brandon Young, our Controller and Interim Chief Accounting Officer.
Speaker Change: Brandon has been an integral part of our financial leadership team for many years.
David Moon: Before I get into the second quarter results, I want to update you on our CFO search and our strategic planning process, or what we call the playbook process. First, I want to call your attention to the press release that went out earlier today regarding our new Chief Financial Officer. Officer. I'm pleased to announce that Michael Mancini will become our new CFO effective August 5th. Michael brings experience leading high growth, engineering and technology focused start-up companies, two of which he served as CFO. He has extensive financial, operational, and capital markets experience from a diverse career, including banking, private equity, and hedge funds.
David W. Moon: He has extensive financial, operational, and capital markets experience from a diverse career including banking, private equity, and hedge funds. Michael's experience will serve us well as we expand into new wastewater and CO2 markets and work to further strengthen our relationships with our shareholders. Regarding our playbook process, we have moved from the where to play phase to the how to play phase. This how to play phase will include critical milestones and financial targets that will form the foundation for how we communicate our progress with all of you in the years to come.
Speaker Change: Before I get into the second quarter results, I want to update you on our CFO search and our strategic planning process, or what we call playbook process.
Speaker Change: First, I want to call your attention to the press release that went out earlier today regarding our new chief financial officer.
Speaker Change: I'm pleased to announce that Michael Mancini will become our new CFO , effective August 5th.
Speaker Change: Michael brings experience leading high-growth engineering and technology-focused startup companies, two of which he served as CFO .
Speaker Change: He has extensive financial, operational, and capital markets experience from a diverse career including banking, private equity, and hedge funds.
David Moon: Michael's experience will serve as well as we expanded the new wastewater and CO2 markets and worked to further strengthen our relationships with our shareholders. Regarding our playbook process, we have moved from the where-to-play phase to the how-to-play phase. This how-to-play phase will include critical milestones and financial targets that will form the foundation for how we communicate our progress with all of you in the years to come.
Speaker Change: Michael's experience will serve us well as we expand into new wastewater and CO2 markets and work to further strengthen our relationships with our shareholders.
Speaker Change: Regarding our playbook process, we have moved from the where-to-play phase to the how-to-play phase.
Speaker Change: This how to play phase will include critical milestones and financial targets that will form the foundation for how we communicate our progress with all of you in the years to come.
David Moon: While we still intend to share a high-level summary of our playbook during the third quarter earnings call, I've decided that a more appropriate forum would be to host a webinar in the fourth quarter to share the details. We will be providing the details for this webinar by the end of the third quarter.
David W. Moon: While we still intend to share a high-level summary of our playbook during the third quarter earnings call, I've decided that a more appropriate forum would be to host a webinar in the fourth quarter to share the details. We will be providing the details for this webinar by the end of the third quarter.
Speaker Change: But we still intend to share a high-level summary of our playbook during the third quarter earnings call.
Speaker Change: I've decided that a more appropriate forum would be to host a webinar in the fourth quarter to share the details.
Speaker Change: We will be providing the details for this webinar by the end of the third quarter.
David Moon: Now let us move to the second quarter update. Beginning with water. We are maintaining revenue guidance of $140 to $150 million for the year. There are four reasons why I remain confident in this guidance. First, we achieved second quarter water revenue of $26.9 million, which was 6.4 million better than the same quarter last year, thanks in large part to strong mega-project and OEM performance in MEA and Europe. There were several shipments worth noting that we had discussed in previous calls. We are pleased to report that we completed shipment of the Perura project in Chennai, India.
David W. Moon: Now let us move to the second quarter update, beginning with water. We are maintaining revenue guidance of $140 to $150 million for the year. There are four reasons why I remain confident in this guidance.
Speaker Change: Now let us move to the second quarter update.
Speaker Change: Beginning with water.
Speaker Change: We are maintaining revenue guidance of $140 to $150 million for the year.
Speaker Change: There are four reasons why I remain confident in this guidance.
David W. Moon: First, we achieved second quarter water revenue of $26.9 million, which was $6.4 million better than the same quarter last year, thanks in large part to Strong Megaproject and OEM performance in MEA Enduro. There were several shipments worth noting that we've discussed in previous calls. We are pleased to report that we've completed shipment of the Perur project in Chennai, India. As a reminder, this was the project that slipped out of December last
Speaker Change: First, we achieved second quarter water revenue of $26.9 million, which was $6.4 million better than the same quarter last year, thanks in large part to strong megaproject and OEM performance in MEA in Europe .
Speaker Change: Now, there were several shipments worth noting that we've discussed in previous calls.
Speaker Change: We are pleased to report that we've completed shipment of the Perur project in Chennai, India.
David Moon: As a reminder, this was the project that slipped out of December last year. As is the case with large-scale infrastructure projects, there are execution arrests that are out of our control that can cause delays. It is important to note that while our position remains strong in a mega-project space, we are not immune to these risks. We delivered the first shipment in the second quarter worth $4.2 million, and the second shipment this month worth $4.1 million. Once constructed, this will be the largest desalination plant in India, delivering 400,000 cubic meters per day. We also ship the first phase of three phases, the Hathion IPP project in Dubai, UAE, worth $5.2 million.
Speaker Change: As a reminder, this was the project that slipped out of December last year.
David W. Moon: As is the case with large-scale infrastructure projects, there are execution risks that are out of our control that can cause delays. It is important to note that while our position remains strong in the megaproject space, we are not immune to these risks. We delivered the first shipment in the second quarter worth $4.2 million, and the second shipment this month worth $4.1 million. Once constructed,
Speaker Change: As is the case with large-scale infrastructure projects, there are execution risks that are out of our control that can cause delays.
Speaker Change: It is important to note that while our position remains strong in the megaproject space, we are not immune to these risks.
Speaker Change: We delivered the first shipment in the second quarter worth $4.2 million, and the second shipment this month worth $4.1 million.
David W. Moon: This will be the largest desalination plant in India, delivering 400,000 cubic meters of water per day. We have also shipped the first phase of the three-phase project. The Hacian IPP project in Dubai, UAE, is worth $5.2 million. Once constructed, this 820,000 cubic meter per day plant will be the largest desal plant in Dubai. This serves as another example of large-scale project slippage. In this case, the project was re-tendered, and timing was adjusted, but our position to execute this project remained strong throughout the entire process. We expect the remaining two phases to shift within this calendar year.
Speaker Change: Once constructed.
Speaker Change: This will be the largest desalination plant in India, delivering 400,000 cubic meters per day.
Speaker Change: We also shipped the first phase of three phases, the Hacian IPP project in Dubai UAE worth 5.2 million dollars.
David Moon: Once constructed, this 820,000 cubic meter per day plant with the largest desalination plan in Dubai. This serves as another example of large scale project slippage. In this case, the project was retendered and timing was adjusted, but our position to execute this project remains strong throughout the entire process. We expect the remaining two phases to ship within this calendar year. Second, we announced in July the signing of $15 million in contracts to supply pressure exchanges to several SWRRO diesel plants in India, which included the Perura project. The remaining four projects were expected to ship in 2024.
Speaker Change: Once constructed, this 820,000 cubic meter per day plant will be the largest desal plant in Dubai.
Speaker Change: This serves as another example of large-scale project slippage.
Speaker Change: In this case, the project was re-tendered and timing was adjusted, but our position to execute this project remained strong throughout the entire process.
Speaker Change: We expect the remaining two phases to shift within this calendar year.
David W. Moon: Second, we announced in July the signing of $15 million in contracts to supply pressure exchangers to several SWRO desal plants in India, which included the Perura project. The remaining four projects are expected to ship in 2024. Altogether, these plants will provide over 670,000 cubic meters of clean drinking water to communities in India each day. As one of the most water-stressed countries in the world, India continues to invest in desalination projects to supplement its fresh water supply.
Speaker Change: Second, we announced in July the signing of 15 million dollars in contracts to supply pressure exchangers to several SWRO desal plants in India.
Speaker Change: which included the Perura project.
Speaker Change: The remaining four projects are expected to ship in 2024.
David Moon: Altogether, these plants will provide over 670,000 cubic meters of clean, drinking water to communities in India each day. As one of the most water-stressed countries in the world, India continues to invest in desalination projects to supplement its fresh water supply. We continue to observe a growing divergence between the world's fresh water supply and demand, and this trend can be observed in countries like India, which home to 18% of the world's population, but only has 4% of the world's fresh water resources. Third, our current 2024 total revenue, which includes revenue recognized in the first half of the year and signed projects under contract yet to be delivered, totals approximately $107 million, or 74% of the midpoint of our guided range for the year.
Speaker Change: Altogether, these plants will provide over 670,000 cubic meters of clean drinking water to communities in India each day.
Speaker Change: As one of the most water-stressed countries in the world, India continues to invest in desalination projects to supplement its freshwater supply.
David W. Moon: We continue to observe a growing divergence between the world's freshwater supply and demand, and this trend can be observed in countries like India, which is home to 18% of the world's population but only has 4% of the world's fresh water resources.
Speaker Change: We continue to observe a growing divergence between the world's fresh water supply and demand, and this trend can be observed in countries like India, where it's home to 18% of the world's population, but only has 4% of the world's fresh water resources.
David W. Moon: [inaudible] Our current 2024 total revenue, which includes revenue recognized in the first half of the year and signed projects under contract yet to be delivered, totals approximately $107 million, 74% of the midpoint of our guided range for the year. This compares to roughly 118 million, or 89% of the guided range at the same time in 2023. This reflects a 9% decrease year over year.
Speaker Change: [inaudible]
Speaker Change: Our current 2024 total revenue, which includes revenue recognized in the first half of the year.
Speaker Change: and signed projects under contract yet to be delivered.
Speaker Change: totals approximately 107 million dollars or 74 percent of the midpoint of our guided range for the year.
David Moon: This compares to roughly 189% of the guided range at the same time in 2023. This reflects a 9% decrease year over year. The decrease is driven by the timing of the closure of several large scale project contracts. We currently have approximately $25 million of mega-project draft contracts that we are anticipating finalizing over the next several weeks that we plan to deliver this year. Our strong performance of the track date activity and the draft contracts under finalization underpins our confidence in reaffirming our guidance for this year. And fourth, our wastewater pipeline continues to grow, and we've increased our signed wastewater contracts by almost 5% as compared to last year at this time.
Speaker Change: This compares to roughly 118 million or 89% of the guided range at the same time in 2023.
Speaker Change: This reflects a 9% decrease year-over-year.
David W. Moon: The decrease is driven by the timing of the closure of several large-scale project contracts. We currently have approximately $25 million in megaproject draft contracts that we are anticipating finalizing over the next several weeks that we plan to deliver this year. Our strong performance in contracting activity and the draft contracts under finalization underpins our confidence in reaffirming our guidance for this year. And we've increased our signed wastewater contracts by almost 5% as compared to last year at this time.
Speaker Change: The decrease is driven by the timing of the closure of several large-scale project contracts.
Speaker Change: We currently have approximately $25 million of megaproject draft contracts that we are anticipating finalizing over the next several weeks that we plan to deliver this year.
Speaker Change: Our strong performance of contracting activity and the draft contracts under finalization underpins our confidence in reaffirming our guidance for this year.
Speaker Change: And fourth, our wastewater pipeline continues to grow, and we've increased our signed wastewater contracts by almost 5% as compared to last year at this time.
David Moon: As predicted, we had a slow start to the year, primarily driven by the economic conditions in China. We are monitoring the situation closely, but have already seen an uptick in bid activity and plan to have a very active second half of the year in this sector. Based on current projected delivery schedules, we expect that 35% of the second half water revenue will fall into Q3 and 65% in Q4. This would put the third quarter water revenue at $35 to $39, and the fourth quarter at $66 to $72. dollars.
Speaker Change: As predicted, we had a slow start to the year, primarily driven by the economic conditions in China.
Speaker Change: We are monitoring the situation closely but have already seen an uptick in bid activity and plan to have a very active second half of the year in this sector.
Speaker Change: Based on current projected delivery schedules, we expect that 35% of the second half water revenue will fall into Q3 and 65% in Q4.
Speaker Change: This would put the third quarter water revenue at 35 to 39 million dollars and the fourth quarter at 66 to 72 million dollars.
David Moon: Now let's move to our CO2 business. As I stated during our last call, after the successful completion of lab testing, our second generation PXG in the second quarter. Our first gate for 2024; we have now moved towards our second gate, which is the installation of 30 to 50 sites by the end of Q4 2024. We have planned to have 10 of these sites installed by the end of August to capture critical summer data that would then form the foundation for a white paper who will publish in the fourth quarter. I am pleased to report that we now have nine second generation PXG sites operating in the U.S.
Speaker Change: Now let's move to our CO2 business.
Speaker Change: As I stated during our last call, after the successful completion of lab testing our second generation PXG in the second quarter.
Speaker Change: Our first gate for 2024, we have now moved towards our second gate, which is the installation of 30 to 50 sites by the end of Q4 of 2024.
Speaker Change: We have planned to have 10 of these sites installed by the end of August to capture critical summer data that would then form the foundation for a white paper we will publish in the fourth quarter.
David W. Moon: I am pleased to report that we now have nine second-generation PXG sites operating in the U.S. and Europe as of July 15, to measure and verify energy savings provided by our second-generation PXG at six of the ten sites. These six sites are in California. The site in Spain will be a large food processing plant. Such an exercise becomes table stakes when sitting in front of end users.
Speaker Change: I am pleased to report that we now have nine second-generation PXG sites operating in the US and Europe as of July 15th.
David Moon: and Europe as of July 15th, with the 10th site to start up in August. Additionally, we have contracted with a highly respected third-party engineering firm, DC Engineering, to measure and verify energy savings provided by our second generation PXG at six of the 10 sites. They will also assist us in the white paper development. These six sites are in California, which are Vary Archa and Grocery Outlet, Ohio, which is Groger, Belgium, which is Del Hayes, and Spain, which is Elder Foods. The site in Spain will be a large food processing plant. DC Engineering is an industry leader in commercial industrial refrigeration design, management, and compliance services.
Speaker Change: with the 10th site to start up in August .
Speaker Change: Additionally, we have contracted with a highly respected third-party engineering firm, DC Engineering, to measure and verify energy savings provided by our second-generation PXG at six of the ten sites.
David Moon: In fact, many of the engineers have worked for larger retailers. It's such a conservative industry as food retail. Third-party verification of a new technology is paramount. In fact, if you have faith in your technology as we do, you will proactively engage your respected third-party or university to independently verify your claims in a field setting. It's exactly what we were doing with DC Engineering. The last time I worked with them was on a new ammonia carbon dioxide cascade refrigeration system for a supermarket chain in the Southeast. In fact, our results were so well received, we and our supermarket customer were awarded the EPA's Green Shield Platinum Certification for environmentally advanced refrigeration systems. Such an exercise becomes table stakes when setting in front of end users.
Speaker Change: In fact, many of their engineers have worked for large retailers.
Speaker Change: In such a conservative industry as food retail, third-party verification of a new technology is paramount.
Speaker Change: The last time I worked with them was on a new ammonia carbon dioxide cascade refrigeration system for a supermarket chain in the southeast.
David Moon: With DC Engineering's assistance, our white paper will become the catalyst for our OEM partners and us to accelerate PXG adoption with the end users. DC Engineering is currently in the measuring phase. Additionally, our OEM partners, Hilfenexanepta, will be collecting data on our behalf at two of the 10 sites located in Canada, which are Loblaws and Hungry, which are also shown respectively. We will be collecting data at the remaining two sites. And finally, we have 40 sites in our pipeline for 2024, including the nine sites already on the grid.
Speaker Change: With DC Engineering's assistance, our whitepaper will become the catalyst for our OEM partners and us to accelerate PXG adoption with the end users.
Speaker Change: TC Engineering is currently in the measuring phase.
David W. Moon: Additionally, our OEM partners, HealthPhoenix and EFTA, will be collecting data on our behalf at two of the 10 sites located in Canada, which is Loblaws, and Hungary, which is Oshan, respectively. Our gross margin rebounded from the first quarter of the year, with the second quarter coming in at approximately 65%, and operating expense today. $2.6 million for playbook consulting and $1.4 million for recruiting and executive transition costs. Of the remaining approximately $2.2 million of one-time costs, we expect 75% to be spent in the third quarter and 25% in the fourth.
Speaker Change: Additionally, our OEM partners, HealthPhoenix and EFTA, will be collecting data on our behalf at two of the 10 sites located in Canada, which is Loblaw's, and Hungary, which is Auchan, respectively.
Speaker Change: And finally, we have 40 sites in our pipeline for 2024, including the nine sites already upgrading.
David Moon: Now, let's move to the financial update. Our growth margin rebounded from the first quarter of the year, with the second quarter coming in at approximately 65%. Our growth margin expectation for the third quarter is 62 to 64% as we continue to manage Q400 wrap-up production challenges. We are confident we will have most of these challenges, which are largely material handling and nature, behind us by the end of the third quarter, including adding additional Q400 capacity by the end of the year. We had expected the Q400 would only comprise about 25% of our water px demand for 2024, but have been pleasantly surprised that it's trending towards 50% for the year.
Speaker Change: Our gross margin expectation for the third quarter is 62 to 64 percent as we continue to manage Q400 wrap-up production challenges.
Speaker Change: Behind us by the end of the third quarter, including adding additional Q400 capacity by the end of the year.
Speaker Change: But I've been pleasantly surprised that it's trending towards 50% for the year.
David Moon: Our 4-year growth margin guidance remains at 64 to 67%. Our operating expenses increased 21% over the second quarter of last year, primarily due to one-time expenses. Now, as mentioned last quarter and as expected, we continue to experience one time associated with the work and support of our long-term growth strategy, our playbook, as well as some executive transition cost. The combined impact of these one time expenses total $4 million in the second quarter. To recap one-time cost and operating expense today, we incurred $800,000 in the first quarter and $4 million in the second quarter. The second quarter breakdown is as follows: $2.6 million for playbook consulting and $1.4 million for recruiting and executive transition cost.
Speaker Change: Our four-year gross margin guidance remains at 64 to 67 percent.
Speaker Change: Our operating expenses increased 21% over the second quarter of last year, primarily due to one-time expenses.
Speaker Change: Now, as mentioned last quarter and as expected, we continue to experience one-time costs associated with the work in support of our long-term growth strategy, our playbook.
Speaker Change: as well as some executive transition costs.
Speaker Change: The combined impact of these one-time expenses totaled $4 million in the second quarter.
Speaker Change: To recap, one-time cost.
Speaker Change: In operating expense today, we incurred $800,000 in the first quarter and $4 million in the second quarter.
Speaker Change: The second quarter breakdown is as follows.
Speaker Change: $2.6 million for playbook consulting.
Speaker Change: and $1.4 million for recruiting and executive transition costs.
David Moon: We are maintaining our operating expense guidance for the year of $78 to $80 million, which includes the estimated $7 million in one-time cost. We expect operating expense to come in at $21 to $22 million for the third quarter. Of the remaining approximately $2.2 million of one-time costs, we expect 75% to be spent in the third quarter and 25% in the fourth quarter. As a result of these one-time items, we experience a small, net income loss in the quarter, though with a large sequential improvement from the previous quarter and putting those very close to break even.
Speaker Change: We are maintaining our operating expense guidance for the year of $78 to $80 million.
Speaker Change: which includes the estimated $7 million in one-time costs.
Speaker Change: We expect operating expense to come in at $21 to $22 million for the third quarter.
Speaker Change: Of the remaining approximately $2.2 million of one-time costs, we expect 75% to be spent in the third quarter and 25% in the fourth quarter.
Speaker Change: As a result of these one-time items, we experienced a small net income loss in the quarter, though with a large sequential improvement from the previous quarter and putting us very close to breakeven.
David Moon: We are on track to moving to positive operating income at the remainder of the year progress. And lastly, we continue to grow cash in the second quarter, increasing our cash and investment position in the second quarter from $129 million to $138 million. We currently expect to end the year between $140 and $150 million.
Speaker Change: We are on track to moving to positive operating income as the remainder of the year progresses.
David W. Moon: And lastly, we continue to grow cash in the second quarter. We anticipate our wastewater business to generate 12 to $15 million in revenue, and we are maintaining our gross margin guidance of 64% to 67% and operating expense guidance of $78 to $80 million.
Speaker Change: And lastly, we continue to grow cash in the second quarter.
Speaker Change: Increasing our cash and investment position in the second quarter from $129 million to $138 million.
Speaker Change: We currently expect...
Speaker Change: to end the year between $140 million and $150 million.
David Moon: To sum up... Group. We delivered a strong quarter, supported by a growing backlog, which gives us confidence in our four-year revenue guidance of $140 to $150 million. We anticipate our wastewater business to generate $12 to $15 million in revenue. We expect to have 30 to 50 sites with our PX Second Generation PXG installed by the end of the year. And we are maintaining our gross margin guidance of 64 to 67 percent and operating expense to $78 to $80 million.
Speaker Change: So to sum up,
Speaker Change: We delivered a strong quarter supported by a growing backlog.
Speaker Change: which gives us confidence in our four-year revenue guidance of $140 to $150 million.
Speaker Change: We anticipate our wastewater business to generate $12 to $15 million in revenue.
Speaker Change: We expect to have 30 to 50 sites with our second-generation PXG installed by the end of the year.
Speaker Change: And we are maintaining our gross margin guidance of 64% to 67% and operating expense to $78 to $80 million.
Unknown Attendee: With that, now let's move to Q&A. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and the confirmation tone will indicate your line is in the question Q. You may press star two if you would like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. Wally, pull for questions.
Speaker Change: With that, now let's move to Q&A.
Operator: Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. One moment, please, while we pull for questions.
Speaker Change: Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please, while we pull for questions.
Pavel Molchanov: Our first question comes from the line of Pavel Malkamov with Raymond James. Please proceed. Thanks for taking the question. You know, it's probably start with the playbook. I know you don't want to kind of frontrun these specific targets that you will unveil towards the end of the year. But just conceptually, will you provide kind of revenue, earnings, any other metrics, and will it be by product line?
Speaker Change: Our first question comes from the line of Pavel Molchanov with Raymond James. Please proceed.
Pavel S. Molchanov: Thanks for taking the question. I'll probably start with the playbook.
Pavel S. Molchanov: I know you do not want to kind of front run the specific targets that you will unveil towards the end of the year, but just conceptually, will you provide any other metrics, and will it be by product line?
Pavel S. Molchanov: I know you do not want to kind of front run the specific targets that you will unveil towards the end of the year, but just conceptually, will you provide kind of revenue, earnings?
Pavel S. Molchanov: Any other metrics, and will it be by product line?
David W. Moon: Oh, hi. Hi, Pavel. This is David Moon. Nice to hear your voice today.
David Moon: Hi, Pavel. This is David Moon. Nice to hear your voice today.
Speaker Change: Oh, hi. Hi, Pavel. This is David Moon. Nice to hear your voice today.
David Moon: So the guidance that will, so we'll break out, as I said, on just a few minutes ago, we're going to break out the release of the playbook into, will have, will provide the 25 and 26 revenue guidance as part of the earnings call for Q3. Maybe a few milestones, but it'll be pretty high level. And then when we get to the actual webinar that we'll have later in Q4, we'll provide more detail around not only years in terms of years out. It'll be a five-year look. We'll also provide not just revenue, but also earnings, and also look by business unit as well.
Speaker Change: So, the guidance that we'll, so we'll break out, as I said, on the,
Speaker Change: Just a few minutes ago, we're going to break out the release of
Speaker Change: the playbook into. We'll provide the 25 and 26 revenue guidance as part of the earnings call for Q3. Maybe a few milestones, but it'll be pretty high level. And then when we get to the
Speaker Change: Then when we get to the actual webinar that we'll have later in Q4, we'll provide more detail around not only years, in terms of years out.
Speaker Change: It'll be a five-year look, but we'll also provide not just revenue, but also earnings And also a look by business units as well
Pavel Molchanov: Okay, that's something for us to look forward to.
David W. Moon: Okay, that's something for us to look forward to. When you talk about DC engineering in the measuring phase as it relates to the refrigeration product, what exactly is being measured? Is it the energy savings or something else?
Speaker Change: Okay, that's something for us to look forward to.
Pavel Molchanov: When you talk about DC engineering in the measuring phase as it relates to the refrigeration product, what exactly is being measured? Is it the energy savings or something else? Yeah, so there's two specific... so there's two specific...
Speaker Change: Talk about DC engineering in the measuring phase as it relates to the refrigeration product. What exactly is being measured? Is it the energy savings or something else?
David W. Moon: Yeah, so there's two specific metrics that are being validated or measured by DC Engineering. One is just purely energy saving. And so DC engineering is confirming, measuring, and confirming both of those.
Speaker Change: Yeah, so there's two specific, so there's two specific...
David Moon: Matrix that were there being validated or measured by DC engineering. One is just purely energy savings. And then the second is capacity extension. And I think we've talked in previous calls about how the PFG provides capacity extension in high heat load days. And so DC engineering is confirming, measuring, and confirming both of those.
Speaker Change: metrics that were that's being there being validated or measured by DC Engineering. One is just purely energy savings.
Speaker Change: And then the second is capacity extension. And I think we've talked in previous calls, Pavel, about how the PXG provides capacity extension in high heat load days.
Speaker Change: and so DC Engineering is confirming, measuring and confirming both of those.
David Moon: And as you speak with prospective customers, do they have a particular threshold or target that they want to see, you know, in terms of the improvement in the refrigeration system? I think so. Largely, the feedback has been around, you know, it's a very first-cost-conscious interest. And so largely, the feedback has been around pay that period.
David W. Moon: And as you speak with prospective customers, do they have a particular threshold or target that they want to see, you know, in terms of improvement?
Pavel S. Molchanov: And as you speak with prospective customers, do they have a particular threshold or target that they want to see, you know, in terms of the improvement?
Speaker Change: in the refrigeration system.
Pavel S. Molchanov: I think so. Largely the feedback has been around, you know, it's a very first cost conscious conscious
Speaker Change: And so largely the feedback has been around pay that period.
David Moon: And anything from two to three years is acceptable. And so that's been sort of, and so then you can roll in, capacity extension under that, you can roll in certain energy savings as part of that. So that's the primary feedback we get, or many, you know, or what end-user supermarkets want you to be looking for. And that's a very, very short pay period. Okay.
Speaker Change: and anything from two to three years is acceptable.
Speaker Change: And so that's, that's been sort of the, and so then you can roll in capacity extension under that. You can roll in certain energy savings as part of that.
Speaker Change: That's the primary feedback we get, or what end users, supermarkets might be looking for. And that's a very, very short payback period.
David W. Moon: Okay, last questions, a little bit more macro. Is there any evidence that interest rates, you know, high interest rates, currency, oil price, or anything else is
David Moon: Last question, a little bit more macro. Is there any evidence that interest rate, you know, high interest rates, currency, oil price, or anything else is structurally hindering the development of diesel in the Middle East? None. I'd say nothing that we can see at this point.
Speaker Change: Okay, last questions, a little bit more macro.
Speaker Change: Is there any evidence that interest rate, you know, high interest rates, currency, oil price, or anything else
Speaker Change: is
Speaker Change: structurally hindering the development of D cell in the Middle East.
Speaker Change: None. I'd say nothing that we can see at this point. And, you know, our field team is
David Moon: And you know, our field, our field thing is as good as it gets and as close to customers as any. And, you know, so far, full steam ahead. All right.
David W. Moon: It is as good as it gets and as close to customers as any. And, you know, so far, full steam ahead.
Speaker Change: is as good as it gets and as close to customers as any, and, you know, so far, full steam ahead.
David W. Moon: All right, thanks very much.
Pavel Molchanov: Thanks very much.
Speaker Change: All right. Thanks very much.
Ryan Pfingst: And the next question comes from the line of Ryan thinks with Be Riley Securities. Please proceed. Hey guys, thanks for taking my questions.
Operator: And the next question comes from the line of Ryan Pfingst with B. Reilly Securities. Please proceed.
Speaker Change: Thanks for the help.
Speaker Change: And the next question comes from the line of Ryan Pfingst with B. Riley Securities. Please proceed.
David Moon: I know you don't want to get ahead of the three two update and webinar in the fourth quarter around CO2, but maybe can you talk a little bit about the recently deployed PXGs and, you know, maybe how they performed compared to what you were seeing from the prior generation? Yeah. So I think what's most important about what we've seen out of the second gen is that they're just, they're not running on stuff. No vibration. Sound levels are better than the first gen PXG, which were the two issues that we saw one of the software when we developed the second gen.
Ryan James Pfingst: Hey guys, thanks for taking my questions. I know you don't want to get ahead of the
Ryan James Pfingst: 3Q update and webinar in the fourth quarter around CO2, but maybe can you talk a little bit about the recently deployed PXGs and maybe how they've performed compared to what you were seeing from the prior generation?
Ryan James Pfingst: 3Q update and webinar in the fourth quarter around CO2, but maybe can you talk a little bit about the recently deployed PXGs and maybe how they've performed compared to what you were seeing from the prior generation?
David W. Moon: So I think what's most important about what we've seen out of the second gen is that they're just, they're not running nonstop. No vibration, and sound levels are better than the first-gen PXG, which were the two issues that we wanted to solve when we developed it. [inaudible] I mean, we've had 100-plus degree days in Southern California for most of the last month or so, and so far, so good. So, we're happy with the performance.
Speaker Change: And so I think what's most important about what we've seen out of the second gen is that they're just they're not running non-stop.
Speaker Change: No vibration, sound levels are better than the first-gen PXG, which were the two issues that we wanted to solve for when we developed.
David Moon: And so, field time so far, you know, it's, they're running like clockwork in the field. So very, very pleased thus far with the performance we've seen in the field. And we're starting to get in several areas like Southern California. We're starting to get really some stress test, you know, our PFC stress test, right? I mean, we've had under plus degree days in Southern California for most of the last month or so, and so far, so good. So we're happy with the performance. Great.
Speaker Change: The second gen. And so…
Speaker Change: field time so far you know it's they're running like like clockwork in the field so very
Speaker Change: Very pleased thus far with the performance we've seen in the field and we're starting to get
Speaker Change: in several areas like Southern California.
Speaker Change: We're starting to get really some stress tests, you know, our PFC stress test, right? I mean, we've had 100-plus degree days in Southern California for most of the last month or so, and so far, so good. So we're happy with the performance.
David Moon: And then turning over to the water side. The AI theme is obviously super topical today, and data centers are huge consumers of water. Are you hearing anything in terms of desalination or RO and waste water participating there? So we are starting to push that discussion on our side. And so this is something we've been talking about the last three or so months about how we can. You know, we capture a lot of data. There's a lot of our PXs or data reds in terms of opportunity. And so we're talking to our EPCs and in an online operators about how potentially we can go faster and some ideas we have along the AI fronts.
David W. Moon: And then turning over to the water side, the AI theme is obviously super topical today, and data centers are huge consumers of water. Are you hearing anything in terms of desalination or RO and wastewater participating there?
Speaker Change: Great.
Speaker Change: And then turning over to the water side, the AI theme is obviously super topical today and data centers are huge consumers of water.
Speaker Change: Are you hearing anything in terms of desalination or RO in wastewater participating there?
David W. Moon: So we are, we're starting to push that discussion on our side. And so.
Speaker Change: So we are, we're starting to push that discussion on our side and so
David W. Moon: This is something we've been talking about for the last three or so months about how we can. We capture a lot of data, our PXs are data-rich in terms of opportunity, and so we're talking to our EPCs and OON operators about how, potentially, we can go faster, and some ideas we have along the AI fronts. We're not getting pulled; it's we pushing. We're doing the pushing.
Speaker Change: This is something we've been talking about the last three or so months about how we can
Speaker Change: We capture a lot of data, our PXs are data rich in terms of opportunity, and so we're talking to our EPCs
Speaker Change: and OANN operators about how potentially we can go faster and some ideas we have along the AI fronts. We're not getting pulled, it's we're pushing, we're doing the pushing at this moment.
David Moon: It's we're not getting pulled. It's we're pushing. We're doing the pushing at this moment.
Ryan Pfingst: Okay, interesting. And then maybe just one more. Could you potentially talk a little bit about 2025? I know you just said the macro wasn't really hindering. You know, these sell projects moving forward. What are you seeing in terms of the visibility you have on 2025 today and the potential growth for you guys? Yeah, so I think so, you know, we're confident this is 20.4 will be the 10th consecutive year of growth that we had. And I would say, looking where sort of where I'm standing today, I would say that 2025 should be no different. I mean, that should be the 11th year of growth that we'll looking at for our.
David W. Moon: And then maybe just one more. Could you possibly talk a little bit about 2025? I know you just said the macro wasn't really hindering, you know, these cell projects moving forward, but what are you seeing in terms of the visibility you have on 2025 today and the potential growth for you guys?
Speaker Change: Okay, interesting.
Speaker Change: And then maybe just one more.
Speaker Change: Could you potentially talk a little bit about
Speaker Change: 2025. I know you just said the macro wasn't really hindering, you know, desal projects moving forward, but what are you seeing in terms of the visibility you have on 2025 today and the potential growth for you guys?
David W. Moon: Yeah, so I think, you know, we're, we're confident where this is. This 2024 will be the 10th consecutive year of growth. We've had, and I would say, looking at where I'm standing today, I would say that 2025 should be no different. I mean, that should be the 11th year of growth that we'll be looking at for ERI. So, more to come when we, you know, when we talk in the third quarter, certainly as part of the webinar, but I see the growth trends. You know, the macro story continues to look good. So, we're going to continue to ride that wave. So, I think it looks good for 2025.
Speaker Change: Yeah, so I think, so, you know, we're confident this 2024 will be the 10th consecutive year of growth.
Speaker Change: We've had, and I would say looking where, sort of where I'm standing today, I would say that 2025 should be no different. I mean, that should be the 11th year of growth.
David Moon: So more to come when we, you know, when we talk in third quarter, so much part of the webinar, but I see the growth trends. Can you know the macro story continues to look good? So, and we're going to continue riding that way. So I think it looks good for 2025. Great. Thanks for those answers.
Speaker Change: that we'll be looking at for ERI.
Speaker Change: More to come when we, you know, when we talk in third quarter, certainly as part of the webinar, but I see the growth trends, you know, the macro story continues to look good. So, and we're, we're going to, we're going to continue to ride that wave. So I think it looks good for 2025.
David W. Moon: Great. Thanks for those answers. I'll turn it back.
Ryan Pfingst: I'll turn it back.
Speaker Change: Great. Thanks for those answers. I'll turn it back.
Jason Bandel: Yeah, that's right. The next question comes from the line of Jason Bando with Evercore ISI. Please proceed. Yeah, thanks. Hey, guys. First, first question on the refrigeration side. I know you mentioned you're prepared remarks about Kroger testing your PXG, and I saw their recent announcement that they're going to start using CO2 refrigeration systems starting next year. Just curious, based on your experience so far, what would a typical supermarket rollout look like? Do they typically start with new store openings and distribution centers? Do they kind of wait for the end of the usual life for older systems?
Operator: And the next question comes from the line of Jason Bandell with Evercore ISI. Please proceed.
Speaker Change: And the next question comes from the line of Jason Bandell with Evercore ISI. Please proceed.
Jason Bandell: Yeah, thanks. Hey guys, first question on the refrigeration side. I know you mentioned in your prepared remarks about Kroger testing your PXG, and I saw their recent announcement that they're going to start using CO2 refrigeration systems starting next year. Just curious, based on your experience so far, what would a typical supermarket rollout look like? Do they typically start with new store openings and distribution centers? Or do they kind of wait for the end of the useful life of older systems? Like, how does that transition typically happen?
Jason Bandell: Hey guys, first question on the refrigeration side.
Jason Bandell: I know you mentioned in your prepared remarks about Kroger testing your PXG, and I saw their recent announcement that they're going to start using CO2 refrigeration systems starting next year. I'm just curious, based on your experience so far.
Jason Bandell: What would a typical supermarket rollout look like? Do they typically start with new store openings and distribution centers? Do they kind of wait for the end of the useful life for older systems? Like how does that transition typically happen?
David Moon: Like how does that transition typically happen?
David Moon: It's going to really depend. So, in this space, they're what we call first movers or first adopters and in their followers. And so those sort of supermarkets fall in those two camps, sort of nobody in between, really. And I think Kroger has someone that you would call an early adopter. Right. And so how this will play out with Kroger, we're doing we're doing the one store now Cincinnati. It's getting a lot of exposure, by the way, because it's their headquarters. College. And that continues to go well. And as Kroger begins to work on their capital plans for rolling out CO2 over the next five years, then I believe we have a real chance to be a part of those capital plans.
David W. Moon: It is going to really depend. So, in this space, there are what we call first movers or first adopters, and then there are followers. And so they're sort of supermarkets following those two camps, sort of nobody in between. And I see Kroger as someone that you would call an early adopter, right? And so how this will play out with Kroger is we're doing the one store now in Cincinnati. It's getting a lot of exposure, by the way, because it's their headquarters.
Speaker Change: So in this space, there are what we call first movers or first adopters, and then there are followers. And so those sort of supermarkets fall in those two camps, sort of nobody in between really.
Speaker Change: And I see Kroger as someone that you would call an early adopter, right? And so how this will play out with Kroger, we're doing the one store now in Cincinnati, it's getting a lot of exposure, by the way, because it's their headquarters.
David W. Moon: And that continues to go well, and as Kroger begins to work on their capital plans for rolling out CO2 over the next five years, I believe we have a real chance to be a part of those capital plans. And they'll go faster, and they'll start with stores that are older, most likely older, where there may be some leaks may be a problem. Unknown Attendee, James Siccardi, Wally Walker, Ryan Pfingst, Wally Walker, Unknown Attendee, James Siccardi, David Moon, Pamela Tondreau, Energy Recovery Inc., And then, as the new stores are obviously built, those would certainly be CO2. But I, but I, you know, I think they'll start from the bottom of their list, and their most problematic stories will be where they end.
Speaker Change: As that continues to go well, and as Kroger begins to work on their capital plans for rolling out CO2 over the next five years.
Speaker Change: I believe we have a real chance to be a part of those capital plans, and they'll go faster, and they'll start with stores that are older, most likely that are older, where there may be some, you know, leaks may be a problem.
David Moon: And they'll go faster, and they'll start with stores that are older, most likely that are older, and where there may be some leaks, maybe a problem. System may not be running well, or just, you know, the equipment is sort of an exploration day. So they'll start with the older stores first. And then, as the new stores are obviously built, those would be certainly CO2. But I, you know, I think they'll start from the bottom of their list, and their most problematic stores will be where they start. Got it. Okay, that makes sense.
Speaker Change: system may not be running well or it's just you know the equipment is sort of at its expiration date and so they'll start with the older stores first.
Jason Bandell: And then as the new stores are obviously built, those would be certainly CO2. But I, you know, I think they'll start from the bottom of their list, and their most problematic stores will be where they start.
David W. Moon: Got it. Okay, that makes sense. And then with the white paper. Will OEMs feel comfortable with the amount of run-time data in the white paper, or will some want to see even more run-time data in order to get comfortable with the real-world performance of the PXG?
David Moon: And then with the white paper, the OEMs, will they feel comfortable with the amount of runtime data in the white paper, or will some want to see even more runtime data in order to get comfortable with the real-world performance of the PXT? Yeah, so it's a very good question. So the run time that we've laid out as part of this work with DC engineering has been largely given to us by the OEMs. And so this is what they're mandating. This is what they're comfortable with in order to be able to set with end users and have this next discussion.
Speaker Change: Got it. Okay, that makes sense. And then with the white paper?
Speaker Change: Do OEMs, will they feel comfortable with the amount of run-time data in the white paper or will some want to see even more run-time data in order to get comfortable with the real-world performance of the BXJ?
David W. Moon: Yeah, so it's a very good question. So the runtime that we've that we've laid out as part of this work with DC Engineering has been largely given to us by the OEMs, and so this is what they're mandating. This is what they're comfortable with, in order to be able to sit with end-users and have this next discussion, and so we are following their... Unknown Attendee, James Siccardi, Wally Walker, Ryan Pfingst, Wally Walker, Unknown Attendee, James Siccardi, David Moon, Pamela Tondreau, Energy Recovery Inc., and nothing more, nothing less. And so we come out of this, this summer period, with good results. That'll be enough, then, to take our discussion to the next level. I got it.
Speaker Change: So it's a very good question. So the runtime that we've that we've laid out as part of this
Speaker Change: This work with DC Engineering has been largely given to us by the OEMs, so this is what they're mandating. This is what they're comfortable with.
Speaker Change: in order to be able to sit with end-users and have this next discussion. And so we are following their...
David Moon: And so we are following their, their our direction; it comes to runtime.
David Moon: And what's critical is this is the summer period. And nothing more, nothing less. And so we come out of this, we come out of this summer period with good results. That'll be enough to take our discussion to the next level. Got it.
Speaker Change: their direction when it comes to run time. And what's critical is this is the summer period. And nothing more, nothing less. And so we come out of this summer period with good results.
Speaker Change: That'll be enough, then, to take our discussion to the next level.
David W. Moon: Got it. Now switching gears a little bit to wastewater, I know you reiterated the full year revenue guidance despite the slower start to the year. Just curious if you can provide a little more color. I want to give you confidence that the second half revenue will come in to meet your full year guidance.
Jason Bandel: And that's just in gears a little bit to waste water. I know you reiterated the full-year revenue guidance, despite the slower start to the year. Just curious, you can provide a little more color.
Speaker Change: Got it. Now switching gears a little bit to wastewater. I know you reiterated the full year revenue guidance despite the slower start to the year. Just curious if you can provide a little more color. I want to give you the confidence that the second half revenue will come in to meet your full year guidance.
David Moon: I won't give you the confidence that the second half revenue will come in to meet your full year guidance. Yeah, so we did about $600,000 in the waste water Discord, which was equal to what we did last year. Our backlog, our backlog is I talked out earlier as growing. We're seeing an uptick of the last four weeks. We've seen a real uptick in quoting that we had seen for a while, largely driven by China. And so we're seeing that China is starting; we're starting to see just an increased level of activity that we haven't seen for the year in China.
David W. Moon: We did about $600,000 in the wastewater business this quarter, which was equal to what we did last year. Our backlog, as I talked about earlier, is growing. We're seeing an uptick over the last four weeks. We've seen a real uptick in clothing that we hadn't seen for a while, largely driven by China. So we're seeing that China is starting to see just an increased level of activity that we haven't seen for the year in China.
Speaker Change: Yeah, so we did about $600,000 in the wastewater this quarter, which was equal to what we did this time last year.
Speaker Change: Our backlog, as I talked about earlier, is growing.
Speaker Change: We're seeing an uptick of the last four weeks. We've seen a real uptick in clothing that we hadn't seen for a while, largely driven by China.
Speaker Change: And so we're seeing that China is starting, we're starting to see just an increased level of activity that we haven't seen for the year in China.
David W. Moon: And so I think that bodes well for the rest of the year. And if we look at the uptick and quoting plus what we've already got on the books in terms of backlog, you know, we're still comfortable with the 12 to 15 of guidance, even though we started slow.
David Moon: And so I think that both well for the rest of the year. And if we look at the uptick and in quoting, plus what we've already got on the books in terms of backlog, you know, we're still comfortable with the 12 to 15 of guidance, even though we started slow.
Speaker Change: And so I think that bodes well for the rest of the year. And if we look at the uptick in quoting plus what we've already got on the books in terms of backlog, you know, we're still comfortable with the 12 to 15 of guidance even though we started slow.
David W. Moon: And one last one for me on the CFO search process. I know you kind of went through Michael's background and the prepared remarks. Just curious if you could share a little more details on how you decided to pick him and if you regret not having an overlap with Josh when he starts.
Jason Bandel: Understood.
Jason Bandel: One last one for me, just on the CFO search process. I know you went kind of went through Michael's background into a pair of remarks. Just curious, you can share a little more details on just how you decided and pick him. And if you regret not having an overlap with Josh, he starts. Oh look, I think in a perfect world have been great if we would have had some overlap. Michael is an experienced CFO. He breathes a skill set with his startup work. He knows how to work under pressure, given his previous background. He knows how to, he knows how to work with investors.
Speaker Change: Understood. And one last one for me, just on the CFO search process. I know you went kind of went through Michael's background and the prepared remarks. Just curious if you can share a little more details on how you decided to pick him, and if you regret not having an overlap with Josh when he starts.
David W. Moon: Oh, look. I think in a perfect world, I would have been great. If we had some overlap, but Michael is an experienced CFO. He brings a skill set to his startup work. He knows how to work under pressure, given his previous background. He knows how to work with investors. He'll hit the ground running, I have no doubt. And so, yes, it would have been good, yes, but where he'll hit the ground. You know, he starts next Monday, and so, and Josh has been kind enough to say that he will make himself available if needed. So I'm pretty happy that he'll hit the ground running. I'm not worried about that. Sounds good. Looking forward to meeting you.
Speaker Change: Oh, look, I think In a Perfect World would have been great if we would have had some overlap, but Michael is an experienced CFO .
Speaker Change: [inaudible]
Speaker Change: He brings a skill set with his start-up work. He knows how to work under pressure, given his previous background. He knows how to work with investors.
David Moon: He'll hit the ground running; I have no doubt. And so some of you have sort of been good, yes, but we're, he'll hit the ground. He starts next Monday, and so, and Josh has been kind enough to say that he will make himself available if needed. So I'm, I'm pretty happy that he'll hit the ground running. I'm not worried about that.
Speaker Change: He'll hit the ground running. I have no doubt and so So yes would have been good. Yes, but where he'll hit the ground, you know, he starts next Monday and so
Speaker Change: And Josh has been kind enough to say that he will make himself available if needed. So I'm pretty happy that he'll hit the ground running. I'm not worried about that.
Jason Bandel: Sounds good, looking forward to meeting him, and thanks for taking my questions. Thank you, thank you.
David W. Moon: Sounds good. Looking forward to meeting him, and thanks for taking my questions. Thank you. Thank you. Ladies and gentlemen, as a reminder,
Speaker Change: Sounds good. Looking forward to meeting him and thanks for taking my questions.
Unknown Attendee: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad.
James Siccardi: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. There are no further questions at this time. I would like to turn the call back to James Siccardi for closing remarks.
Jason Bandell: Thank you. Thanks Jason.
Speaker Change: Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Unknown Attendee: There are no further questions at this time.
James Siccardi: I would like to turn the call back to James Cicardi for closing remarks. Thank you, everyone, for joining us this evening. We look forward to speaking to you again in the third quarter call and at our webinar. Please take care.
Speaker Change: There are no further questions at this time. I would like to turn the call back to James Siccardi for closing remarks.
James Siccardi: Thank you everyone for joining us this evening. We look forward to speaking to you again on the third quarter call and at our webinar. Please take care. This concludes today's conference. Goodbye. You may disconnect your lines at this time. Enjoy the rest of your day.
James Siccardi: Thank you everyone for joining us this evening. We look forward to speaking to you again in the third quarter call and at our webinar. Please take care.
Unknown Attendee: This concludes today's conference. Good bye. You may disconnect your lens at this time, and you're on the rest of your day.
Operator: This concludes today's conference. Goodbye. You may disconnect your lines at this time. Enjoy the rest of your day.
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Speaker Change: This concludes today's conference. Goodbye. You may disconnect your lines at this time.
Speaker Change: Enjoy the rest of your day.
Speaker Change: [inaudible]
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Speaker Change: [inaudible]