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Saturday, June 14, 2008

Finally An Exciting Water IPO

Keep in mind, I dont know exactly when this will IPO, but they filed in April 2008. One article said it will be second half 2008.

Desalination component manufacturer Energy Recovery files for IPO
4/1/2008

Energy Recovery, a developer and manufacturer of energy recovery devices utilized in the water desalination industry, filed with the SEC for an IPO on Tuesday. The California-based company booked $35 million in revenue in 2007 and will apply to list its shares on the NASDAQ under the ticker ERII. Citi and Credit Suisse are the lead underwriters on the deal.
Read More Here

Energy Recovery Inc. Home Page

What are the financial results of Energy Recovery IPO?
ERI last year saw $5.8 million in net income on $35.4 million in revenue, up from net income of $894,000 on revenue of $10.7 million in 2005. Between 2003 and 2007 the company saw an annual compound growth rate of 72 percent in revenue, according to its prospectus, largely due to growth in the SWRO market and ERI's increased penetration.
Read More Here

Some Highlights from the Company's S-1 filing Read S-1 Filing Here

We are a leading global developer and manufacturer of highly efficient energy recovery devices utilized in the rapidly growing water desalination industry. We operate primarily in the sea water reverse osmosis, or SWRO, segment of the industry. In the SWRO process, high pressure is used to drive sea water through filtering membranes to produce fresh water. Energy recovery devices have increased the cost-competitiveness of SWRO desalination compared to other means of fresh water supply and have enabled the ongoing rapid growth of the SWRO segment of the desalination industry worldwide. Our primary product, the PX Pressure Exchanger, or PX, helps optimize the energy intensive SWRO process by recapturing and recycling up to 98% of the energy in the high pressure reject stream, thereby reducing SWRO energy consumption by an estimated 60% as compared to the same process without any energy recovery devices.

The demand for fresh water continues to grow, driven by the need for drinking water to satisfy the world’s growing population, changing weather patterns, an increasing need for water for agriculture and industry and the concentration of populations in urban areas that lack sufficient fresh water resources. The United Nations Population Fund expects the global consumption of water to double every 20 years. A study conducted by the International Water Management Institute projects that by 2025, 33% of the population of the developing world will face severe water shortages. The uneven geographic distribution of fresh water supplies compounds this problem.

The two basic processes used to desalinate sea water are thermal, or distillation, and more recently, SWRO. The most significant operating cost component for either process is energy consumption. Thermal desalination technology is highly energy inefficient and is mainly used in the Middle East where energy costs are low. Until approximately 15 years ago SWRO was also energy inefficient, in part because of the loss of energy associated with the high-pressure reject stream. Today, however, the energy cost of the SWRO process is 50% less than that of the traditional thermal desalination process due to the incorporation of energy recovery devices, including our PX device, and improved membranes.

The significant reduction in operating costs related to energy has made the SWRO desalination industry in which we compete the fastest growing segment of the desalination industry. According to Global Water Intelligence, or GWI, due to the use of SWRO technology, the cost of producing a cubic meter of fresh water from sea water, which averaged approximately $10 per cubic meter in the mid-1960’s, had dropped to as low as $0.46 per cubic meter by 2005. As a result, the share of total new contracted sea water desalination capacity using SWRO has increased from 42% in 1999 to approximately 71% in 2006.

Desalination has become an economically attractive alternative in many coastal regions or other locations near a salt water source where fresh water sources are becoming increasingly stressed. According to the February/March 2008 issue of International Desalination & Water Reuse Quarterly, there are approximately 14,000 desalination plants worldwide. GWI estimates that as of December 31, 2005, there were 39.9 million cubic meters per day of installed capacity, and that the growth in the market for new total desalination capacity should increase by approximately 13% per year from 2005 to 2015. We expect SWRO’s share of new total desalination capacity to grow in excess of the overall industry growth rate, particularly due to higher energy costs experienced over the past few years.

We are active in the fastest growing markets for desalination, which include China, Algeria, Australia and India. According to GWI projections, these markets are expected to grow at least 20% per year from 2005 to 2015. Other significant markets include the Middle East, North America, the Caribbean and Europe. Additionally, our PX device is currently specified in the pilot test facility for the proposed Carlsbad, California plant, which, if constructed, is expected to be the largest SWRO plant then operating in the United States. We understand that the proposed Carlsbad, California desalination plant is in the final stages of its permit procurement process and construction is expected to begin once all permits have been obtained.

Articles

Can a water stock weather the IPO dry spell?
Sat Apr 12, 2008 3:41am IST

By Steven Bertoni

NEW YORK, April 11 (Reuters) - Energy Recovery Inc, a water purification equipment maker, has filed to go public, and the issue could see solid demand since it gives certain niche investors a new asset to chase and the company looks insulated from an economic downturn.
Read More Here

Desalination company Energy Recovery Inc. plans IPO
East Bay Business Times - by Mavis Scanlon

Looking to capitalize on the world's ever-increasing thirst for fresh water, desalination equipment supplier Energy Recovery Inc. last month filed to raise as much as $175 million in an initial public offering to expand its business in a fast-growing segment of the global water desalination industry.
Read More here

Energy Recovery Registers for IPO
Tuesday April 1, 9:56 am ET
Energy Recovery, Which Makes Devices for Water Desalination Efficiency, Registers for IPO

Read More here

Water woes: Scarcity points to big opportunities in desalination
water costs
Read More Here

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