Energy Recovery, Inc. Signs Definitive Agreement to Acquire Pump Engineering, L.L.C.
December 02 2009 - 5:16PM
Business Wire
Energy Recovery, Inc. (NASDAQ: ERII), a leader in the design and
development of energy recovery devices for the desalination
industry, today announced it has entered into a definitive
agreement to acquire all of the equity interests of Pump
Engineering, L.L.C. based in New Boston, Michigan. Under the terms
of the agreement, ERI will pay the shareholders of Pump Engineering
approximately $20 million in cash plus one million shares of ERI
Common Stock. The completion of the transaction, which is subject
to satisfaction of customary conditions, is expected to take place
in the fourth quarter of 2009.
Pump Engineering is a leading provider of centrifugal turbine
energy-saving technology for seawater and brackish desalination
applications, and has demonstrated support for emerging markets
such as natural gas and high pressure fluid processing. Pump
Engineering’s hydraulic turbochargers and pumps are custom-designed
to reduce energy consumption and increase efficiency in specific
process conditions. Much like ERI’s line of PX energy recovery
devices, Pump Engineering’s products are simple to operate, durable
and require a small footprint in a plant.
“ERI’s acquisition of Pump Engineering is aligned with our
growth strategy of expanding our product offerings and addressing
potential new markets. It allows ERI to offer our clients multiple
complementary technologies that are unmatched in the industry,”
said ERI President and CEO G.G. Pique. “This acquisition
underscores ERI’s commitment to lead a global effort to prove that
desalination is an affordable, environmentally sound and
energy-efficient answer to the growing water crisis. Pump
Engineering is the leading, high-quality energy recovery device
solution in areas where the cost of power is low and the customer
is more sensitive to the up-front capital cost. With dedicated
sales and marketing, technical and support teams, the combined
client base will benefit from a total solution package with
enhanced customer service capabilities and a wider breadth of
technical expertise in R&D. We can now supply any desalination
project in the world with the most appropriate energy recovery
device.”
ERI believes that the acquisition of Pump Engineering will
enhance the Company’s competitive position and broaden its
addressable market by:
- Providing the desalination
industry with superior quality energy recovery technologies that
deliver proven, best-in-class solutions for isobaric and
centrifugal devices for both seawater and brackish reverse osmosis
applications.
- Expanding ERI’s product
portfolio to offer a more complete suite of energy-saving solutions
that cover a larger footprint in the brackish and seawater
desalination markets.
- Designing, manufacturing and
selling packaged solutions that integrate high pressure pumps,
circulation pumps and energy recovery devices to offer a complete
solution for a power train in a desalination plant.
- Increasing market share with an
expanded suite of products in regions where the cost of power is
low and up-front capital cost considerations take precedence over
operating costs.
- Combining the two
industry-leading technologies and their comprehensive ongoing
R&D efforts to develop next generation products.
- Pursuing new applications
outside of seawater and brackish desalination, such as natural gas
and high pressure fluid processes where the centrifugal technology
has unique advantages.
“The acquisition of Pump Engineering and its capability to
manufacture high pressure and circulation pumps for desalination
applications means ERI can now offer clients a single-source
solution for the entire power train in a desalination plant,” said
Borja Blanco, Senior Vice President of Sales at ERI. “This opens up
tremendous market opportunities for us. We are excited to expand
our worldwide reach and market penetration by combining Pump
Engineering’s global network of agents with our extremely capable
direct sales team to take advantage of the broader suite of
products and solutions that this acquisition provides.”
Pump Engineering’s turbine technology can be applied to new and
substantially larger addressable markets outside of the water
treatment markets such as natural gas and other high pressure fluid
processes. Similar to the desalination process, these markets also
have high-pressure streams where significant energy can be saved;
however, they are very sensitive to cross-contamination. The
turbine design provides 100 percent isolation of the process
streams making it a good fit for these future applications.
“We're delighted with ERI’s validation of Pump Engineering’s
technology and overall market strategy,” stated Robert Oklejas,
Founder and President of Pump Engineering. “For the past 23 years,
our employees have been dedicated to designing a very high quality
technology that offers a cost-conscious energy saving desalination
solution. Our customers around the world will benefit from the
superior array of energy recovery solutions that our combined
efforts and products will bring to the market.”
Pump Engineering is currently organized as a limited liability
company. Its unaudited financial statements for its 2008 fiscal
year ended December 31 show that the company generated $9.3 million
in revenue and produced an operating margin of 10%. Pump
Engineering expects to generate approximately $8 to $9 million of
revenue in 2009 and approximately $13 to $15 million in revenue in
2010, including the Magtaa project in Algeria recently awarded to
Pump Engineering. The estimated revenues for 2010 do not include
the potential for synergistic sales of high pressure and
circulation pumps to ERI’s OEM customers or sales into new
applications outside of desalination.
ERI will host a conference call for investors to discuss this
acquisition on Thursday, December 3, 2009 before the market opens
at 5:30 a.m. PT (8:30 a.m. ET). The conference call will be in a
"listen-only" mode for all participants other than the investment
professionals who regularly follow the Company. The toll-free phone
number for the call is 877-941-8610 or 480-629-9819 and the access
code is 4189643. Callers should dial in approximately 15 minutes
prior to the scheduled start time. A telephonic replay will be
available at 800-406-7325 or 303-590-3030, access code: 4189643,
until Wednesday, December 17, 2009. Investors may also access the
live call or the replay over the internet at www.streetevents.com
and www.energyrecovery.com. The replay will be available
approximately three hours after the live call concludes.
About Energy Recovery, Inc.
Energy Recovery, Inc. (NASDAQ:ERII) designs and develops energy
recovery devices that help make desalination affordable by
significantly reducing energy consumption. Energy Recovery’s PX
Pressure Exchanger™ (PX™) device is a rotary positive displacement
pump that recovers energy from the high pressure reject stream of
seawater reverse osmosis systems at up to 98% efficiency. The
company is headquartered in the San Francisco Bay Area with offices
in key desalination centers worldwide, including Madrid, Shanghai,
Florida and the United Arab Emirates. For more information about
Energy Recovery, Inc. and the PX technology, please visit
www.energyrecovery.com.
Forward Looking Statements
This press release includes “forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements include statements about
ERI’s potential acquisition of Pump Engineering, Inc. L.L.C., Pump
Engineering’s future financial performance, ERI’s plans to
integrate Pump Engineering’s business to offer a broader array of
products and solutions to the markets it serves and the
acquisition’s potential for enhancing ERI’s competitive position
and for opening up opportunities in new markets. Because such
forward-looking statements involve risks and uncertainties,
including the risks that the acquisition of Pump Engineering will
not be consummated, as the transaction is subject to certain
closing conditions, the Company's actual results may differ
materially from the predictions in those forward-looking
statements. Factors that could cause actual results to differ
materially include, but are not limited to, unsuccessful
integration of the two companies operations, delays in, or
cancellation of, the construction of desalination plants, the
inability of ERI’s or Pump Engineering’s customers to obtain
project financing, delays in governmental approvals, changes in end
users’ budgets for desalination plants or the timing of their
purchasing decisions, the world economic crisis and other risks
detailed in the Company's filings with the Securities and Exchange
Commission (“SEC”). All forward-looking statements are made as of
today, and the Company assumes no obligation to update such
statements. For more details relating to the risks and
uncertainties that could cause actual results to differ materially
from those anticipated in our forward-looking statements, please
refer to the Company's SEC filings.
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