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Michael Fitzsimmons  

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  • Iraq: Exxon to sell 35% stake in $50B oil project [View news story]
    Good move for XOM!
    Aug 23, 2013. 07:26 AM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Texas was having fresh water issues even before the fracking revolution and severe recent drought made things worse. It would appear just a matter of time before we see SWRO desalination plants pop up on the Gulf Coast. With respect to the leftovers (brine - a mixture of concentrated salt levels and water and leftover treatment chemicals), it is often released back into the ocean. At the Carlsbad plant, the outflow will be released into the Agua Hedionda Lagoon.
    Aug 23, 2013. 07:20 AM | Likes Like |Link to Comment
  • Consolidated Water: Desalination Expert Set To Rise 25% [View article]
    DAG: Yes, browsing at some of the companies on the list Rina provided proves your point. A standard water utility may pay a decent dividend by the outlook for growth may not be there. One thing I like about both CWCO and REII is that they are plays across the broader desalination industry and have technology/services that have a global reach. In that aspect, they seem fairly unique in that their outlook for growth is superior most standard utilities. If either of you find other companies similar to these two, I would be interested in them. Thanks.
    Aug 23, 2013. 06:47 AM | Likes Like |Link to Comment
  • Consolidated Water: Desalination Expert Set To Rise 25% [View article]
    Thanks Rina - big list!
    Aug 22, 2013. 08:20 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Ahhhsooo - demand forecast. Gotcha, and I agree with your comment about ERII having visibility into new plant plans. But the problem is they don't have visibility into exact delivery dates and therefore revenue recognition. A great example is the Carlsbad project which has jumped through hoops for what, 5 years now? But listening to the CEO, the Carlsbad project was really kind of a gating item for many other US based SWRO projects which are now going forward with the Carlsbad progress. So, yeah, there aren't as many SWRO plants as iPhone models/volumes, but there still seems to be very large variability in order/revenue recognition. Should be interesting to see how it plays out over the next 6-12 months. The CEO hinted at some more order announcement over the coming weeks and months. Time will tell. Thanks again for taking time to leave your comments.

    Btw, I am really waiting for south Texas to kick in. From what I hear, the frack water requirements have really stressed water supplies down there. I know there are committees now in Texas trying to figure out where their water will come from. At some point they are going to turn to the Gulf of Mexico.
    Aug 22, 2013. 04:44 PM | Likes Like |Link to Comment
  • Consolidated Water: Desalination Expert Set To Rise 25% [View article]
    Thanks Alamo and I agree - some good commentary on this one.
    Aug 22, 2013. 04:32 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Hi bartp - That certainly would be a nice growth kicker for ERII. Retrofitting in the refinery space could be a tough sell, but I would think new expansion plans not only for refineries but also for chemical plants would be realistic. If I was ERII, I'd have a sales person talking to Chevron Phillips Chemical Co. ("CPChem") now...they have some big expansion plans down on the Gulf Coast.
    Aug 22, 2013. 02:40 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Battery: Yes, I have seen many company presentations promising much and delivering little - especially in the energy space that I am most familiar with. ConocoPhillips has been one notable exception. They put out a strategic plan years ago and have executed not only flawlessly, but above expectations. Anyhow, wrt ERII, they have gone through a tough patch, no doubt, as many companies did during and post the credit crunch beginning in 2008/2009. However, being a long-term shareholder, I'd be interesting in your take: has the company reached a turning point and do you believe they are poised to become profitable right at the same time revenues will pick up dramatically?
    Aug 22, 2013. 02:36 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Tertiary Finance: thanks for the compliment. You are right to question my revenue comment on 2014 - others have as well. That said, we simply don't know what revenue is going to be for full year 2013, but we do know the 2nd half is going to be "uniquely strong" and that the company expects 30-40% growth on that number in 2014. And this is why I said the investment is risky and a "speculative buy".

    Here are some comments on the CEO in the latest conf. call transcript:

    "Looking out to 2014 and beyond we continue to see global desalination demand trending upward, which should drive 30% to 40% desalination revenue growth for energy recovery in 2014 and 20% CAGR over the next five years. It’s worth noting that at least one widely read third party trade publication recently projected more than 90% reverse osmosis desalination industry growth in 2014 implying significant growth opportunity for energy recovery in 2015."

    So there apparently is at least one trade publication that sees alot of pent-up demand from the credit contraction during the crisis to come to fruition in 2014. I lost half of my article yesterday during the submission process, had to re-write, and forgot to put this part back in.

    One thing we do know for sure, and as I mentioned, is that Q-Q revenue recognition is going to be lumpy. With such a small-cap, the stock's reaction could be volatile. As for manufacturing, it doesn't seem to me that the PX line of products would be very difficult to build. I have seen no comments by management that meeting demand is a problem - it is simply an issue of when the customer wants them delivered. So I am not sure what you were getting at with the iPhone comparison. Anyhow, thanks for your contribution and for second guessing my analysis.
    Aug 22, 2013. 12:36 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    2tired2talk. Thank you. We should be careful not to confuse net profit margins with net income. The company basically retooled and reinvested during the industry cap-ex downturn following the financial crisis of 2008/2009 and it has taken some time to essentially rebuild the business - including bringing on new management. As I said in the article, this is a risky and speculative investment. That said, after reviewing the very strong industry fundamentals, looking at expanding gross margins, stable operating expenses, and key design wins (like Carlsbad), the company appears to be a very good risk/reward situation. I don't see the need for the company to raise more money at this point with a stock offering. They apparently have the capability to meet current demand with existing manufacturing facilities. After suffering through the downturn, I doubt they would want to punish shareholders now when they are finally on the verge of profitability due to a coming "revenue wave". But anything is possible I suppose.
    Aug 22, 2013. 12:21 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    scinvestor: Thank you and you bring up a good point. As we know with DRC's mission critical turbine business, aftermarket revenue for them is substantial. I was going to mention aftermarket revenue in this article, since desalination is also mission critical, but as you mention, with the 25 year lifespan, I think it will be some years before aftermarket sales becomes a significant revenue stream. 10 years from now, this could be a different story.
    Aug 22, 2013. 12:14 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Chinese reverse engineering and copy cat manufacturing is always a threat in every industry. That said, the PX product line is high technology, proven to be efficient, and very reliable (25 year no maintenance lifespan). I would think that is pretty tough to match in a corrosive salt-water environment. And that is probably why the company's market share grew from 50% to 90% from 2011 to 2012. It's also why ERII has such a huge installed customer base in China (see the global installation map link I referred to earlier). Mid east turmoil? Even protestors and military police need to drink. The middle east population is growing fast and there is a lack of potable water. It is a huge market for ERII's products.
    Aug 22, 2013. 12:11 PM | Likes Like |Link to Comment
  • Consolidated Water: Desalination Expert Set To Rise 25% [View article]
    Interesting concept James. On the other hand, after the latest news on Fukushima we may see competing desalination plants with solar panels on top or a wind array nearby. Regardless, powering desalination plants is an important factor in their placement. One reason I believe the Rosarito proposal likely to go forward was the ability to co-locate the plant near the existing Rosarito power plant. It can reuse the same seawater intake and outflow while also providing power to the plant.
    Aug 22, 2013. 12:05 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Hi Jarrod - yes, I think I addressed both the revenue lumpiness and the concentrated risk in the article. I agree about your oil & gas comments, and if you noticed I didn't even mention this business segment in the article because it is apparently a non-factor at this time. Where we might differ is in our opinion of the global desalination market in general. I think the company could grow quite nicely based on this market segment alone due to their dominate 90% market share. The recent Carlsbad contract award by IDE Tech solidifies that position. I think the worldwide demand for potable water is on the verge of a fundamental breakout based on the reasons stated in my previous article on CWCO (which I did not repeat in this article due to its length):
    - pollution and fresh water availability in China
    - population growth in arid regions like the Middle East and Africa
    - fundamental lack of fresh water supplies in places like Southern CA, and South FLA
    - rising sea levels as a result of global warming.

    But you are right to question the concentrated risk, and this is one reason I put the company as a "speculative" buy. The other prime reasons being a lack of recent profitability and of course the pushed out revenue growth. However, my speculative buy recommendation was based solely on the company's participation in the desalination market. Oil & gas growth would be a nice kicker, but I am not expecting it. DRC would be a prime competitor there.
    Aug 22, 2013. 09:50 AM | Likes Like |Link to Comment
  • Yoho Resources Lives In Takeover City: The Kaybob Play Of The Duvernay Shale [View article]
    YOHO announced Q3 earnings yesterday:

    http://bit.ly/176369w

    including a reduction of $10 million in cap-ex for 2013 over previous guidance. Looks like YO is going to slow down in the Duvernay and let other build-out infrastructure while learning more on optimization of completion techniques. While the company is "extremely pleased" with the drilling results in the Duve (avg, 1,200 boe of gross production on the wells), I would have liked to have seen a breakdown on the liquids content. Regardless, it is clear activity is picking up in the Kaybob with the company reporting 80 wells drilled, drilling or licensed in 2013. Additional drilling and infrastructure build-out can only increase the value of YO's Kaybob holdings.
    Aug 22, 2013. 09:13 AM | Likes Like |Link to Comment
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