Greetings and welcome to Energy Recovery second quarter 2022 conference 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, Investor Relations. Please go ahead, sir. Hello, everyone and welcome to Energy Recovery's 2022 second quarter earnings conference call. My name is James Siccardi, Vice President of Investor Relations at Energy Recovery and I'm here today with our Chairman, President and Chief Executive Officer, Bob Mao and our Chief Financial Officer, Joshua Ballard. 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. 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. 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 3 August 2022. 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 Chairman, President and Chief Executive Officer, Robert Mao. Thank you, Jim and thank you everyone for joining us. We are all hearing a lot of negative global and domestic economic news. Inflation is high, there is war in Europe and we may already be in a recession. Equity markets, though a little better recently, have fallen swifter than any time in decades. Yet here at Energy Recovery, we continue to make substantial progress in all three of our business markets despite this noise around us. Our growth targets remain intact and are up, too, resilient. I'll remind you that regardless of the domestic economic headwinds, more than 98% of our business is overseas. Despite high inflation, our profitability remains robust owing to the strength of our margins reflected by the reputation and value creation of our PX technology. Despite supply chain disruptions, we continue manufacturing without pause because our team's foresight to build inventories well before supply chains were an issue. Despite turmoil in the financial markets, we maintain ample cash reserve. Despite the rise in interest rates, our business, which currently has no reliance on debt, has not been directly impacted. Our core market of desalination. We help provide water to millions of people worldwide. We believe this basic human need will largely weather current global economic uncertainties, as it has in past years. The need for water in an increasingly water-scarce world remains a strong motivator for investments in this sector. As of today, we believe we remain on track in our desalination and industrial wastewater markets to meet our guidance of 25% revenue growth for 2022. Our megaproject channel remains strong and we are seeing a resurgence in our smaller OEM desalination projects from the COVID-related pent-up demand. In addition, increased global water scarcity is leading to a regulatory environment that is pushing filtration requirements of industrial wastewater. In short, we feel we're well-positioned today and poised to execute on the strategy we have laid out ahead of us. Today, I will focus our discussion on industrial wastewater and CO2 and Josh will provide you with some more specific updates about how the desalination business is evolving this year. With that, let me move on to industrial wastewater. At the end of the second quarter, we had already exceeded 2021 revenue by 60% and are well on our way to meet our forecast of $3 million in industrial wastewater revenue for fiscal 2022. I mentioned in our last call that we were collecting performance data from our first commissioned industrial wastewater plants. Results from the field show that our new Ultra PX is achieving efficiencies of at least 93% and we are generating the savings for our customers that we promised. For example, at one lithium battery plant, our technology is saving the facility roughly $150,000 in electricity costs per year based on 2021 electricity cost levels, with an estimated one-year payback. At a textile plant in India, a $500,000 investment in our technology is netting an estimated $500,000 per year in savings, again, based on 2021 electricity costs. This translates into value creation of 10-15 times the initial investment over the life of these wastewater plants. We expect to see similar savings results in other wastewater verticals as well. With rising energy costs, we expect these savings to increase and accelerate in the coming years. We believe these real-world savings will help further prove the value proposition of reverse osmosis processes in industrial wastewater, which of course, are driven by the energy savings provided by our products. We're now able to use this data to educate and further penetrate the markets where we have a presence. For example, we received our first award with the lithium battery recycling market in China during the second quarter. This installation will give us our first reference site in this lithium sub-vertical. We have now penetrated the three sub-verticals of the lithium ion battery value chain, namely lithium mining, battery manufacturing and now recycling. This is a significant milestone for us as we continue to build volume in this space, especially given the significant position China plays in this global market. We have previously spoken about the potential of the overall lithium market and our estimated total addressable market of likely more than $200 million this decade. Because of the global urgency to expand lithium capacity, our teams will continue to prioritize this market and have already identified numerous projects in various stages of planning between now and 2030. Another industry where we have early success is textiles. Water is used in multiple stages of the textile manufacturing process and the industry overall generates nearly 5 billion tons of wastewater per year. Textile is one of the top three water-wasting industries in both China and India. Combined, these two countries discharge over 2.5 billion tons of wastewater every year. Today, the textile industry is looking for ways to reduce water effluent and to reuse as much water, wastewater as possible for a variety of reasons, including regulatory pressures, rising costs and limited availability of fresh water in an increasingly more water-scarce world and the fact that many chemicals in the textile process can be recycled and reused or sold. We have had initial success in textiles, with approximately 15% of our sales occurring within this industry. We currently estimate a potential TAM in China and India alone of about $75 million today, growing to over $100 million by 2026 and $140 million by the end of the decade. Importantly, India has announced intentions to double the size of their textile output by 2026, is investing in textile hubs with centralized wastewater treatment centers. The centralized treatment model, which will process larger flows of wastewater, should provide an exciting opportunity for Energy Recovery. All told, the lithium battery and textile markets could reach a total TAM for this decade of more than $340 million. In summary, we believe these two verticals represent critical market opportunity to serve as the core revenue-generating focus for our industrial wastewater unit. We will keep you updated on our progress within these two verticals in the coming quarters as we continue to drill down within them and we'll highlight additional wastewater verticals in future calls as we continue to push for increased volume sales in this business. Now let us discuss our CO2 business, where again, global regulations are forcing a transition from HFC refrigerants to more climate-friendly natural refrigerants due to global warming, providing the tailwinds that drive future potential growth in CO2. While this transition will occur with or without us, the response we have received thus far seems to indicate the industry's desire to ease the OPEX challenge natural refrigerants pose. First, we're pleased to announce that our first PXG was commissioned in a new grocery store in Southern Europe and the initial results are exceeding expectations. Installation and commissioning went smoothly and we have been consistently reducing the energy load of the rack by over 20% during days where temperatures ranges from 30-35 degrees Celsius or 86-95 degrees Fahrenheit. It is important to note that this first unit was not a PXG-centric system. The unit was fully integrated into rack's control systems but mechanically separated, almost like the bolt-on we will be deploying at Vallarta in California. Our European partner's initial priority was the reliability of our technology in the field and this architecture provides our partner with the ability to isolate the PX should any issue arise. Therefore, in this first installation, energy efficiency was actually a secondary consideration. However, despite these less than optimal architectural conditions, the PXG efficiency has provided pleasantly surprising upside to our partner. We believe that with a fully integrated PXG-centric build, we can achieve even greater efficiency for our customers. Our initial success with this customer has already led to preliminary discussions for additional PXG-centric deployments at new sites, possibly later this year. In addition to our successful commissioning, I am pleased to announce that we enter into a second joint development agreement with a large U.S.-based refrigeration manufacturer. Our new partner has indicated that they intend to deploy our PXG later this year or early next year. We're also engaged in advanced discussions with additional refrigeration manufacturers and hope to sign and deploy our technology with them in the coming months. We have also received a strong response from the PXG reference designs we published on our website this summer. These reference designs provide manufacturers a number of PXG architectures to consider as they design their own next-generation PXG-centric CO2 refrigeration rack. This move has further aided market acceptance and expedited relations with additional OEMs. We hope to see further deployment with these OEMs as well. Finally, an update on our installation at the Vallarta Supermarkets. While we had hoped to have commissioned our unit during the second quarter, we're now on track to commission in September. Much of the construction work has been completed and our testing of the skid has been ongoing. Vallarta remains excited about the technology and has begun preliminary discussions about additional future PXG-centric deployments. In summary, we made material progress this quarter. We believe that our technology is being viewed by the refrigeration industry as the sought-after solution to the OPEX challenge of transitioning away from climate harmful HFCs and toward more climate-friendly natural refrigerants. Our strategy to leverage distribution networks established by existing manufacturers is beginning to show promise. Now we are gathering data from the field installation that is proving to the industry the value of our technology in real-world situations, while more and more industry participants are taking notice. We expect to begin in earnest discussions with our partners regarding volumetric orders so that we can commence the necessary planning needed to meet their delivery requirements for 2023 and beyond. We will provide further updates on our progress in CO2 at our next earnings call in November, including how we see volume, volumes will be ramping up in 2023. With that, I hand it over to Josh. Good afternoon, everyone. We generated $20 million in revenue this quarter as guided during the Q1 call, relatively flat against Q2 2021. Results for this quarter's revenue were driven by the timing of mega project shipments, which this year are weighted to the third and fourth quarters, as communicated in May. For example, while year-to-date mega project revenues are down 9% based on our contracted backlog, we're anticipating a strong second half, highlighted by a very robust fourth quarter. By year-end, we expect full-year mega project growth in the 10%-15% range. Notably, OEM revenues are up 75% year-to-date. Total OEM revenue for the year includes $1.6 million in industrial wastewater sales, which, as Bob mentioned, is on pace to achieve our full-year guidance. OEM desalination revenue has grown closer to 50% year-to-date, which we currently expect to hold through the end of the fiscal year. Overall, we continue to finally see our post-COVID return of desalination OEM and aftermarket revenues due to pent-up demand, which as of today is expected to continue through the end of the year. We have no change to our revenue forecast for the year, although we continue to keep an eye on end of year shipments in our very large fourth quarter. As I mentioned last quarter, we expect gross margin to moderate this year and we have begun to see this in the second quarter. There are two things at play here. First, our product mix changed in the second quarter, reflecting an increase in sales of non-PX products, which naturally puts pressure on our top-line blended margin. We have seen this occur several times over the years. Second, while we are not yet reflecting inflationary increases in our pressure exchanger costs this year, we are experiencing some inflationary pressure on raw materials for pumps and turbochargers, which has weighed on margins. While we are working to mitigate these increases, we do not expect to see our margin improve considerably in 2022. Again, we maintain our guidance of 66%-68% gross margin for the year. Note that we do expect to see additional increases in costs in 2022, particularly for labor and other inputs such as energy and shipping. The majority of these increases will not be reflected in 2022 margins, in part owing to our overall inventory build that has already occurred but we cannot delay inflation forever. We do not anticipate that the overall effect of these increases will be large, however and we will be prepared to discuss them in more detail during our Q3 call. Our OPEX grew about 24% year-over-year in the quarter. However, keep in mind that this includes a $1.3 million one-time expense due to the cessation of our VorTeq activities. About $1 million of this is reflected in R&D spend and the remaining $300,000 in G&A. Therefore, on an adjusted and recurring basis, OPEX grew 15% year-over-year, largely driven by sales and marketing as we naturally grow spend from our COVID lows and focus on building our industrial wastewater and CO2 businesses. For example, we've greatly increased the number and frequency of trade shows and conferences as we work to reengage with customers in desalination after COVID, as well as to expand our messaging in industrial wastewater and refrigeration. R&D remained relatively flat year-over-year and G&A grew about 8%. Importantly, overall adjusted operating expenses showed a nominal increase of only 1% over first quarter this year. We are still targeting around 50% OpEx as a percent of revenue by year end, excluding these one-time VorTeq related expenses, as increased revenues in the second half of the year should begin to balance out our spend. We closed the quarter with a cash and securities balance of $87 million. This $10 million reduction from last quarter is entirely due to the share repurchase program. Our free cash flow has actually increased by $12 million for the quarter, due mostly to increased collections but were offset by nearly $19 million in buybacks. We completed the repurchase program on 1 July. All told, we repurchased $50 million in stock at an average price of $18.57 for a total of 2.7 million shares. As of today, we have not put a new buyback program in place but of course, we'll let you know if that changes. With regards to our operating cash flow, as I discussed last quarter, we continue to see increased inventory levels due to the lower shipments this quarter. Despite these lower shipments, we continue to produce at a level loaded pace to satisfy demand for the much larger planned third and fourth quarters, which increased inventory levels up to about $28 million. Finally, I'll give you a brief update on VorTeq. We have not been successful in finding a partner to date. Although we continue discussions with a couple of potential interested parties, activities have been reduced to the point where we made the decision to shut down operations. This resulted in a $1.3 million one-time expense driven by severance and accelerated depreciation. All told, the cash component of this one-time expense was only about $200,000. With that, we can now move to Q&A. Thank you very much. At this time, we will be conducting a question and answer session. If you would like to ask a question, then please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Nils Thommessen with Fearnley Securities. Please go ahead. Good afternoon. I was just hoping to get some additional color on capital allocation going forward. If you could share anything on, for example, CapEx requirements for more capacity and what potentially you need to build in working capital so we can, you know, have our own thoughts around future potential shareholder distributions. Sure. This is Josh. I'll take it, Nils. How you doing? This year, our CapEx spend is pretty much in line with last year. Not any major changes. As we look forward, what is gonna drive increases in CapEx or working capital will in any large degree, any material degree, would be CO2 refrigeration. As we start to talk about that potential ramp up in future quarters, we'll be able to define that a little better, right? Depending on how quickly and how far we go, we really push our CapEx. If we have to build a new facility or increase capacity in existing facilities, that's what will really drive that in the coming future. If that makes sense. As well as working capital. Otherwise, you know, our current cash flows can easily cover, you know, just about our operating cash, what we're spending in order to grow desalination and industrial wastewater. At this point, is there any reason to believe that a new CO2 refrigeration construction site would be more expensive than the last one you constructed for desal? No, I think the open questions will be where we build it. If we don't expand in existing facilities, for example, if we decided to build closer to where other refrigeration manufacturers are or if we had, you know, customers in Europe we wanna go closer to, whatever that may be, you know, that could entail a little more cost. Because volumes would be increasing so much, if we looked at more automation and so forth in our manufacturing process. Those things could define up or down but either way, I don't think it's gonna be dramatically higher than what you've seen in the past than what we've talked about. Okay, thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. Our next question comes from Wally Walker with Hana Road Capital. Please go ahead. Yeah, good afternoon, guys. Hey, as you're spending more and more time on your CO2 business and testing it, do you have any updates as you're thinking about it on the TAM for that business? Also as you are spending the time in testing, any adjacencies that have come forward that you hadn't considered, just as you're starting to look at that new business? Thank you, Wally. In terms of TAM, quite a few earnings calls ago, we had said the refrigeration TAM by the end of the decade could be $1 billion. That probably still is a good number to work with. Of course, you're gonna say, you know, tell me closer than when at the end of this thing. We think it's quite large, Wally and in November, we'll have more explicit quantitative numbers for you. The TAM in part also depends on how much, how good, which we consider pretty good, is our value proposition and the temperature range that we can serve very effectively. Both with our testing results and early results from the actual real world tests are very encouraging. Wally, next time we'll give you very specific numbers. What I can say is from ERII's perspective, the TAM is large. In terms of adjacencies, again, we'll talk next time. The flip side of refrigeration is heating. It is in the first degree approximation, it is the mirror image of refrigeration and we are evaluating that. In fact, we are discussing with some OEMs on this other side. Again, more specific to come next time, Wally. Okay. Can't wait. Thank you. Good luck. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one on your telephone keypad. As there are no further questions, I would now like to hand the call back to Mr. James Siccardi for closing remarks. Thank you, Peter. As a reminder, our prepared remarks can be found on the investors section of our website. With that, I'd like to thank everyone for joining us this evening and we look forward to talking to you again in early November. Thank you. Thank you. This concludes today's conference. You may disconnect your lines.