Good day, ladies and gentlemen, and welcome to Energy Recovery's Q2 2026 earnings call. During today's call, Energy Recovery 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 the company and on management's beliefs, assumptions, estimates and 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 annual Form 10-K and quarterly 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, August 5th, 2026. 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. Our hosts for today's call are Alex Buehler, Interim President and Chief Executive Officer of Energy Recovery, and Aidan Ryan, Interim Chief Financial Officer. I would now like to turn the call over to Mr. Buehler. Thank you, operator. Good afternoon, everyone. Earlier today, we released a letter to shareholders on the investor relations section of our website that reviews business and financial performance during the quarter. Prior to opening the line for questions and answers, I'd like to highlight a few important takeaways from that letter. We are focused on bringing our CEO search to a close. We have been impressed with the breadth and the quality of the candidate pool. The combination of Energy Recovery's long-term tailwinds, technology leadership and platform strength have allowed us to attract accomplished leaders who are ready to lead our next chapter of growth. We look forward to updating you further as this search progresses. As interim CEO, I'm focused on ensuring the successful execution of our business initiatives and continuity with our customers and employees during this search process. In addition to my past career across water, energy, and infrastructure services, I have also had the privilege of serving on Energy Recovery's board for over a decade. With this background, I am ensuring that we keep pace on growth, innovation, manufacturing transformation, and capital discipline. Moving now to our outlook. We sit in attractive end markets with durable structural growth in the high single digits. While the war has temporarily impacted us and clouded our visibility, we are confident in our long-term pipeline and a return to growth as these headwinds pass. Lastly, we've demonstrated our discipline in operating costs this year. That practice will continue. In addition to a steady pace of improvements in overhead efficiency, our ongoing manufacturing transformation will provide significant cost improvement when our new facility in Saudi Arabia achieves planned run rate production. With that, we will now move to the question and answer portion of our conference call. Operator, please open the line for questions. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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 pull for questions. Our first question is from Ryan Pfingst with B. Riley Securities. Please proceed with your question. Hey, guys. Thanks for taking the questions. First, could you just talk about your current visibility on mega projects in the Middle East? As of the last call, I believe, there were no formal delays given to you guys, but they were expected. Is that still the case? Well, let me start kind of with the pipeline. Then I'll specifically address the second part of your question, Ryan. I will say the pipeline is strong. I would even characterize it as uniquely strong. We do have really good forward visibility. Obviously, in this market, we've got structural, durable demand drivers, and those certainly have not changed. We are predicting a market recovery, although we're unable at this juncture to kind of put a date and a timeline on that. When we look at our pipeline, we do have named projects, in some cases with EPCs appointed, in other cases without, with named customers as well. That forward visibility can extend out for five years. The pipeline looks good. It looks uniquely strong from my perspective, but we are still in this environment where we are seeing delays. Some of those delays, to your specific question, have in fact been formalized and communicated. Obviously, those are caused by financing challenges in this current environment of geopolitical risk, where risk premiums go up. Obviously, we have procurement challenges from our EPCs We just have logistic challenges as well in terms of getting things started and proceeding into the execution phases of these things. Good pipeline, but still with uncertain timing is the punchline there. I appreciate that detail. Secondly, could you dig in more on the cost impact that your new facility in Saudi Arabia is expected to have and the extent of the potential margin uplift there? The Saudi Arabia facility is primarily strategic in nature. It's designed to get us closer to customers, and to minimize freight and shipping costs to those customers, and also to build a local presence in a region that's very important for us over time. It is, I'd say complementary with our facilities in California. We plan to use both, as we talked about in the letter. We do see it as a source of margin improvement in the future, and a lot of those margin improvements come from just freight and shipping and procurement. There are some generally lower operating costs in the region. We'll see those margin improvements come gradually over time as the facility ramps in 2027 and 2028 and beyond, as well as when we introduce new products, including our Q650 into the market. Don't think about it as a, we open the factory, all of a sudden margins snap up. It is something that's going to happen over time, and it's probably too early to quantify that, but we do expect improvement. That makes sense. I appreciate that. Then last one for me on the wastewater side. What are some of the key actions that you're taking today to accelerate business there? And when do you think we'll ultimately see a commercial inflection point for Energy Recovery's products in that market? Yeah. Obviously, we like the wastewater market. That goes without saying. We continue to invest there. What we see is a growing market, as we look at several use cases and applications for our products and technologies. You would have noted in some of our earlier press releases that we have achieved and announced product success and reference projects. We have also expanded and diversified our portfolio of products, so we can do high pressure, ultra high pressure, low pressure, and ultra-low pressure. That certainly broadened the aperture of our technologies in those range of use cases. Certainly, we are also focused on accelerating market adoption and revenue growth. I think some things we're doing there are we are better allocating our resources to where the market opportunity is. For example, a lot of opportunity in Asia, especially in places like China and India, where they haven't really taken up MLD, ZLD as industrial or national policies in those markets for obvious reasons. We are also trying to balance our key account management approach and our go-to-market strategy. We are trying to position with the right sort of OEM players in the right end markets and cover those accounts. Obviously, if we can get specced in with some of those RO companies, that could mean a significant uplift in revenue, and an opportunity to scale more quickly. We are also thinking we're going to run this with more efficiency as well. You would have probably picked up on that in the shareholder letter. We're balancing revenue growth and efficiency, and that's through better resource allocation and in some cases, leaner operations on the sales management side. Certainly not reducing our sales resources, especially as we think about our priority geo markets and target accounts, but running it more efficiently from a sales management perspective. That's how we think about wastewater. Obviously, the results were pretty soft, but we still feel really good about the market, its size, our product success, and the case of project references that we are developing. Understood. I appreciate all that detail. Thanks, guys. Yeah, sure. Our next question is from Ryan Connors with Northcoast Research. Please proceed with your question. Thanks. Good afternoon, gentlemen, and thanks for your time today. I wanted to start off on the big picture and then kind of move down from there. Obviously the Iran conflict is a key part of the story right now. I think one of the unique things about it has been the on-again, off-again nature of it. One minute we're looking at a resolution and then we're not. I'm just curious, what do you think is going to be the catalyst to open the market up and reduce those risk premium as you talked about, Alex? When this thing keeps head faking that it's resolved and then not, does it have to be resolved for six or nine months very clearly before some of these countries open things back up or Just curious because it seems like something that just is coming and going almost every other day or week here. Yeah, look, obviously difficult to say where things are going on the geopolitical side, and yeah, we can all acknowledge and appreciate that whiplash, right? There's a deal, there's no deal. Missiles are flying again. Now we're in a ceasefire. I think what we need to see on our side is Projects moving to financing, EPC appointments, as well as sort of execution in terms of award to delivery. In certain cases, we get awards, although delivery is pushed out. Obviously, that doesn't help. That helps us from a backlog perspective, but not necessarily from a revenue perspective, right? Because we're still dependent on that execution timeline. It's one of those things, we'll know it when we see it, because we'll see normal order of operations, timing, and velocity in our detailed pipeline, which is sort of the difference between an award date and a make water date. Earlier than that, the difference between a project manifesting and its award date. Right now, we're just out of bounds there. We will see it come inbounds, hopefully soon, but one can never tell. Right? How that correlates to geopolitical environment, I can't possibly say, right? What needs to happen on that side, but ceasefire, a cessation of hostile activity, whatever that is. I can tell you, we'll know it when we see it in our project pipeline as we measure those key project milestones and the time in between those milestones. Yep. No, that's a very helpful perspective on it. That kind of leads to my next question, which was, totally understand the impossibility of reinstating guidance in this kind of environment like you described, but the one thing you do stress a couple times in the release, in the letter, is the backlog, so the $27 million. How do we think about that number? What does that number mean for us? Can we think about that as kind of a four to the second half? I'm just curious. That is the one metric we have, and I'm just curious how you would frame that for us, how we should be thinking about that from a modeling perspective. Yeah. I'd primarily look at our comments around the strength of the backlog in 2027 and beyond. I think that's when we're going to see growth start to reappear. We have seen some contracting activity this year resume, but there is also some delay in contracting activity. We disclosed the backlog number, but the ability to use that to read through into the rest of our year, I think is limited in this circumstance. I think we're trying to get the focus to really be on the long-term pipeline. Got it. Okay. That's on the MPD side, though. You've heard us say that OEM and aftermarket business, we expect to be resilient through the rest of this year. Keep that in mind, too. Yep. You talked about the PX Q650 earlier. Obviously, this whole air pocket here with the Iran conflict ends up being poorly timed as it relates to that launch. Should we think about this as kind of pushing out the PX Q650 launch and rollout to where that's really going to impact the top line? I guess you've mentioned it'll impact the margins as well. Do we kind of think about that more as almost a late 2027, 2028 story at this point, where it really moves the needle? No, it shouldn't impact the product launches at all, right? We have launched that product. We are seeing commercial uptake even from key customers. That too is a demonstration of our product leadership, our innovative spirit, as well as the strength of our value proposition. We certainly think it makes sense as more countries are launching these multi-year national water programs and trains are getting larger, volumetric flow is increasing, right? This just seems like a natural play into that changing market environment. It also strengthens our competitive position pretty well. Very well, I would say. When you look at our performance against any competitive benchmarks out there, which there aren't many on the MPD side anyway, as we look at large mega projects in the pipeline, when you look at things like efficiency, specific energy consumption, back pressure, useful life, warranty coverage, et cetera, I just think it puts us in such a strong competitive position, strengthens our value proposition accordingly. The short answer to your question is no, it won't delay the product launch. We are inking deals for the 650, both small and large, we expect that we will continue to ink those deals. Got it. Okay. Then going back to the new facility, the new manufacturing facility in Saudi Arabia, congratulations on that. I know that's been something that's been in the works for a while. I want to take that from the flip side as the earlier question on the margin benefit. In terms of the capital cost there and the cash flow impact over the next, I guess, year and a half as that ramps up, Aidan, do you have anything you can share with us on the total capital cost for that and how that'll sequence over the next year, however long that takes? Yeah, I think about it as a very limited capital cost. As a reminder, we're not green fielding a new site. We are leasing a space. The incremental capital cost is really around equipment, some fixed assets. We gave guidance this year for $3 million-$6 million of total CapEx. That still stands. You might remember maintenance CapEx is less than that. We're talking about a few million bucks this year. There may be some next year as we build out that facility further, but it's a limited CapEx facility. Got it. Okay. Fair enough. Thanks for your time. Thank you. Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Jeffrey Campbell with Seaport Research Partners. Please proceed with your question. Thank you for taking my questions. You've said that the OEM and aftermarkets are going to remain pretty resilient. Can you give us some kind of broad guidance on what that represents for the rest of 2026? Is it going to be similar to the first two quarters? How do you think about that? Our comment about the resiliency was really a full year comment. In the first half, we've obviously in OEM and aftermarket come down a little bit below where we were last year. When we look at the second half of the year and when we look at the full year, I'd characterize our expectations as those businesses will remain resilient. There was a little choppiness, obviously, in the first half from everything that happened in the war. Those businesses are not immune by any means to the goings-on there. Again, resilient for the full year. Okay. You noted that the low pressure PX energy savings were 23% and 25% in real world applications. I'm just wondering what sort of improvement does that represent over what you were offering prior to the low PX development? Pretty similar. Those products really just address other use cases within wastewater, it's a product that will expand the TAM for us. Okay. You mentioned that the mega project construction activity had resumed in some Middle East conflict areas. Those apparently are not producing deals for Energy Recovery at this point. I thought that might be a good opportunity to just review what's the typical lag between when a project starts actual construction and then when you receive a tender for your devices. Usually we're on the early side of the procurement cycle. I would like to know that we're kind of one to two of the capital value here. In most cases, because of our production schedule slotting in production, right? They're going to want to order products from us and get those in hand and in-house, right? We have seen a lag. We have seen that lag grow in this environment. Back to the earlier part of your question, obviously, we've got great comprehensive visibility of the MPD pipeline. There's not a project out there that we don't see and we don't see early, and we're not in discussion with those customers. I mean, the users or the off-takers, the developers, the EPCs, et cetera. We've got incredible coverage, and early and forward visibility on those projects. That's the point I would want to reinforce there, right? We're not going to miss an MPD project. We're going to see them all, and we're going to be positioned early and be closely monitoring that project timeline. Okay. My last one that I'll ask is going back to this targeted changes that you're making in wastewater. You've already given some good color on that, I wondered if you could zero in particularly on the synergies that you said you want to unlock with the broader organization. I'm wondering if those are organizational or are we talking about manufacturing? What kind of synergies are you thinking about? Yeah. What we're finding is that there are some common customers here. When we think about sales coverage in a territorial sense, we had sort of separate and parallel business units between water or desal and wastewater. I think what we've done is taken a view of what is the customer overlap, what are the key accounts, and then how many salespeople or territory specialists do we need in any specific area to cover those key accounts in that territory. That's one area of, call it synergies, right? The other area of synergies is on the sales management side. Obviously, we do have a sales management infrastructure for desal. We do have a sales management infrastructure for wastewater. In some cases, those are duplicative and overlapping, so we could certainly drive realized efficiencies and economize between those two. I would point to both of those kind of overlapping sales resources in certain cases and then overlapping sales management in other cases. Okay, great. No, that was helpful. Thank you. I appreciate it. We have reached the end of the question and answer session. I would like to turn the floor back over to Alex Buehler for closing comments. Thank you, operator. I want to thank all of our stakeholders for your continued interest and support, and we look forward to updating you on our next call after the third quarter. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.