Energy Recovery (NASDAQ: ERII) saw its stock plummet 11.18% in Wednesday's trading session following the release of its third-quarter earnings report. The company, which specializes in industrial fluid flow technologies, reported mixed results that fell short of some investor expectations.

For the quarter ended September 30, Energy Recovery reported revenue of $32 million, representing a 17% decrease from the same period last year and missing the analyst consensus estimate of $32.93 million. Despite the revenue shortfall, the company managed to beat earnings expectations, posting an adjusted earnings per share (EPS) of $0.12, surpassing the analyst estimate of $0.10.

The financial results revealed several concerning trends for investors. Net income for the quarter decreased by 54% year-over-year to $3.9 million, while the gross margin slightly declined to 64.2% from 65.1% in the previous year. The company attributed the revenue decline mainly to the timing of revenue from contracted projects and cited product mix and tariffs as factors affecting the gross margin. Despite these challenges, Energy Recovery's management stated that the third-quarter results were in line with their internal expectations.

Wall Street's reaction to the earnings report was decidedly negative, as reflected in the stock's sharp decline. The market's response suggests that investors are particularly concerned about the company's revenue trajectory and the potential for continued pressure on margins. As Energy Recovery faces headwinds in its operating environment, including issues related to product mix and tariffs, investors will likely be watching closely for signs of improvement in future quarters.