10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-K/A

(Amendment No. 1)

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2018
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from        to

CommissionFileNumber:001-34112

EnergyRecovery,Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	01-0616867
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

1717 Doolittle Drive, San Leandro, CA 94577

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code:(510) 483-7370

SecuritiesregisteredpursuanttoSection12(b)oftheSecuritiesExchangeActof1934:

Title of Each Class	Name of Exchange on Which Registered
Common stock, $0.001 par value	The NASDAQ Stock Market LLC

SecuritiesregisteredpursuanttoSection12(g)oftheAct:None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ☐ Yes  þ No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  ☐ Yes  þ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  þ Yes  ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐ Accelerated filer þ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  ☐ Yes  þ No

The aggregate market value of the voting stock held by non-affiliates amounted to approximately $284 million on June 30, 2018.

The number of shares of the registrant’s common stock outstanding as of February 28, 2019 was 54,107,060 shares.

DOCUMENTSINCORPORATEDBYREFERENCE

As noted herein, the information called for by Part III is incorporated by reference to specified portions of the registrant’s definitive proxy statement to be filed in conjunction with the registrant’s 2019 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the registrant’s fiscal year ended December 31, 2018.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-KA (the “Amendment”) of Energy Recovery Inc (“the Company”) amends the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, originally filed with the Securities and Exchange Commission on March 7, 2019 (the “Original Report”).

This Amendment is being filed solely to correct two administrative errors on the cover page of the Original Report with respect to the aggregate market value of the voting stock held by non-affiliates at June 30, 2018 and the number of shares outstanding of the Company’s common stock as of February 28, 2019. The correct amount of aggregate market value of the voting stock held by non-affiliates at June 30, 2018 was approximately $284 million. The correct number of shares of the Company’s common stock outstanding as of February 28, 2019, was 54,107,060.

This Amendment No. 1 speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Original Report. No other changes have been made to the Original Report.

As required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this Amendment contains new certifications by the Company’s principal executive officer and principal financial officer, which are being filed as exhibits to the Amendment. Because the Amendment includes no financial statements, the Company is not including certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

PART IV

Item 15 — Exhibits and Financial Statement Schedules

We have filed the following documents as Exhibits to this form 10-K/A:

Exhibit Number	Exhibit Description	Incorporated by Reference				Filed Herewith
		Form	File No.	Exhibit	Filing Date
31.1	Certification of Principal Executive Officer, pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer, pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

– 4 –

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Leandro, State of California, on the 11th day of March 2019.

ENERGY RECOVERY, INC.

By: /s/ CHRIS GANNON

Chris Gannon

President and Chief Executive Officer

Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ CHRIS GANNON	President and Chief Executive Officer	March 11, 2019
Chris Gannon	(Principal Executive Officer)
/s/ JOSHUA BALLARD	Chief Financial Officer	March 11, 2019
Joshua Ballard	(Principal Financial and Accounting Officer)

– 5 –

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a) OR 15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Chris Gannon, certify that:

1. I have reviewed this annual report on Form 10-K/A of Energy Recovery, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Date: March 11, 2019	/s/ CHRIS GANNON
	Name:	Chris Gannon
	Title:	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2 

CERTIFICATION OF PRINCIPAL RINCIPAL FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a) OR 15d-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Joshua Ballard, certify that:

1. I have reviewed this annual report on Form 10-K/A of Energy Recovery, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Date: March 11, 2019	/s/ JOSHUA BALLARD
	Name:	Joshua Ballard
	Title:	Chief Financial Officer (Principal Financial Officer)

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Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Feb. 28, 2019	Jun. 30, 2018
Document Information [Line Items]
Entity Registrant Name	Energy Recovery, Inc.
Entity Central Index Key	0001421517
Trading Symbol	erii
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		54,107,060
Entity Public Float			$ 284
Document Type	10-K/A
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Amendment Flag	true
Amendment Description	Correction in shares amount

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Consolidated Balance Sheets - USD ($) $ in Thousands		Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents		$ 21,955	$ 27,780
Restricted cash		97	2,664
Short-term investments		73,338	70,020
Accounts receivable, net of allowance for doubtful accounts of $396 and $103 at December 31, 2018 and 2017, respectively		10,212	12,465
Contract Assets		4,083	6,278
Inventories		7,138	5,514
Income tax receivable		15	0
Prepaid expenses and other current assets		2,810	1,342
Total current assets		119,648	126,063
Restricted cash, non-current		86	182
Long-term investments		1,269	0
Deferred tax assets, non-current		18,318	7,933
Property and equipment, net		14,619	13,393
Operating lease, right of use asset		12,189	2,843
Goodwill		12,790	12,790
Other intangible assets, net		640	1,269
Other assets, non-current		282	12
Total assets		179,841	164,485
Current liabilities:
Accounts payable		1,439	4,091
Accrued expenses and other current liabilities		8,019	7,948
Lease liability		926	1,603
Income taxes payable		0	432
Accrued warranty reserve		478	366
Contract liabilities		16,270	15,909
Current portion of long-term debt		0	11
Total current liabilities		27,132	30,360
Long-term debt, less current portion		0	16
Lease liabilities, non-current		12,556	1,698
Contract liabilities, non-current		26,539	40,517
Other non-current liabilities		236	0
Total liabilities		66,463	72,591
Commitments and Contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017		0	0
Common stock, $0.001 par value; 200,000,000 shares authorized; 59,396,020 shares issued and 53,940,085 shares outstanding at December 31, 2018 and 58,168,433 shares issued and 53,905,600 shares outstanding at December 31, 2017		59	58
Additional paid-in capital		158,404	149,006
Accumulated comprehensive loss		(133)	(125)
Treasury stock, at cost, 5,455,935 shares repurchased at December 31, 2018 and 4,262,833 shares repurchased at December 31, 2017		(30,486)	(20,486)
Accumulated deficit		(14,466)	(36,559)
Total stockholders’ equity	[1]	113,378	91,894
Total liabilities and stockholders’ equity		$ 179,841	$ 164,485

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ (396)	$ (103)
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	59,396,020	58,168,433
Common stock, shares outstanding (in shares)	53,940,085	53,905,600
Treasury stock, at cost, shares (in shares)	5,455,935	4,262,833

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue		$ 61,025	$ 58,023	$ 49,715
Operating expenses:
General and administrative		21,476	17,354	16,626
Sales and marketing		7,546	9,391	9,116
Research and development		17,012	13,443	10,136
Amortization of intangible assets		630	631	631
Total operating expenses		46,664	40,819	36,509
Income from operations		9,978	9,249	3,426
Other income (expense):
Interest income		1,543	870	309
Interest expense		(1)	(2)	(3)
Other non-operating expense, net		(80)	(188)	(19)
Total other income, net		1,462	680	287
Income before income taxes		11,440	9,929	3,713
Benefit from income taxes		(10,653)	(8,425)	(6)
Net income	[1]	$ 22,093	$ 18,354	$ 3,719
Income per share:
Basic (in dollars per share)		$ 0.41	$ 0.34	$ 0.07
Diluted (in dollars per share)		$ 0.40	$ 0.33	$ 0.07
Number of shares used in per share calculations:
Basic (in shares)		53,764	53,701	52,341
Diluted (in shares)		55,338	55,612	55,451
Product
Revenue		$ 61,025	$ 58,023	$ 49,715
Product cost of revenue		17,873	19,061	17,849
Product gross profit		43,152	38,962	31,866
License and development revenue
Revenue		$ 13,490	$ 11,106	$ 8,069

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	[1]	$ 22,093	$ 18,354	$ 3,719
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(12)	57	(27)
Unrealized income (loss) on investments		4	(64)	(27)
Other comprehensive loss, net of tax		(8)	(7)	(54)
Comprehensive income		$ 22,085	$ 18,347	$ 3,665

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands		Total		Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning Balance (in shares) at Dec. 31, 2015				54,948,000	(2,479,000)
Beginning Balance at Dec. 31, 2015		$ 64,333	[1]	$ 55	$ (6,835)	$ 129,809	$ (64)	$ (58,632)	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	[1]	3,719						3,719
Unrealized loss on investments		(27)	[1]				(27)
Foreign currency translation adjustments		(27)	[1]				(27)
Issuance of common stock (shares)				1,936,000
Issuance of common stock		6,600	[1]	$ 2		6,598
Repurchase of common stock for treasury (shares)					(1,243,000)
Repurchase of common stock for treasury		(9,375)	[1]		$ (9,375)
Employee stock-based compensation		3,269	[1]			3,269
Ending Balance (in shares) at Dec. 31, 2016				56,884,000	(3,722,000)
Ending Balance at Dec. 31, 2016		68,492	[1]	$ 57	$ (16,210)	139,676	(118)	(54,913)	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	[1]	18,354						18,354
Unrealized loss on investments		(64)	[1]				(64)
Foreign currency translation adjustments		57	[1]				57
Issuance of common stock (shares)				1,284,000
Issuance of common stock		5,238	[1]	$ 1		5,237
Repurchase of common stock for treasury (shares)					(541,000)
Repurchase of common stock for treasury		(4,276)	[1]		$ (4,276)
Employee stock-based compensation		$ 4,093	[1]			4,093
Ending Balance (in shares) at Dec. 31, 2017		53,905,600		58,168,000	(4,263,000)
Ending Balance at Dec. 31, 2017		$ 91,894	[1]	$ 58	$ (20,486)	149,006	(125)	(36,559)	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	[1]	22,093
Unrealized loss on investments		4	[1]				4
Foreign currency translation adjustments		(12)	[1]				(12)
Issuance of common stock (shares)				1,228,000
Issuance of common stock		4,139	[1]	$ 1		4,138
Repurchase of common stock for treasury (shares)					(1,193,000)
Repurchase of common stock for treasury		(10,000)	[1]		$ (10,000)
Employee stock-based compensation		$ 5,260	[1]			5,260
Ending Balance (in shares) at Dec. 31, 2018		53,940,085		59,396,000	(5,456,000)
Ending Balance at Dec. 31, 2018		$ 113,378	[1]	$ 59	$ (30,486)	$ 158,404	$ (133)	$ (14,466)	[1]

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash Flows From Operating Activities:
Net income	[1]	$ 22,093	$ 18,354	$ 3,719
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		5,240	4,087	3,263
Depreciation and amortization		3,869	3,666	3,680
Amortization of premiums on investments		362	460	174
Provision for warranty claims		326	246	208
Reversal of accruals related to expired warranties		(180)	(200)	(236)
Unrealized (gain) loss on foreign currency translation		(10)	144	13
Provision for doubtful accounts		336	55	76
Adjustments for excess or obsolete inventory		197	201	(361)
Deferred income taxes		(10,385)	(8,865)	(459)
Loss on disposal of fixed assets		408	0	0
Other non-cash adjustments		0	(196)	(131)
Changes in operating assets and liabilities:
Accounts receivable		1,917	(761)	(244)
Contract assets		2,196	(4,263)	(130)
Inventories		(1,872)	(1,250)	2,287
Prepaid and other assets		(682)	(39)	(402)
Accounts payable		(2,274)	2,118	(360)
Accrued expenses and other liabilities		87	611	(262)
Income taxes payable		(447)	385	398
Contract Liabilities		(13,616)	(11,858)	(6,268)
Net cash provided by operating activities		7,565	2,895	4,965
Cash Flows From Investing Activities:
Maturities of marketable securities		81,268	49,106	7,535
Purchases of marketable securities		(86,192)	(80,641)	(46,552)
Capital expenditures		(5,235)	(7,376)	(1,112)
Net cash used in investing activities		(10,159)	(38,911)	(40,129)
Cash Flows From Financing Activities:
Net proceeds from issuance of common stock		4,291	5,508	6,600
Tax payment for employee shares withheld		(150)	(270)	0
Repayment of long-term debt		(27)	(11)	(10)
Repurchase of common stock		(10,000)	(4,276)	(9,375)
Net cash (used in) provided by financing activities		(5,886)	951	(2,785)
Effect of exchange rate differences on cash and cash equivalents		(8)	(57)	(41)
Net change in cash and cash equivalents and restricted cash		(8,488)	(35,122)	(37,990)
Cash and cash equivalents and restricted cash, beginning of year		30,626	65,748	103,738
Cash and cash equivalents and restricted cash, end of year		22,138	30,626	65,748
Supplemental disclosure of cash flow information:
Cash paid for interest		1	2	3
Cash received for income tax refunds		13	16	2
Cash paid for income taxes		610	57	51
Supplemental disclosure of non-cash transactions:
Purchases of property and equipment in trade accounts payable and accrued expenses and other liabilities		30	475	66
Non-cash lease liabilities arising from obtaining right of use assets		$ 10,411	$ 0	$ 0

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Description of Business and Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Description of Business and Significant Accounting Policies

Description of Business and Significant Accounting Policies

Energy Recovery, Inc. and its wholly-owned subsidiaries (the “Company,” “Energy Recovery,” “our,” “us,” or “we”) is an energy solutions provider to industrial fluid flow markets worldwide. The Company’s core competencies are fluid dynamics and advanced material science. The Company’s products make industrial processes more operationally and capital expenditure efficient. The Company’s solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. The Company’s solutions are marketed and sold in fluid flow markets, such as water, oil & gas, and chemical processing, under the trademarks ERI^®, PX^®, Pressure Exchanger^®, PX Pressure Exchanger^®, VorTeq^™, MTeq^™, IsoBoost^®, IsoGen^®, AT^™, and AquaBold^™. The Company owns, manufactures, and/or develops its solutions, in whole or in part, in the United States of America, (“U.S.”) and the Republic of Ireland (“Ireland”).

Basis of Presentation

The Company’s Consolidated Financial Statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications and Retroactive Adjustments

Certain prior year amounts have been reclassified in the Consolidated Statements of Cash Flows and certain Notes to Consolidated Financial Statements to conform to the current year presentation. In addition, as of January 1, 2018 the Company adopted “ASU 2014-09”, “ASU 2016-08” and “ASU 2016-10” (the combination is also known as “ASC 606” or “New Revenue Standard”) using the full retrospective transition method, and the Company early adopted ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842), also referred to as “ASC 842” or “New Lease Standard,” The Company also adopted ASU 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash, also referred to as “New Cash Flow Presentation Standard” on January 1, 2018. See Note 2, “Recent Accounting Pronouncements,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K regarding the impact of these recent accounting pronouncements on our Consolidated Financial Statements.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements.

The accounting policies that reflect the Company’s more significant estimates and judgments and that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results are revenue recognition; capitalization of research and development assets; allowance for doubtful accounts; allowance for product warranty; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; valuation adjustments for excess and obsolete inventory; deferred taxes and valuation allowances on deferred tax assets; and evaluation and measurement of contingencies. Those estimates could change, and as a result, actual results could differ materially from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents are maintained primarily in demand deposit accounts with large financial institutions and in institutional money market funds. The Company monitors the creditworthiness of the financial institutions and institutional money market funds in which the Company invests its surplus funds. The Company has experienced no credit losses from its cash investments.

Allowances for Doubtful Accounts

The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and general economic conditions. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance.

Short-Term and Long-Term Investments

The Company’s short-term and long-term investments consist primarily of investment-grade debt securities, all of which are classified as available-for-sale. Available-for-sale securities are carried at fair value. Amortization or accretion of premium or discount is included in other income (expense) on the Consolidated Statements of Operations. Changes in the fair value of available-for-sale securities are reported as a component of accumulated other comprehensive loss within stockholders’ equity on the Consolidated Balance Sheet. Realized gains and losses on the sale of available-for-sale securities are determined by specific identification of the cost basis of each security. Short-term investments mature within 12 months and long-term investments mature greater than 12 months.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out “FIFO” method) or net realizable value. The Company calculates inventory valuation adjustments for excess and obsolete inventory based on current inventory levels, movement, expected useful lives, and estimated future demand of the products and spare parts.

Property and Equipment

Property and equipment is recorded at cost and reduced by accumulated depreciation. Depreciation expense is recognized over the estimated useful lives of the assets using the straight-line method. Estimated useful lives are three to ten years. Certain equipment used in the development and manufacturing of ceramic components is depreciated over estimated useful lives of up to 10 years. Leasehold improvements represent remodeling and retrofitting costs for leased office and manufacturing space and are depreciated over the shorter of either the estimated useful lives or the term of the lease. Software purchased for internal use consists primarily of amounts paid for perpetual licenses to third-party software providers and installation costs. Software is depreciated over the estimated useful lives of three to five years. Tangible assets acquired for research and development (“R&D”) activities and have alternative use are capitalized over the useful life of the acquired asset. Estimated useful lives are periodically reviewed, and when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. Maintenance and repairs are charged directly to expense as incurred.

Goodwill and Other Intangible Assets

The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual purchase price recorded as goodwill. The determination of the value of the intangible assets acquired involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from one to 20 years. Acquired intangible assets with contractual terms are amortized over their respective legal or contractual lives. Customer relationships and other non-contractual intangible assets with determinable lives are amortized over periods ranging from five to 20 years.

The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses over the expected remaining useful life of the related asset. A shortfall in these estimated operating cash flows could result in an impairment charge in the future.

Goodwill is not amortized, but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present. The Company estimates the fair value of the reporting unit using the discounted cash flow and market approaches. Forecast of future cash flows are based on the Company’s best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment, and general economic conditions.

As of December 31, 2018 and 2017, acquired intangibles, including goodwill, relate to the acquisition of Pump Engineering, LLC during the fourth quarter of 2009. See Note 7, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of intangible assets.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, restricted cash, investments in marketable securities, accounts receivable, accounts payable, and debt. The carrying amounts for these financial instruments reported in the Consolidated Balance Sheets approximate their fair values. See Note 6, “Investments and Fair Value Measurements,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of fair value.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. At the inception of each contract, performance obligations are identified and the total transaction price is allocated to the performance obligations.

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.

With respect to termination, the Company does not have the ability to cancel a contract for convenience. In general, customers can cancel for convenience upon the payment of a termination fee that covers costs and profit. It is rare for customers to cancel contracts.

See Note 3, “Revenues” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K ,for more detail on product and service revenue recognition - Water segment, cost-to-total cost (“CTC”) revenue recognition- Oil and Gas segment, license and development revenue recognition - Oil and Gas segment.

Research and Development (“R&D”) Expense and Capitalization of R&D Assets

R&D expense consists of costs incurred for internal projects and for technology licensed to third parties. These costs include the Company’s direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, depreciation of facilities, as well as external costs for equipment and supplies. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred. All R&D costs are expensed as incurred and are included in operating expenses.

The costs of materials that are acquired for research and development activities and have no alternative future uses (in research and development projects or otherwise) are expensed as incurred.  With respect to tangible assets acquired or constructed for R&D activities, if the costs of materials that are acquired or constructed for a particular research and development project have alternative future uses (in other research and development projects or otherwise), they are capitalized as an asset and the cost of depreciation is charged to expense. 

Warranty Costs

The Company sells products with a limited warranty for a period ranging from 18 months to five years. The Company accrues for warranty costs based on estimated product failure rates, historical activity, and expectations of future costs. Periodically, the Company evaluates and adjusts the warranty costs to the extent that actual warranty costs vary from the original estimates.

Stock-based Compensation

The Company measures and recognizes stock-based compensation expense based on the fair value measurement for all stock-based awards made to its employees and directors, including restricted stock units (“RSUs”), and employee stock options over the requisite service period (typically the vesting period of the awards). The fair value of RSUs based on the Company’s stock price on the date of grant. The fair value of stock options is calculated on the date of grant using the Black-Scholes option pricing model, which requires a number of complex assumptions including expected life, expected volatility, risk-free interest rate, and dividend yield. The estimation of awards that will ultimately vest requires judgment, and to the extent that actual results or updated estimates differ from our current estimates, such amounts are recorded as a cumulative adjustment in the period in which the estimates are revised. See Note 12, “Stock-Based Compensation,” for further discussion of stock-based compensation.

Foreign Currency

The Company’s reporting currency is the U.S. dollar. The functional currency of the Company’s Irish subsidiaries is the U.S. dollar, while the functional currency of the Company’s other foreign subsidiaries is their respective local currencies. The asset and liability accounts of the Company’s foreign subsidiaries are translated from their local currencies at the rates in effect on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the period. Gains and losses resulting from the translation of the Company’s subsidiary balance sheets are recorded as a component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are recorded in other income (expense) in the Consolidated Statements of Operations.

Income Taxes

Current and non-current tax assets and liabilities are based upon an estimate of taxes refundable or payable for each of the jurisdictions in which the Company is subject to tax. In the ordinary course of business, there is inherent uncertainty in quantifying income tax positions. The Company assesses income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. When applicable, associated interest and penalties are recognized as a component of income tax expense. Accrued interest and penalties are included within the related tax asset or liability on the Consolidated Balance Sheets.

Deferred income taxes are provided for temporary differences arising from differences in bases of assets and liabilities for tax and financial reporting purposes. Deferred income taxes are recorded on temporary differences using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in determining whether and to what extent any valuation allowance is needed on the Company’s deferred tax assets. In making such a determination, the Company considers all available positive and negative evidence including recent results of operations, scheduled reversals of deferred tax liabilities, projected future income, and available tax planning strategies. See Note 10,“Income Taxes,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of tax valuation allowances.

On December 22, 2017, President Trump signed into law the Tax Act, which significantly changed existing U.S. tax laws. Following the enactment of the Tax Act, the SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax law that were in effect immediately before the enactment of the Tax Act. Our adjustments were final in 2017. See Note 10,“Income Taxes,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a discussion of our income tax accounting related to the Tax Act.

The Company’s operations are subject to income and transaction taxes in the U.S. and in foreign jurisdictions. Significant estimates and judgments are required in determining the Company’s worldwide provision for income taxes. Some of these estimates are based on interpretations of existing tax laws or regulations. The ultimate amount of tax liability may be uncertain as a result.

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2018

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606), referred to as Accounting Standards Codification (“ASC”) 606 (“ASC 606”) or the “New Revenue Standard.” ASC 606 supersedes the revenue recognition requirements of ASC 605, Revenue Recognition, and requires entities to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services.

The update also requires more detailed disclosures to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 permits the use of either the full retrospective or cumulative effect transition (modified retrospective) method upon adoption.

In March and April 2016, the FASB issued ASU No. 2016-08 (“ASU 2016-08”), Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU No. 2016-10 (“ASU 2016-10”), Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing, respectively. The amendments in these updates are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and to clarify two aspects of ASC 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The effective date and transition requirements for both ASU 2016-08 and ASU 2016-10 are the same as those for ASU 2014-09, as referred.

The Company adopted “ASU 2014-09”, “ASU 2016-08” and “ASU 2016-10” (the combination is also known as “ASC 606” or “New Revenue Standard”) as of January 1, 2018 using the full retrospective transition method. To assess the impact of and to implement ASC 606, the Company formed a project team, which has operated since 2014, to evaluate internal processes. The Company has implemented changes to its current policies and practices, and internal controls over financial reporting to address the requirements of the standard.

Water Segment Revenue. Performance obligations identified under ASC 606, are consistent with deliverables identified under ASC 605. Revenue recognition for performance obligations accounted for under ASC 606 is consistent with ASC 605 given the transfer of control of the promised goods or services follows the same pattern. Adoption of ASC 606 did not have a material impact on the timing of revenue and expense recognition.

Oil & Gas Segment - Cost-to-Total Cost (“CTC”) Revenue. Performance obligations identified under ASC 606, are consistent with deliverables identified under ASC 605. Revenue recognition for performance obligations accounted for under ASC 606 is consistent with ASC 605 given the transfer of control of the promised goods or services follows the same pattern. Adoption of ASC 606 did not have a material impact on the timing of revenue and expense recognition.

Oil & Gas Segment - License and Development Revenue. License and development revenue associated with the up-front non-refundable $75.0 million exclusivity payment received in connection with the VorTeq license agreement (the “VorTeq License Agreement”) that the Company entered into with a technology corporation (the “VorTeq Licensee”) under ASC 605 was recognized on a straight-line basis over the 15-year term of the license, while the two subsequent milestone payments of $25.0 million that could each be earned under the VorTeq License Agreement were to be recognized in full when achieved under milestone accounting.

License and development revenue under ASC 606, which includes both the upfront non-refundable $75.0 million exclusivity payment and the two milestone payments of $25.0 million each, when determined probable, is comprised of:

• revenue recognition over time based on an input measure of progress based on a cost driver, which management has determined is the best estimate of the progress made on the project during the period from inception until full commercialization, for the amount allocated to the exclusive Missile (as defined in Note 15, “VorTeq Partnership and License Agreement”) license, and research and development services, and

• revenue recognition related to stand-ready, when and if available, upgrades subsequent to full commercialization, recognized over time ratably over the period, which matches the transfer of benefit to the customer on a daily basis, commencing after full commercial launch until the expiration of the contract.

The changes in license and development revenue due to the adoption of ASC 606 are as follows.

	Years Ended December 31,
	2017		2016
	(In thousands)
License and development revenue, as previously reported	$	5,000	$	5,000
Increase in revenue due to adoption of the New Revenue Standard	6,106		3,069
License and development revenue, as adjusted	$	11,106	$	8,069

The changes in the contract liability balance related to license and development revenue due to the adoption of ASC 606 are as follows.

	December 31, 2017		December 31, 2016
	(In thousands)
License and development contract liability, as previously reported	$	63,958	$	68,958
Decrease in contract liability due to adoption of the New Revenue Standard	9,465		3,359
License and development contract liability, as adjusted	$	54,493	$	65,599

For license and development revenue, performance obligations identified under ASC 606 differ somewhat from contingent and non-contingent deliverables identified under ASC 605 due to transfer of control considerations.

Under ASC 606, the Company concluded that the Missile license represents functional intellectual property and that the license is not distinct from the research and development services to be provided prior to product commercialization. The transaction price allocated to this combined performance obligation of a continually evolving license will be recognized over the estimated period required to result in full commercial launch using an input measure of progress of the cost of salaries and wages and travel expenses related to the project prior to full commercial launch.

The milestone method of accounting has been eliminated under ASC 606. Instead of recognizing the full amount of each milestone payment as revenue in the period in which it is achieved, the Company will revise its estimate of the transaction price to include development milestone payments only when they become probable of achievement and revenue will be recognized consistent with the input measure of progress.

The Company has concluded that its obligation to provide when and if available updates to its technology in the period subsequent to full commercial launch represents a performance obligation. The transaction price allocated to this stand-ready performance obligation will be recognized ratably over the period commencing after full commercial launch until the expiration of the contract.

See Note 15, “VorTeq Partnership and License Agreement” for additional discussion on the VorTeq License Agreement, and Note 3, “Revenues,” for further discussion of revenue recognition.

In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842): which supersedes ASC 840, Leases (Topic 840), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The FASB has continued to clarify this guidance through the issuance of additional ASUs. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases.

The Company early adopted ASU 2016-02 on January 1, 2018 concurrent with the Company’s adoption of the New Revenue Standard and elected the available practical expedients. The adoption of ASU 2016-02 had no impact on the Company’s Consolidated Statements of Operations. The most significant impact was the recognition of right of use assets and liabilities for operating leases. Adoption of the standard required the Company to recast certain previously reported results, including the recognition of additional operating lease right of use assets and liabilities.

In November 2016, the FASB issued ASU 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash, also referred to as “New Cash Flow Presentation Standard.” ASU 2016-18 is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash on the Consolidated Statement of Cash Flows. ASU 2016-18 requires that the Consolidated Statement of Cash Flows explain the change in total cash and equivalents and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The standard also requires reconciliation between the total cash and equivalents and restricted cash presented on the Consolidated Statement of Cash Flows and the cash and cash equivalents balance presented on the Consolidated Balance Sheet. ASU 2016-18 is effective retrospectively on January 1, 2018. The Company adopted ASU 2016-18 on January 1, 2018. The Company recast its Consolidated Statements of Cash Flows for the prior periods presented based on the restricted cash balance on the balance sheet date and has provided a reconciliation of cash, cash equivalents and restricted cash in Note 5, “Other Financial Information.”

In January 2016, the FASB issued ASU No. 2016-01 (“ASU 2016-01”), Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU 2016-01 on January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s financial position or results of operations.

In August 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 impacts all entities that are required to present a statement of cash flows under ASC 230, Statement of Cash Flows. The amendment provides guidance on eight specific cash flow issues. For public entities, ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and interim periods within those years. Adoption should be applied using a retrospective transition method to each period presented. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s financial position or results of operations.

In October 2016, the FASB issued ASU 2016-16 (“ASU 2016-16”), Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to legacy GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective on January 1, 2018, with early adoption permitted. The update is required to be adopted on a modified retrospective basis with the cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2016-16 on January 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the Company’s financial position or results of operations.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-base payment award require an entity to apply modification accounting under ASC 718, Compensation – Stock Compensation. ASU 2017-09 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s financial position or results of operations.

Impact of Recently Adopted Accounting Pronouncements

The following table illustrates changes in the Condensed Consolidated Balance Sheets as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard and New Lease Standard at January 1, 2018.

	December 31, 2017
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Lease Standard			As Adjusted
	(In thousands)
Assets
Current assets:
Contract assets	$	6,411		$	(133	)	$	—		$	6,278
Total current assets	126,196			(133		)	—			126,063
Non-current assets
Deferred tax assets, non-current	7,902			31			—			7,933
Operating lease, right of use asset	—			—			2,843			2,843
Total assets	161,744			(102		)	2,843			164,485
Liabilities and Stockholders’ Equity
Current liabilities:
Accrued expenses and other current liabilities	8,517			(469		)	(100		)	7,948
Lease liabilities	—			—			1,603			1,603
Contract liabilities	6,416			9,493			—			15,909
Total current liabilities	19,833			9,024			1,503			30,360
Non-current liabilities
Lease liabilities, non-current	—			—			1,698			1,698
Contract liabilities, non-current	59,006			(18,489		)	—			40,517
Other non-current liabilities	358			—			(358		)	—
Total liabilities	79,213			(9,465		)	2,843			72,591
Stockholders’ equity:
Accumulated deficit	(45,922		)	9,363			—			(36,559		)
Total stockholders’ equity	82,531			9,363			—			91,894
Total liabilities and stockholders’ equity	161,744			(102		)	2,843			164,485

The following table illustrates changes in the Condensed Consolidated Statement of Operations as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017									Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			As Adjusted			As Previously Reported			Adoption of New Revenue Standard		As Adjusted
	(In thousands, except for per share data)
Product revenue	$	58,156		$	(133	)	$	58,023		$	49,715		$	—	$	49,715
Product cost of revenue	19,061			—			19,061			17,849			—		17,849
Product gross profit	$	39,095		$	(133	)	$	38,962		$	31,866		$	—	$	31,866
License and development revenue	$	5,000		$	6,106		$	11,106		$	5,000		$	3,069	$	8,069
Income from operations	3,276			5,973			9,249			357			3,069		3,426
Income before income taxes	3,956			5,973			9,929			644			3,069		3,713
(Benefit from) provision for income taxes	(8,394		)	(31		)	(8,425		)	(390		)	384		(6		)
Net income	12,350			6,004			18,354			1,034			2,685		3,719
Income per share:
Basic	$	0.23		$	0.11		$	0.34		$	0.02		0.05		$	0.07
Diluted	$	0.22		$	0.11		$	0.33		$	0.02		0.05		$	0.07
Number of shares used in per share calculations:
Basic	53,701			—			53,701			52,341			—		52,341
Diluted	55,612			—			55,612			55,451			—		55,451

The following table illustrates changes in the Company’s segment activities as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017									Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			As Adjusted			As Previously Reported			Adoption of New Revenue Standard		As Adjusted
	(In thousands)
Water
Product revenue	$	54,301		$	—		$	54,301		$	47,545		$	—	$	47,545
Product cost of revenue	16,032			—			16,032			16,353			—		16,353
Product gross profit	$	38,269		$	—		$	38,269		$	31,192		$	—	$	31,192
Income from operations	$	29,386		$	—		$	29,386		$	23,073		$	—	$	23,073
Oil & Gas
Product revenue	$	3,855		$	(133	)	$	3,722		$	2,170		$	—	$	2,170
Product cost of revenue	3,029						3,029			1,496			—		1,496
Product gross profit	$	826		$	(133	)	$	693		$	674		$	—	$	674
License and development revenue	$	5,000		$	6,106		$	11,106		$	5,000		$	3,069	$	8,069
Income (loss) from operations	(10,184		)	5,973			(4,211		)	(7,016		)	3,069		(3,947		)

The following table illustrates changes in the Condensed Consolidated Statement of Comprehensive Income as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017						Twelve Months Ended December 31, 2016
	As Previously Reported		Adoption of New Revenue Standard		As Adjusted		As Previously Reported		Adoption of New Revenue Standard		As Adjusted
	(In thousands)
Net income	$	12,350	$	6,004	$	18,354	$	1,034	$	2,685	$	3,719
Comprehensive income	12,343		6,004		18,347		980		2,685		3,665

The following tables illustrate changes in the Condensed Consolidated Statement of Cash Flows as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard and New Cash Flow Presentation effective January 1, 2018.

	Twelve Months Ended December 31, 2017
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Cash Flow Presentation Standard			As Adjusted
	(In thousands)
Net income	$	12,350		$	6,004		$	—		$	18,354
Changes in operating assets and liabilities:
Accounts receivable	(761		)	—			—			(761		)
Contract assets	(4,396		)	133			—			(4,263		)
Inventories	(1,250		)	—			—			(1,250		)
Prepaid and other assets	(39		)	—			—			(39		)
Accounts payable	2,118									2,118
Accrued expenses and other liabilities	364			247			—			611
Income taxes	416			(31		)	—			385
Contract liabilities	(5,505		)	(6,353		)	—			(11,858		)
Net cash used in operating activities	2,895			—			—			2,895
Restricted cash	1,538			—			(1,538		)	—
Net cash used in investing activities	(37,373		)	—			(1,538		)	(38,911		)
Net change in cash, cash equivalents and restricted cash	(33,584		)	—			(1,538		)	(35,122		)
Cash, cash equivalents and restricted cash, beginning of year	61,364			—			4,384			65,748
Cash, cash equivalents and restricted cash, end of period	27,780			—			2,846			30,626

	Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Cash Flow Presentation Standard		As Adjusted
	(In thousands)
Net income	$	1,034		$	2,685		$	—	$	3,719
Changes in operating assets and liabilities:
Accounts receivable	(244		)	—			—		(244		)
Contract assets	(130		)	—			—		(130		)
Inventories	2,287			—			—		2,287
Prepaid and other assets	(402		)	—			—		(402		)
Accounts payable	(360		)	—			—		(360		)
Accrued expenses and other liabilities	1,259			(1,521		)	—		(262		)
Income taxes	14			384			—		398
Contract liabilities	(4,720		)	(1,548		)	—		(6,268		)
Net cash used in operating activities	4,965			—			—		4,965
Restricted cash	(577		)	—			577		—
Net cash used in investing activities	(40,706		)	—			577		(40,129		)
Net change in cash, cash equivalents and restricted cash	(38,567		)	—			577		(37,990		)
Cash, cash equivalents and restricted cash, beginning of year	99,931			—			3,807		103,738
Cash, cash equivalents and restricted cash, end of period	61,364			—			4,384		65,748

Recently issued accounting pronouncements not yet adopted

In June 2016, the FASB issued ASU 2016-13 (“ASU 2016-13”), “Financial Instruments - Credit Losses” (Topic 326). The FASB issued this update to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company expects to adopt this standard on January 1, 2020 and does not expect the adoption of ASU 2016-13 to have a material impact on its financial statements.

In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment quantitative test and allows for the determination of impairment by comparing the fair value of the reporting unit with its carrying amount. The amendments in this update should be applied on a prospective basis. For public entities which are SEC filers, this amendment is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. The Company expects to adopt this standard on January 1, 2020 and does not expect the adoption of ASU 2017-04 to have a material impact on its financial statements.

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Revenue

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue

Revenues

Adoption of ASC 606, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC 606 using the full retrospective transition method. The Company recorded a net reduction to opening retained earnings of $0.3 million as of January 1, 2016, due to the cumulative impact of adopting ASC 606. The impact to revenues as a result of applying ASC 606 was an increase of $6.0 million, and $3.0 million, for the years 2017 and 2016 respectively.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. At the inception of each contract, performance obligations are identified and the total transaction price is allocated to the performance obligations.

The Company’s payment terms vary based on the credit risk of its customer. For certain customer types, the Company requires payment before the products or services are delivered to the customer. The Company performs an evaluation of customer credit worthiness on an individual contract basis to assess whether collectability is reasonably assured at the inception of the contract. As part of this evaluation, the Company considers many factors about the individual customer, including the underlying financial strength of the customer and/or partnership consortium and the Company’s prior history or industry-specific knowledge about the customer and its supplier relationships. For smaller projects, the Company requires the customer to remit payment generally within 30 to 60 days after product delivery. In some cases, if credit worthiness cannot be determined, prepayment or other security is required.

Sales commissions are expensed as incurred when product revenue is earned. These costs are recorded within sales and marketing expenses.

The following tables present the Company’s revenues disaggregated by geography, based on the shipped to addresses of the Company’s customers and revenue source. Sales and usage-based taxes are excluded from revenues.

		Year Ended December 31, 2018
		Water		Oil and Gas		Total
	(In thousands)
Primary geographical market
Middle East and Africa		$	35,593	$	514	$	36,107
Americas		6,388		13,490		19,878
Asia		11,955		—		11,955
Europe		6,575		—		6,575
Total		$	60,511	$	14,004	$	74,515
Major product/service line
PX, pumps and turbo devices		$	60,511	$	6	$	60,517
License and development		—		13,490		13,490
Oil & gas products		—		508		508
Total		$	60,511	$	14,004	$	74,515

	Year Ended December 31, 2017						Year Ended December 31, 2016
	Water		Oil and Gas		Total		Water		Oil and Gas		Total
	(In thousands)
Primary geographical market
Middle East and Africa	$	26,190	$	3,708	$	29,898	$	19,436	$	2,170	$	21,606
Americas	7,023		11,120		18,143		5,419		8,069		13,488
Asia	12,974		—		12,974		17,397		—		17,397
Europe	8,114		—		8,114		5,293		—		5,293
Total	$	54,301	$	14,828	$	69,129	$	47,545	$	10,239	$	57,784
Major product/service line
PX, pumps and turbo devices	$	54,301	$	15	$	54,316	$	47,545	$	10	$	47,555
License and development	—		11,106		11,106		—		8,069		8,069
Oil & gas products	—		3,707		3,707		—		2,160		2,160
Total	$	54,301	$	14,828	$	69,129	$	47,545	$	10,239	$	57,784

Arrangements with Multiple Performance Obligations and Termination for Convenience

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price. The Company generally determines stand-alone selling prices based on the prices charged to customers.

With respect to termination, the Company does not have the ability to cancel the contract for convenience. In general, customers can cancel for convenience upon the payment of a termination fee that covers costs and profit. It is rare for customers to cancel contracts.

Practical Expedients and Exemptions

In the Water segment, the time period between when the Company transfers control of products to the customer and the payment for the products is, in general, less than one year and, therefore, the practical expedient with respect to a financing component has been adopted by the Company.

With respect to taxes, the Company has made the policy election to exclude taxes from the measurement of the transaction price.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Contract Balances

Contract balances by category are presented in the following table. Prior year amounts have been adjusted for the adoption of ASC 606 on January 1, 2018. See Note 2, “Recent Accounting Pronouncements,”of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for reconciliation of prior year “As Previously Reported” and “As Adjusted” amounts.

	December 31, 2018		December 31, 2017
	(In thousands)
Trade Receivable	$	10,212	$	12,465
Contract assets:
Current contract assets	4,083		6,278
Total contract assets	$	4,083	$	6,278
Current contract liabilities:
Customer deposits	$	706	$	414
Deferred revenue:
Cost and estimated earnings in excess of billings	264		805
License and development	14,518		14,024
Product	548		550
Service	234		116
Total current contract liability	16,270		15,909
Non-current contract liabilities, deferred revenue
License and development	26,485		40,469
Product	54		48
Total non-current contract liability	26,539		40,517
Total contract liability	$	42,809	$	56,426

The Company records un-billed receivables as contract assets. Significant changes in contract assets during the period were as follows.

	December 31, 2018			December 31, 2017
	(In thousands)
Balance, beginning of year	$	6,278		$	2,015
Transferred to receivables	(8,865		)	(2,909		)
Additional unbilled receivables	6,670			7,172
Balance, end of period	$	4,083		$	6,278

The Company records contract liabilities when cash payments are received or due in advance of the Company’s performance. Significant changes in contract liabilities during the period were as follows.

	December 31, 2018			December 31, 2017
	(In thousands)
Balance, beginning of year	$	56,426		$	62,232
Revenue recognized	(13,493		)	(5,892		)
Cash received	(124		)	86
Balance, end of period	$	42,809		$	56,426

Transaction Price Allocated to the Remaining Performance Obligation

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied.

	December 31, 2018
	(In thousands)
Year:
2019	$	14,544
2020	14,480
2021	6,328
2022 and thereafter	5,677
Total	$	41,029

The Company applies the practical expedient in ASC 606, paragraph 10-50-14, and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company applies the practical expedient in ASC 606 paragraph 10-65-1(f)(3), and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount of revenue for the comparative period ended December 31, 2017.

Contract Costs

The Company recognizes the incremental cost of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The costs of obtaining contracts are included in sales and marketing expenses.

Product and Service Revenue Recognition - Water Segment

In the Water segment, a contract is established by a written agreement (executed sales order, executed purchase order or stand-alone contract) with the customer with fixed pricing, and a credit risk assessment is completed prior to the signing of the agreement to ensure that collectability is reasonably assured.

The Company does not bundle performance obligations in the Water segment. The Company identifies each performance obligation separately along with its associated relative standalone selling price based on the prices and discounts that the Company would sell a promised good or service separately to a customer.

Generally, performance obligations consist of delivery of products, such as PX energy recovery devices, turbochargers, pumps, and spare parts. Service obligation amounts which are not material, are deferred as contract liabilities until the services are performed.

The transfer of control for the Company’s products follows transfer of title which typically occurs upon shipment of the equipment in accordance with International Commercial Terms (commonly referred to as “Incoterms”). The specified product performance criteria for the Company’s products pertain to the ability of the Company’s product to meet its published performance specifications and warranty provisions, which the Company’s products have demonstrated on a consistent basis. This factor, combined with historical performance metrics, provides the Company’s management with a reasonable basis to conclude that the products will perform satisfactorily upon commissioning of the plant. Installation is relatively simple, requires no customization, and is performed by the customer under the supervision of the Company’s personnel. Based on these factors, the Company concluded that performance has been completed upon shipment when title transfers based on the shipping terms, and that product revenue is recognized at a point in time.

The Company does not provide its customers with a right of product return; however, the Company will accept returns of products that are deemed to be damaged or defective when delivered that are covered by the terms and conditions of the product warranty. Product warranty is provided consistent with the industry and is considered to be an assurance warranty, not a separate performance obligation. Product returns and warranty charges have not been significant.

Revenue allocable to the Company’s product is limited to the amount that is not contingent upon the delivery of additional items or meeting specified performance conditions. The Company adheres to consistent pricing in the stand-alone sale of products and services.

For large projects, stand-alone contracts are utilized. For these contracts, consistent with industry practice, the Company’s customers typically require their suppliers, including the Company, to accept contractual holdback provisions (also referred to as a retention payment) whereby the final amounts due under the sales contract are remitted over extended periods of time or alternatively, stand-by letters of credit are issued. These retention payments are generally 10% or less of the total contract amount and are due and payable upon the passage of time, generally up to 24 to 36 months from the date of product delivery. These retention payments are generally replaced by bank guarantees which have had no history of being exercised, and they align with the product warranty period. Given that they are not material in the context of the contract, they are not considered to be a financing component. The Company has no performance obligation and they are recorded as contract assets.

Shipping and handling charges billed to customers is a pass-through from the freight forwarder and is included in product revenue. The cost of shipping to customers is included in cost of revenue.

Cost-to-Total Cost (“CTC”) Revenue Recognition - Oil & Gas Segment

IsoBoost and IsoGen systems are highly engineered, customized solutions that are designed and manufactured over an extended period of time and are built specifically to meet a customer’s specifications. Given the facts and circumstances of these projects, the Company concluded that the CTC method of accounting is appropriate for IsoBoost and IsoGen systems. In the event that a purchase order for an IsoBoost or IsoGen system does not meet these facts and circumstances, then the CTC method of accounting does not apply. The Company had one CTC contract for IsoBoost turbochargers in fiscal years 2016 through 2018, which was completed in 2018, and last units were shipped in the first quarter of 2019. A standard assurance type warranty was provided.

Revenue from fixed price contracts is recognized with progress measured in the ratio of costs incurred to estimated final costs. Contract costs include all direct material and labor costs related to contract performance. Pre-contract costs with no future benefit were expensed in the period in which they were incurred. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revisions become known, using the cumulative catchup method. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is recorded in the period in which the loss becomes evident. No loss has been incurred to date. Revenue is recognized only to the extent costs have been recognized in the same period.

Cost and estimated earnings on uncompleted contracts is presented in the following table.

				December 31, 2017
	December 31, 2018			As Previously Reported			Adoption of New Revenue Standard			As Adjusted
	(In thousands)
Estimated earnings to date	$	6,477		$	6,000		$	(133	)	$	5,867
Estimated costs to date	(5,289		)	(4,525		)	—			(4,525		)
Subtotal	1,188			1,475			(133		)	1,342
Net billings to date	(108		)	2,718			—			2,718
Total	$	1,080		$	4,193		$	(133	)	$	4,060
Included in accompanying balance sheets:
Unbilled project costs	$	1,343		$	4,998		$	(133	)	$	4,865
Cost and estimated earnings in excess of billings	(263		)	(805		)	—			(805		)
Total	$	1,080		$	4,193		$	(133	)	$	4,060

Unbilled project costs and Cost and estimated earnings in excess of billings are included in Contract assets and Contract liabilities on the Condensed Consolidated Balance Sheets, respectively.

License and Development Revenue Recognition - Oil & Gas Segment

License and development revenue is comprised of revenue recognition over time of the upfront non-refundable $75.0 million exclusivity fee received in connection with the VorTeq License Agreement, as well as the revenue recognition over time of the two milestone payments of $25.0 million each when uncertainty of receipt is resolved and receipt of each milestone payment is considered probable.

The VorTeq License Agreement is comprised of a 15-year exclusive license for the Company’s VorTeq technology (“VorTeq”). In performing the obligations under the license, the Company provides research and development services to commercialize the technology in accordance with the Key Performance Indicators (“KPIs”), defined in the VorTeq License Agreement. After commercialization is achieved, payments will be received for the supply and servicing of certain components of the VorTeq. All payments are non-refundable. See Note 15, “VorTeq Partnership and License Agreement.”of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further details.

The Company recognizes license and development revenue in accordance with ASC 606. Revenue is recognized when control of the promised goods or services is transferred to customers. Stand-alone selling price was established at the inception of the VorTeq License Agreement by taking the transaction to market on a non-exclusive basis, and pricing in an exclusivity premium. Since the VorTeq License Agreement included an up-front non-refundable payment at the inception of the VorTeq License Agreement and future products and services are provided after initial commercialization, the Company completed an analysis and concluded that there was no material right included in the pricing of the VorTeq License Agreement.

Performance obligations, such as the exclusive license to the Missile technology and upgrades prior to and subsequent to the date of full commercial launch, have been identified. Value has been allocated to the performance obligations and revenue is recognized over time based on the input measure of progress of the cost of salaries and wages related to the project prior to full commercialization, and ratably for the unspecified upgrades for the period subsequent to full commercialization until the expiration of the VorTeq License Agreement.

Once commercial launch is achieved and cartridges are provided under the contract, revenue from those royalty payments will be recognized in accordance with ASC 842, with the Company as the lessor. It is expected that the cartridge leases will be classified as operating leases, and lease revenue will be recognized as earned.

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Income Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Income (Loss) Per Share

Income Per Share

Net income is divided by the weighted average number of common shares outstanding during the year to calculate basic net income per common share. Basic earnings per share exclude any dilutive effects of stock options and RSUs.

Diluted net income per common share reflects the potential dilution that would occur if outstanding stock options to purchase common stock were exercised for common stock, using the treasury stock method, and the common stock underlying outstanding restricted award was issued. Diluted earnings per share for the years ended December 31, 2018, 2017 and 2016, includes the dilutive effects of stock options and RSUs. Certain common stock issuable under stock options and RSUs have been omitted from the 2018, 2017 and 2016 diluted net income per share calculations because their inclusion is considered anti-dilutive.

The computation of basic and diluted net income per share is presented in the following table.

	Year Ended December 31,
	2018		2017		2016
	(In thousands, except per share amounts)
Numerator:
Net income	$	22,093	$	18,354	$	3,719
Denominator:
Basic weighted average common shares outstanding	53,764		53,701		52,341
Weighted average effect of dilutive stock awards	1,574		1,911		3,110
Diluted weighted average common shares outstanding	55,338		55,612		55,451
Net income per share:
Basic	$	0.41	$	0.34	$	0.07
Diluted	$	0.40	$	0.33	$	0.07

The potential common shares were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive is presented in the following table.

	Year Ended December 31,
	2018	2017	2016
	(In thousands)
Anti-dilutive shares excluded from net income per share calculation	2,176	1,810	2,987

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Investments and Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Investments, Fair Value Disclosure [Abstract]

Investments and Fair Value Measurements

Investments and Fair Value Measurements

Available-for-Sale Investments

The Company’s investments are all classified as available-for-sale. As of December 31, 2018, $73.4 million was classified as short-term and $1.3 million was classified as long-term. At December 31, 2017, all available-for-sale-investments were classified as short-term. There were no sales of available-for-sale investments during the years ended December 31, 2018 and 2017.

Available-for-sale investments as of December 31, 2018 and 2017 are presented in the following tables.

	December 31, 2018
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(In thousands)
Short-term investments
U.S. Treasury securities	$	8,102	$	1	$	(2	)	$	8,101
Corporate notes and bonds	65,324		1		(88		)	65,237
Total short-term investments	$	73,426	$	2	$	(90	)	$	73,338
Long-term investments
Corporate notes and bonds	$	1,269	$	—	$	—		$	1,269
Total long-term investments	$	1,269	$	—	$	—		$	1,269
Total available-for-sale investments	$	74,695	$	2	$	(90	)	$	74,607

	December 31, 2017
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(In thousands)
U.S. Treasury securities	$	16,755	$	—	$	(14	)	$	16,741
Corporate notes and bonds *	53,367		—		(77		)	53,290
Municipal notes and bonds	247		—		—			247
Total available-for-sale investments	$	70,369	$	—	$	(91	)	$	70,278

* $0.3 million of corporate bonds were classified as cash & cash equivalents.

The Company monitors investments for other-than-temporary impairment. It was determined that unrealized gains and losses at December 31, 2018 and 2017, are temporary in nature, because the changes in market value for these securities resulted from fluctuating interest rates, rather than a deterioration of the credit worthiness of the issuers. The Company is unlikely to experience gains or losses if these securities are held to maturity. In the event that the Company disposes of these securities before maturity, it is expected that the realized gains or losses, if any, will be immaterial.

Expected maturities can differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties. The amortized cost and fair value of available-for-sale securities that had stated maturities as of December 31, 2018 are shown by contractual maturity in the following table.

	December 31, 2018
	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	73,426	$	73,338
Due in greater than one year	1,269		1,269
	$	74,695	$	74,607

Fair Value of Financial Instruments

The Company follows the authoritative guidance for fair value measurements and disclosures that, among other things, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

Level 3 — Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions that market participants would use in pricing.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, un-billed receivables, cost and estimated earnings in excess of billings, accounts payable, and other accrued expenses approximate fair value due to the short-term maturity of those instruments. For the Company’s investments in available-for-sale securities, if quoted prices in active markets for identical investments are not available to determine fair value (Level 1), then the Company uses quoted prices for similar assets or inputs other than quoted prices that are observable either directly or indirectly (Level 2). The investments included in Level 2 consist of corporate notes and bonds, municipal notes and bonds and U.S. Treasury securities.

The fair value of financial assets and liabilities measured on a recurring basis is presented in the following tables.

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
Assets:
Cash equivalents
Money market securities	$	6,661	$	6,661	$	—	$	—
Total cash equivalents	6,661		6,661		—		—
Short-term investments
U.S. Treasury securities	8,101		—		8,101		—
Corporate notes and bonds	65,237		—		65,237		—
Total short-term investments	73,338		—		73,338		—
Long-term investments
Corporate notes and bonds	$	1,269	$	—	$	1,269	$	—
Total long-term securities
Total assets	$	81,268	$	6,661	$	74,607	$	—

			Fair Value Measurement at Reporting Date Using
	December 31, 2017		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
Assets:
Cash equivalents
Money market securities	$	—	$	—	$	—	$	—
Corporate notes and bonds	258		—		258		—
Total cash equivalents	258		—		258		—
Short-term investments
U.S. Treasury securities	16,741		—		16,741		—
Corporate notes and bonds	$	53,032	$	—	$	53,032	$	—
Municipal notes and bonds	247		—		247		—
Total short-term investments	70,020		—		70,020		—
Total assets	$	70,278	$	—	$	70,278	$	—

During the years ended December 31, 2018 and 2017, the Company had no transfers of financial assets and liabilities between Level 1 and Level 2.

The fair value and gross unrealized losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument as of December 31, 2018 and 2017 are summarized in the following table. Available-for-sale investments that were in an unrealized gain position have been excluded from the following table.

	December 31, 2018					December 31, 2017
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(In thousands)
U.S. Treasury securities	$	8,101	$	(2	)	$	10,162	$	(14	)
Corporate notes and bonds	61,809		(88		)	53,222		(77		)
Municipal notes and bonds	—		—			247		—
Total available-for-sale investments	$	69,910	$	(90	)	$	63,631	$	(91	)

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Other Financial Information

12 Months Ended

Dec. 31, 2018

Other Financial Information [Abstract]

Other Financial Information

Other Financial Information

Cash, Cash Equivalents and Restricted Cash

The Company pledged cash in connection with certain stand-by letters of credit and company credit cards. The Company deposited corresponding amounts into accounts at several financial institutions. See Note 8, “Long-term Debt and Lines of Credit,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for additional discussion related to the Company’s stand-by letters of credit and restricted cash requirements.

The Company’s cash, cash equivalents, and restricted cash are presented in the table below.

	December 31, 2018		December 31, 2017
	(In thousands)
Cash and cash equivalents	$	21,955	$	27,780
Restricted cash	183		2,846
Total cash, cash equivalents, and restricted cash	$	22,138	$	30,626

Allowance for Doubtful Accounts

The allowance for doubtful accounts activities are presented in the table below.

	Allowance for Doubtful Accounts
	(In thousands)
As of December 31, 2015	166
Additions	76
Changes in Estimates	(112		)
Deductions	—
As of December 31, 2016	$	130
Additions	55
Changes in Estimates(1)	(77		)
Deductions(2)	(5		)
As of December 31, 2017	103
Additions	336
Changes in Estimates(1)	(43		)
As of December 31, 2018	$	396

(1) Collections of previously reserved accounts

(2) Uncollectible accounts written off, net of recoveries

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or net realizable value and are presented by category in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Raw materials	$	2,238	$	1,899
Work in process	2,689		2,191
Finished goods	2,211		1,424
Inventories, net	$	7,138	$	5,514

Valuation adjustments for excess and obsolete inventory, reflected as a reduction of inventory at December 31, 2018 and 2017 was $0.7 million and $0.7 million, respectively.

Prepaid and Other Current Assets

Prepaid expenses and other current assets by category are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Interest receivable	$	478	$	439
Supplier advances	591		124
Insurance	238		256
Software license	161		193
Prepaid and refundable VAT and import duty	289		—
Income tax refund	465		—
Other prepaid expenses and current assets	588		330
Total prepaid and other current assets	$	2,810	$	1,342

Property and Equipment

Property and equipment held for use by category are presented in the following table.

	December 31, 2018			December 31, 2017
	(In thousands)
Machinery and equipment	$	23,675		$	20,813
Leasehold improvements	10,458			10,458
Software	3,013			2,985
Office equipment, furniture, and fixtures	2,970			2,699
Automobiles	199			114
Construction in progress	945			466
Total property and equipment	41,260			37,535
Less: accumulated depreciation and amortization	(26,641		)	(24,142		)
Property and equipment, net	$	14,619		$	13,393

Construction in progress costs at December 31, 2018 and 2017 primarily relates to R&D equipment received but not placed in service.

Depreciation expense related to all depreciable property and equipment is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Depreciation expense	$	3,228	$	3,035	$	3,049

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities by category are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Payroll and commissions payable	$	5,843	$	6,071
Other accrued expenses and current liabilities	2,176		1,877
Total accrued expenses and other current liabilities	$	8,019	$	7,948

Accumulated Other Comprehensive Loss

There were no reclassifications of amounts out of Accumulated Other Comprehensive Loss, as there have been no sales of securities or translation adjustments that impacted other comprehensive loss during the years presented. The tax impact of the changes in Accumulated Other Comprehensive Loss was not material.

Advertising Expense

Advertising expense is charged to operations during the year in which it is incurred. Total advertising expense was not material for the years ended December 31, 2018, 2017 and 2016.

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The net carrying amount of goodwill as of December 31, 2018 and 2017 was $12.8 million. Goodwill resulted from the Company’s acquisition of Pump Engineering, LLC in December 2009. The Company’s annual impairment test performed as of July 1, 2018 determined that goodwill was not impaired. As of December 31, 2018 and 2017, no impairment of goodwill has been recorded in the accompanying Consolidated Financial Statements.

Other Intangible Assets

The components of identifiable intangible assets, all of which are finite-lived, as of the date indicated were as follows in the table below. All intangible assets are amortized on a straight-line basis over their useful life.

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Losses			Net Carrying Amount		Weighted Average Useful Life
	(In thousands, except for weighted average useful life)
Developed technology	$	6,100	$	(5,541	)	$	—		$	559	10
Patents	585		(462		)	(42		)	81		18
Total	$	6,685	$	(6,003	)	$	(42	)	$	640

	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Losses			Net Carrying Amount		Weighted Average Useful Life
	(In thousands, except for weighted average useful life)
Developed technology	$	6,100	$	(4,931	)	$	—		$	1,169	10
Patents	585		(443		)	(42		)	100		18
Total	$	6,685	$	(5,374	)	$	(42	)	$	1,269

Accumulated impairment losses for patents at December 31, 2018 and 2017 include impairment losses from 2007 and 2010. No other impairment of intangible assets was identified during the periods presented for intangible assets.

Amortization of intangibles was $0.6 million for each of the years ended December 31, 2018, 2017 and 2016.

Future estimated amortization expense as of December 31, 2018 on intangible assets is presented in the following table.

	Future Amortization
	(In thousands)
Year:
2019	$	576
2020	16
2021	12
2022	11
2023	11
Thereafter	14
Total	$	640

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Long-term Debt and Lines of Credit

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Long-term Debt and Lines of Credit

Long-term Debt and Lines of Credit

Installment Loan

In March 2015, the Company entered into a loan agreement with a financial institution for a $55 thousand fixed-rate installment loan with an annual interest rate of 6.35%. The note is secured by the asset purchased. The loan is payable in equal monthly installments with a maturity date of April 2, 2020. The loan was fully paid off in 2018.

Long-term debt as of December 31, 2018 and 2017 is presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Loan payable	$	—	$	27
Less: current portion	—		(11		)
Total long-term debt	$	—	$	16

Loans and Stand-by Letters of Credit

Loan and Pledge Agreement

On January 27, 2017, the Company entered into a loan and pledge agreement (the “Loan and Pledge Agreement”) with a financial institution (“Financial Institution 2”). The Loan and Pledge Agreement provides for a committed revolving credit line of $16.0 million and an uncommitted revolving credit line of $4.0 million. The Loan and Pledge Agreement was amended on March 17, 2017, to increase the permitted indebtedness under the agreement and to modify certain revolving loan credit options. No other provisions of the Loan and Pledge Agreement were amended. The Loan and Pledge Agreement was further amended on March 30, 2018 to extend the termination date of the Loan and Pledge Agreement from March 31, 2018 to March 31, 2020. No other provisions of the Loan and Pledge Agreement were amended at that time. The Loan and Pledge Agreement was further amended on August 24, 2018 to permit the Company to incur indebtedness owed to a foreign subsidiary in an aggregate amount not to exceed $66.0 million, which amount is subordinated to any amounts outstanding under the Loan and Pledge Agreement. As of December 31, 2018, no debt was outstanding under the Loan and Pledge Agreement, however, the standby letters of credit outstanding with Financial Institution 2 are deducted from the total revolving credit line.

Stand-by Letters of Credit

In connection with a previous loan agreement, entered into in June 2012 and terminated in June 2017, Financial Institution 1 issued stand-by letters of credit to the Company that were subject to customary fees and expenses for issuance or renewal. The unused portion of the credit facility was subject to a facility fee in an amount equal to 0.25% per annum of the average unused portion of the revolving line. The loan agreement required the Company to maintain a cash collateral balance equal to 101% of all outstanding advances and all outstanding stand-by letters of credit collateralized by the line of credit. With the termination of the loan agreement, the cash collateral requirement was increased to 105% on all stand-by letters of credit and corporate credit cards at Financial Institution 1.

In September 2016, Financial Institution 2 issued stand-by letters of credit to the Company that were subject to customary fees and expenses for issuance or renewal. Initially, Financial Institution 2 required a cash collateral equal to the full outstanding amount of the stand-by letters of credit until the Loan and Pledge Agreement was put in place on January 27, 2017. As of that same date, this cash collateral requirement was removed when the Company entered into a loan and pledge agreement with Financial Institution 2 (see Loan and Pledge Agreement above) and replaced with pledged U.S. Investments held at Financial Institution 2 equal to the full outstanding amount of the stand-by letters of credit. These stand-by letters of credit are subject to fees, in an amount equal to 0.7% per annum of the face amount of the letter of credit, that are payable quarterly and are non-refundable.

In October 2016, the Company entered into stand-by letters of credit with a financial institution (“Financial Institution 3”). Financial Institution 3’s stand-by letters of credit were secured by a cash collateral balance required equal to the full outstanding amount of the stand-by letters of credit.

The financial institutions where the outstanding amounts of stand-by letters of credit are collateralized by restricted cash or pledged U.S. investments are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Financial Institution 1	$	92	$	1,687
Financial Institution 2	8,680		7,745
Financial Institution 3	—		990
Total	$	8,772	$	10,422

The Company’s total restricted cash balances by financial institution are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Financial Institution 1	$	97	$	1,771
Financial Institution 2 (1)	—		—
Financial Institution 3	—		990
Financial Institution 4	86		85
Total	$	183	$	2,846

⁽¹⁾Financial Institution 2 requires pledged U.S. Investments in lieu of restricted cash balances as of January 27, 2017.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Lease Obligations

The Company leases office facilities and equipment under operating leases that expire on various dates through 2028.

In April 2018, the Company renegotiated the lease of approximately of 170,000 square feet of space in San Leandro, California, with the lessor (“New Doolittle Lease”). The New Doolittle Lease is effective from April 2018 through December 2028 and has a renewal term of one additional period of five years. The initial monthly rent is approximately $135 thousand with an annual increase of 3% and a total of nine months of rent abatement.  Under the new lease standard, ASC 842, which was early-adopted by the company in 2018, the New Doolittle Lease was accounted for as a modification with changes in lease term and consideration. As a result, the Company re-measured the lease liability using the updated discount rate using secured borrowing discount rate and revised lease payments and recognized the amount of $10.4 million as an increase to the lease liability, with a corresponding adjustment to the right-of-use asset. 

In October 2017, the Company entered into a sublease agreement for office space in Houston, Texas. The sublease agreement is for a term of 3 years commencing in November 2017.

Rent and lease expense related to all of the Company’s leased property is presented in the following table.

	Twelve Months Ended December 31, 2018		Twelve Months Ended December 31, 2017		Twelve Months Ended December 31, 2016
Operating lease cost	$	1,888	$	1,699	$	1,422

Other information related to the operating leases are presented in the following table.

	Twelve Months Ended December 31, 2018		Twelve Months Ended December 31, 2017		Twelve Months Ended December 31, 2016
Cash payments	$	964	$	1,395	$	1,337

The weighted average remaining lease term and discount rate as of December 31, 2018 related to the operating leases are presented in the following table.

Weighted average remaining lease term	9.8 years
Weighted average discount rate	6.95	%

The Company leases facilities under fixed non-cancellable operating leases that expire on various dates through December 2028. Maturities of lease liabilities as of December 31, 2018 are presented in the following table:

	Lease Amounts
	(In thousands)
Year:
2019	$	1,855
2020	1,653
2021	1,811
2022	1,714
2023	1,922
Thereafter	8,122
Imputed interest	(3,595		)
Total	$	13,482

On January 10, 2019, the Company entered into an industrial lease agreement pursuant to which the Company has leased approximately 25,200 square feet to be constructed office and warehouse space and approximately 4.5 acres of yard space in Katy, Texas, for a new commercial development center for oil & gas field testing and training. The Company’s monthly base rent obligation is approximately $26,000 for the first year of the Lease and increases three percent annually thereafter. In addition, the Company will pay its share of operating expenses, which is currently estimated to be approximately $12,000 per month. The initial term of the Lease is one hundred twenty (120) months after the commencement date, and the Company has two options to extend the Lease by an additional five-year term, which must be exercised by written notice at least six months prior to the end of the relevant term.

Warranty

Changes in the Company’s accrued product warranty reserve are presented in the following table.

	Years Ended December 31,
	2018			2017			2016
	(In thousands)
Balance, beginning of year	$	366		$	406		$	461
Warranty costs charged to cost of revenue	340			246			208
Utilization charges against reserve	(48		)	(86		)	(27		)
Release of accrual related to expired warranties	(180		)	(200		)	(236		)
Balance, end of year	$	478		$	366		$	406

Purchase Obligations

The Company has purchase order arrangements with its vendors for which the Company has not received the related goods or services as of December 31, 2018. These arrangements are subject to change based on the Company’s sales demand forecasts, and the Company has the right to cancel the arrangements prior to the date of delivery. The majority of these purchase order arrangements were related to various raw materials and components parts. As of December 31, 2018, the Company had approximately $8.0 million of open cancellable purchase order arrangements related primarily to materials and parts.

Guarantees

The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, typically with customers. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities, generally limited to personal injury and property damage caused by the Company’s employees at a customer’s desalination plant in proportion to the employee’s percentage of fault for the accident. Damages incurred for these indemnifications would be covered by the Company’s general liability insurance to the extent provided by the policy limitations. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the estimated fair value of these agreements is not material. Accordingly, the Company had no liabilities recorded for these agreements as of December 31, 2018 and 2017.

In certain cases, the Company issues warranty and product performance guarantees to its customers for amounts generally equal to 10% or less of the total sales agreement to endorse the execution of product delivery and the warranty of design work, fabrication, and operating performance of our devices. These guarantees are generally stand-by letters of credit that typically remain in place for periods ranging up to 36 months. All stand-by letters of credit at December 31, 2018 and 2017, were $8.8 million and $10.4 million, respectively. See Note 8, “Long-term Debt and Lines of Credit,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for additional information about the Company’s stand-by letters of credit arrangements.

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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s U.S. and foreign components of consolidated income before income taxes and the benefit from income taxes is presented in the following table.

	Years Ended December 31,
	2018			2017 (1)			2016 (1)
	(In thousands)
Income (loss) before income taxes:
U.S.	$	12,139		$	11,549		$	6,158
Foreign	(699		)	(1,620		)	(2,445		)
Total income before income taxes	$	11,440		$	9,929		$	3,713
Current tax provision (benefit):
Federal	$	(297	)	$	441		$	—
State	(2		)	12			16
Foreign	25			18			46
Current tax provision (benefit)	$	(274	)	$	471		$	62
Deferred tax (benefit) provision:
Federal	$	(9,773	)	$	(9,025	)	$	248
State	(606		)	(1,141		)	3
Foreign	—			1,270			(319		)
Total deferred tax benefit	$	(10,379	)	$	(8,896	)	$	(68	)
Total benefit for income taxes	$	(10,653	)	$	(8,425	)	$	(6	)

(1) Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 are recast.

On December 22, 2017, President Trump signed into law the Tax Act, which significantly changed existing U.S. tax laws. Following the enactment of the Tax Act, the SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax law that were in effect immediately before the enactment of the Tax Act. Our adjustments were final in 2017.

The Company has evaluated the impact of the new global intangible low taxed income (GILTI) and has concluded that the impact to the Company of the GILTI is immaterial.

The tax benefit of $10.7 million for the year ended December 31, 2018, included a $12.3 million U.S. federal and state deferred tax benefit related to the income tax effects of a tax election related to a change to the Company’s international tax structure in Ireland that was effective Q2 2018. This election resulted in a deferred tax asset related to tax expense previously recorded on earnings and profits under the Tax Act on deferred revenue not yet recognized under US GAAP. The 2018 tax results also reflect an $800k tax benefit from stock based compensation tax deductions in excess of the related book expense. For more details on the impact of tax credits and other factors that impact the Company’s annual income tax expense, please see the reconciliation of the statutory federal income tax rate to the effective tax rate table below.

The tax benefit of $8.4 million for the year ended December 31, 2017, consisted of a net $10.1 million U.S. federal and state deferred tax benefit after taking into consideration a valuation allowance release on all but $1.4 million of our U.S. federal and state deferred tax assets, less a valuation allowance for the Irish deferred tax assets of $1.3 million less U.S. federal, state and foreign current tax expense of $0.4 million. In addition, as a result of enactment of the legislation, during the fourth quarter of 2017, the Company incurred a one-time income tax expense of $7.0 million related to the deemed repatriation tax on accumulated foreign earnings (of which $0.3 million is a cash charge and the remaining $6.7 million represents a non-cash discrete tax expense largely from the utilization of net operating loss carryovers). The Company also incurred a non-cash income tax expense of $2.5 million related to the re-measurement of certain deferred tax assets and liabilities based on the tax rates from the Tax Act. For more details on the impact of tax credits and other factors that impact the Company’s annual income tax expense, please see the reconciliation of the statutory federal income tax rate to the effective tax rate table below.

A reconciliation of income taxes computed at the statutory federal income tax rate to the effective tax rate implied by the accompanying Statements of Operations is presented in the following table.

	Years Ended December 31,
	2018		2017 (1)		2016 (1)
U.S. federal taxes at statutory rate	21	%	34	%	34	%
State income tax, net of federal benefit	(6	)%	1	%	—	%
Deemed repatriation transition tax	—	%	71	%	—	%
Deferred tax re-measurement - Change in tax rates	1	%	24	%	—	%
Foreign rate differential	(1	)%	(10	)%	45	%
Change in tax status of foreign operations	(102	)%	—	%	—	%
Stock-based compensation	(3	)%	(6	)%	—	%
Non-deductible expenses	1	%	1	%	2	%
Federal research credits	(6	)%	(4	)%	(11	)%
Valuation allowance	3	%	(197	)%	(70	)%
Other	(1	)%	1	%	—	%
Effective tax rate	(93	)%	(85	)%	—	%

(1) Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 are recast.

The Company’s total deferred tax assets and liabilities is presented in the following table.

	December 31, 2018			December 31, 2017(1)
	(In thousands)
Deferred tax assets:
Net operating loss carry forwards	$	5,636		$	5,918
Accruals and reserves	12,157			2,847
Research and development credit carry forwards	4,609			3,957
Acquired intangibles	859			909
Charitable contributions	24			11
Total deferred tax assets	23,285			13,642
Valuation allowance	(2,850		)	(3,411		)
Net deferred tax assets	20,435			10,231
Deferred tax liabilities:
Depreciation on property and equipment	(937		)	(650		)
Unrecognized gain on translation of foreign currency	(9		)	(5		)
Goodwill	(1,171		)	(1,643		)
Total deferred tax liabilities	(2,117		)	(2,298		)
Net deferred tax assets	$	18,318		$	7,933
As reported on the balance sheet:
Non-current assets	$	18,318		$	7,933
Non-current liabilities	—			—
Net deferred tax assets	$	18,318		$	7,933

(1) Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 are recast.

The Company had gross deferred tax assets of approximately $23.3 million and $13.6 million at December 31, 2018 and 2017, respectively, relating principally to accrued expenses and tax effects of net operating loss and tax credit carry-forwards. In asserting the recoverability of deferred tax assets, management considers whether it is more likely than not that the assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In making such a determination, we consider all available positive and negative evidence including recent results of operations, scheduled reversals of deferred tax liabilities, projected future income, and available tax planning strategies. A significant piece of objective positive evidence evaluated was the cumulative profit incurred in the U.S. and the cumulative losses incurred in Ireland over the three-year period ended December 31, 2018.

On the basis of this evaluation, as of December 31, 2018, the Company recognizes all of its U.S. federal and state deferred tax assets with the exception that the Company continues to maintain a valuation allowance on its California R&D credit carryovers of approximately $1.7 million. The Company will maintain a valuation allowance on its California R&D credit carryovers because it is more likely than not that the Company will continue to annually generate more California R&D tax credits than it utilizes, resulting in no net reduction of credits. The Company’s policy with respect to California R&D credits is that they are utilized on a last-in first-out basis.

In addition, as of December 31, 2018, the Company is reporting a full valuation allowance on its Irish entity’s deferred tax assets totaling $1.2 million. The valuation allowance represents a provision for uncertainty as to the realization of tax benefits from these deferred income tax assets. The Company will continue to evaluate the tax benefit uncertainty and will adjust, if warranted, the valuation allowance in future periods to the extent that the Company’s deferred income tax assets become more likely than not to be realizable.

The Company continues to assert that the accumulated foreign earnings of its subsidiaries in Spain and Canada are permanently reinvested. Due to the Tax Act, any future repatriation of the earnings of its subsidiaries in Spain and Canada would not be subject to U.S. federal income tax. The Company has estimated that the foreign withholding taxes and U.S. state income taxes related to a potential future repatriation of these earnings would be immaterial.

The following table presents the Company’s Federal, California, and foreign net operating loss carryforwards.

	December 31, 2018		December 31, 2017
	(In thousands)
Federal	$	16,838	$	14,227
California	12,681		12,081
Ireland	9,363		16,644
Total net operating loss carryforwards	$	38,882	$	42,952

The net operating loss carryforwards, if not utilized, will begin to expire in 2019 for Federal, and 2031 for California. Utilization of the net operating loss carryforward may be subject to a substantial annual limitation due to the ownership change limitations provided by the U.S. Internal Revenue Code (“IRC”) and similar California provisions. The annual limitation will result in the expiration of the net operating loss carryforwards before utilization. The Company has estimated the amount which may ultimately be realized and recorded deferred tax assets accordingly. The Ireland net operating loss carryforwards does not have an expiration date.

The following table presents the Company’s Federal and California R&D credit, minimum tax credit and foreign tax credit carryforwards.

	December 31, 2018		December 31, 2017
	(In thousands)
Federal	$	2,925	$	2,572
California	2,132		1,753
Total credit carryforwards	$	5,057	$	4,325

The federal R&D credit carryforwards, if not utilized, will start to expire in 2030. The foreign tax credit carryforwards will begin to expire in 2026. The federal minimum tax credit carryforward will be refunded if not utilized no later than 2021. The California credit carryforwards do not expire. Utilization of the credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the IRC and similar California provisions.

Accounting for uncertain tax positions is based on judgment regarding the largest amount that is greater than 50% likely of being realized upon the ultimate settlement with a taxing authority. The aggregate changes in the balance of the gross unrecognized tax benefits is presented in the following table.

	December 31, 2018		December 31, 2017		December 31, 2016
	(In thousands)
Unrecognized tax benefits as of December 31,	$	911	$	603	394
Increases related to prior year tax position	—		117		—
Increases related to current year tax position	251		191		209
Unrecognized tax benefits as of December 31,	$	1,162	$	911	603

As of December 31, 2018, the Company had $1.2 million of unrecognized tax benefits, $0.6 million of which, if recognized, would affect our effective tax rate.

The Company adopted the accounting policy that interest and penalties are classified as part of its income taxes. There are no accrued interest or penalties associated with any unrecognized tax benefits.

There are currently no examinations for Federal, California taxing authorities, and foreign tax authorities. The Company believes that, as of December 31, 2018, the gross unrecognized tax benefits will not materially change in the next twelve months. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to any tax audits and that any settlement will not have a material adverse effect on the consolidated financial position or results of operations. However, there can be no assurances as to the possible outcomes.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholder’s Equity

Preferred Stock

The Company has the authority to issue 10,000,000 shares of $0.001 par value preferred stock. The Board of Directors has the authority, without action by the Company’s stockholders, to designate and issue shares of preferred stock in one or more series. The Board of Directors is also authorized to designate the rights, preferences, and voting powers of each series of preferred stock, any or all of which may be greater than the rights of the common stock including restrictions of dividends on the common stock, dilution of the voting power of the common stock, reduction of the liquidation rights of the common stock, and delaying or preventing a change in control of the Company without further action by the Company’s stockholders. To date, the Board of Directors has not designated any rights, preferences, or powers of any preferred stock, and as of December 31, 2018 and 2017, no shares of preferred stock were issued or outstanding.

Common Stock

The Company has the authority to issue 200,000,000 shares of $0.001 par value common stock. Subject to the preferred rights of the holders of shares of any class or series of preferred stock as provided by the Board of Directors with respect to any such class or series of preferred stock, the holders of the common stock shall be entitled to receive dividends, as and when declared by the Board of Directors. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, after the distribution or payment to the holders of shares of any class or series of preferred stock as provided by the Board of Directors with respect to any such class or series of preferred stock, the remaining assets of the Company available for distribution to stockholders shall be distributed among and paid to the holders of common stock ratably in proportion to the number of shares of common stock held by them.

At December 31, 2018, 59,396,020 shares were issued and 53,940,085 shares were outstanding. At December 31, 2017, 58,168,433 shares were issued and 53,905,600 shares were outstanding.

Stock Repurchase Program

The Company accounts for stock repurchases using the cost method. The aggregate cost includes fees charged in connection with acquiring the outstanding common stock.

On March 7, 2018, the Board of Directors authorized a stock repurchase program under which the Company, at the discretion of management, may repurchase up to $10.0 million in aggregate cost of the Company’s outstanding common stock (the “March 2018 Authorization”). Under the March 2018 Authorization, purchases of shares of common stock may be made through September 30, 2018, from time to time in the open market, or in privately negotiated transactions, in compliance with applicable state and federal securities laws. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements, and capital availability. The March 2018 Authorization does not obligate the Company to acquire any specific number of shares in any period, and may be expanded, extended, modified or discontinued at any time without prior notice. Under the March 2018 Authorization, as of September 30, 2018, the Company repurchased 1,193,102 shares at an aggregate cost of $10.0 million. The March 2018 Authorization expired in September 2018 and there was no repurchase authorization in place at December 31, 2018.

In March 2017, the Board of Directors authorized a stock repurchase program under which the Company, at the discretion of management, could repurchase up to $15.0 million in aggregate cost of the Company’s outstanding common stock through September 30, 2017 (the “March 2017 Authorization”). As of December 31, 2017, 541,177 shares, at an aggregate cost of $4.3 million had been repurchased under the March 2017 Authorization.

In January 2016, the Board of Directors authorized a stock repurchase program under which the Company, at the discretion of management, could repurchase up to $6.0 million in aggregate cost of the Company’s outstanding common stock through June 30, 2016 (the “January 2016 Authorization”). In May 2016, the Board of Directors rescinded the January 2016 Authorization and authorized a new stock repurchase program under which the Company, at the discretion of management, could repurchase up to $10.0 million in aggregate cost of the Company’s outstanding common stock through October 31, 2016 (the “May 2016 Authorization”). At December 31, 2016, 673,700 shares, at an aggregate cost of $4.1 million, had been repurchased under the January 2016 Authorization and 568,500 shares, at an aggregate cost of $5.3 million, had been repurchased under the May 2016 Authorization. The May 2016 Authorization expired in October 2016 and there was no repurchase authorization in place at December 31, 2016.

Under the Company’s stock repurchase programs, from March 2012 through December 31, 2018, the Company spent an aggregate $30.3 million to repurchase 5.5 million shares. In addition to repurchases under the Company’s stock repurchase programs, during the years ended December 31, 2018, and 2017, the Company spent $0.2 million and $0.3 million respectively, to settle employee tax withholding obligations due upon the vesting of RSUs and withheld an equivalent value of shares from the shares provided to the employees upon vesting.

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Stock-based Compensation

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-Based Compensation

Stock Option Plans

In June 2016, the stockholders approved the 2016 Incentive Plan (the “2016 Plan”), that permits the grant of stock options, stock appreciation rights (“SARs”), restricted stock (“ RSUs”), performance units, performance shares, and other stock-based awards to employees, officers, directors, and consultants. Prior to the approval of the 2016 Plan, the Company maintained the Amended and Restated2008 Equity Incentive Plan (the “2008 Plan”). Stock option awards granted under the Plan and the 2008 Plan, generally vest over four years and expire no more than 10 years after the date of grant. Subject to adjustments, as provided in the 2016 Plan, the number of shares of common stock initially authorized for issuance under the 2016 Plan was 4,441,083 shares (which consist of 3,830,000 new share awards plus 611,083 share awards that were authorized and unissued under the 2008 Plan) plus up to 7,635,410 shares that were set aside for awards granted under the 2008 Plan that are subsequently forfeited. The 2016 Plan supersedes all previously issued stock incentive plans (including the 2008 Plan) and is currently the only available plan from which awards may be granted.

Shares available for grant under the Plan were 2,603,183 shares and 3,945,653 shares at December 31, 2018 and 2017, respectively.

Stock-based Compensation Expense

Stock-based compensation expense related to the fair value measurement of awards granted to employees by financial line and by type of award is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Stock-based compensation expense by financial line:
Cost of revenue	$	87	$	158	$	113
General and administrative	3,266		2,218		$	2,057
Sales and marketing	694		821		$	524
Research and development	1,193		890		$	569
Total stock-based compensation expense	$	5,240	$	4,087	$	3,263
Stock-based compensation expense by type of award:
Options	$	3,873	$	3,331	$	3,005
RSUs	1,367		756		$	258
Total stock-based compensation expense	$	5,240	$	4,087	$	3,263

The Company estimates forfeitures at the time of grant and revises those estimates periodically in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. If the Company’s actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

The estimated forfeiture rates used in determining the expense in the table above are presented in the following table.

	For years ended December 31,
	2018	2017	2016
4-year options	14.866%	16.275%	13.513%
1-year options	—%	—%	—%

Share-based compensation cost related to unvested stock options and RSU’s will generally be amortized on a straight-line basis over the remaining average service period. The following table presents the unamortized compensation cost and weighted average service period of all unvested outstanding awards as of December 31, 2018.

	Unamortized Compensation Costs		Weighted Average Service Period
	(In thousands)		(In years)
Stock options	$	5,065	2.5
RSUs	2,128		2.2

Vested Stock Options and RSUs

The total grant date fair value of stock options and RSUs vested during the period are presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Stock options	$	3,607	$	3,375	2,977
RSUs	841		783		—
Total grant date fair value of stock options and RSUs vested during the period	$	4,448	$	4,158	2,977

Stock Option Activity

The following table summarizes the stock option activity under the 2016 Plan and 2008 Plan.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value(1)
	(In thousands, except for weighted average exercise price and weighted average remaining contractual life)
Balance, December 31, 2015	7,198		3.97
Granted	904		8.63
Exercised	(1,936	)	3.41			14,665
Forfeited	(283	)	5.30
Balance, December 31, 2016	5,883		4.81
Granted	677		9.57
Exercised	(1,226	)	4.49			6,798
Forfeited	(242	)	6.60
Balance, December 31, 2017	5,092		$	5.43	6.6	$	17,735
Granted	1,232		$	7.96
Exercised	(1,160	)	$	3.73
Forfeited	(183	)	$	3.98
Balance, December 31, 2018	4,982		$	6.36	6.56	$	6,572
Vested and exercisable as of December 31, 2018	3,193		$	5.44	5.39	$	6,124
Vested and exercisable as of December 31, 2018 and expected to vest thereafter	4,759		$	6.27	6.44	$	6,560

⁽¹⁾  The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock at the time of exercise. The aggregate intrinsic value at December 31, 2018 is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock as of the end of the period.

Restricted Stock Units

RSUs awarded in 2016 vest 25% on the first anniversary of the grant date and 1/48th monthly thereafter dependent upon continued employment. RSUs awarded in 2017 vest 25% annually over the 4 years from date of grant and is dependent upon continued employment. RSUs awarded in 2018 vest 25% annually over the 4 years from date of grant and is dependent upon continued employment. As RSUs vest, the units will be settled in shares of common stock based on a one-to-one ratio. The units were valued based on the market price on the date of grant.

The following table summarizes the RSU activity under the 2016 Plan.

	Shares		Weighted Average Grant-Date Fair Value
	(In thousands, except for weighted average grant-date fair value)
Balance, December 31, 2015	—		—
Awarded	214		8.65
Balance, December 31, 2016	214		8.65
Awarded	162		10.14
Vested	(91	)	8.65
Forfeited	(11	)	8.52
Balance, December 31, 2017	274		9.54
Awarded	280		9.54
Vested	(90	)	9.33
Balance, December 31, 2018	463		8.49

Fair Value Assumptions

Stock Options

The fair value of stock options granted to employees is based on the Black-Scholes option pricing model. To determine the inputs for the Black-Scholes option pricing model, the Company is required to develop several assumptions, which are highly subjective. The Company determines these assumptions as follows:

Expected Term: The Company uses its historical data to determine the expected term of options based on historical exercise data. As there was no historical exercise data for non-employee directors, the Company determines the expected term based on the simplified method.

Expected Volatility: The Company determines expected volatility based on its historical data and the corresponding expected term that was determined using the Company’s historical exercise data.

Risk-Free Interest Rate: The risk-free rate is based on U.S. Treasury issues with remaining terms similar to the expected term on the stock options granted.

Dividend Yield: The Company has never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future; therefore, the Company uses an expected dividend yield of zero in the valuation model.

The estimated grant date fair values of stock options granted to employees were calculated using the Black-Scholes option pricing model based on the assumptions in the following table.

	For years ended December 31,
	2018	2017	2016
Weighted average expected life (years)	4.19	4.50	4.38
Weighted average expected volatility	67.41%	80.22%	80.35%
Risk-free interest rate	2.48% – 3.01%	1.64% – 1.99%	1.03% – 1.32%
Weighted average dividend yield	—%	—%	—%

Restricted Stock Units

The fair value of RSUs granted to employees is based on the Company’s common stock price on the date of grant.

Awards Granted in 2019

On January 31, 2019 and February 1, 2019, the Company granted options and RSUs to certain officers. and on February 12, 2019, the Company granted options and RSUs to other employees. The options and RSUs granted are presented in the following table.

January 31, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	228,571	$	7.60	4 years	10 years
RSUs	136,510	7.60		4 years	**
Total	365,081

February 2, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	95,622	$	7.87	4 years	10 years
RSUs	19,059	$	7.87	4 years	**
Total	114,681

February 12, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	67,888	$	7.70	4 years	10 years
RSUs	228,228	$	7.70	4 years	**
Total	296,116

**    Not applicable.

⁽¹⁾    Any unvested options and RSUs are forfeited upon the employee’s termination.

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Business Segment

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Business Segment

Business Segment

The Company is an energy solutions provider to industrial fluid flow markets worldwide. The Company manufactures and sells high-efficiency ERDs and pumps as well as related products and services. The Company’s chief operating decision-maker (“CODM”) is the chief executive officer (“CEO”).

The Company’s reportable operating segments consist of the Water segment and the Oil & Gas segment. These segments are based on the industries in which the products are sold, the type of energy recovery device sold, and the related products and services. The Water segment consists of revenue associated with products sold for use in reverse osmosis water desalination, as well as the related identifiable expenses. The Oil & Gas segment consists of product revenue associated with products sold for use in gas processing, chemical processing, and hydraulic fracturing and license and development revenue associated with hydraulic fracturing, as well as related identifiable expenses. Operating income for each segment excludes other income and expenses and certain expenses managed outside the operating segment. Costs excluded from operating income include various corporate expenses such as income taxes and other separately managed general and administrative expenses not related to the identified segments. Assets and liabilities are reviewed at the consolidated level by the CODM and are not accounted for by segment. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss).

The summary of financial information by segment is presented in the following tables.

	Year Ended December 31, 2018
	Water		Oil &Gas			Total
	(In thousands)
Product revenue	$	60,512	$	513		$	61,025
Product cost of revenue	17,211		662			17,873
Product gross profit	43,301		(149		)	43,152
License and development revenue	—		13,490			13,490
Operating expenses:
General and administrative	2,078		1,771			3,849
Sales and marketing	5,783		1,264			7,047
Research and development	1,711		15,276			16,987
Amortization of intangibles	629		—			629
Operating expenses	10,201		18,311			28,512
Operating income (loss)	$	33,100	$	(4,970	)	28,130
Less: Corporate operating expenses						18,152
Consolidated operating income						9,978
Non-operating income						1,462
Income before income taxes						$	11,440

	Year Ended December 31, 2017
	Water		Oil &Gas			Total
	(In thousands)
Product revenue	$	54,301	$	3,722		$	58,023
Product cost of revenue	16,032		3,029			19,061
Product gross profit	38,269		693			38,962
License and development revenue	—		11,106			11,106
Operating expenses:
General and administrative	1,401		1,565			2,966
Sales and marketing	5,787		2,228			8,015
Research and development	1,064		12,217			13,281
Amortization of intangibles	631		—			631
Operating expenses	8,883		16,010			24,893
Operating income (loss)	$	29,386	$	(4,211	)	25,175
Less: Corporate operating expenses						15,926
Consolidated operating income						9,249
Non-operating income						680
Income before income taxes						$	9,929

	Year Ended December 31, 2016
	Water		Oil &Gas			Total
	(In thousand)
Product revenue	$	47,545	$	2,170		$	49,715
Product cost of revenue	16,353		1,496			17,849
Product gross profit	31,192		674			31,866
License and development revenue	—		8,069			8,069
Operating expenses:
General and administrative	1,081		1,000			2,081
Sales and marketing	5,076		2,985			8,061
Research and development	1,331		8,705			10,036
Amortization of intangibles	631		—			631
Operating expenses	8,119		12,690			20,809
Operating income (loss)	$	23,073	$	(3,947	)	19,126
Less: Corporate operating expenses						15,700
Consolidated operating income						3,426
Non-operating income						287
Income before income taxes						$	3,713

Depreciation and amortization expense by segment and corporate is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Water	$	2,060	$	2,723	$	3,043
Oil & Gas	1,377		448		244
Corporate	432		495		393
Total depreciation and amortization	$	3,869	$	3,666	$	3,680

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Geographical Information and Concentrations

12 Months Ended

Dec. 31, 2018

Risks and Uncertainties [Abstract]

Geographical Information and Concentrations

Geographical Information and Concentrations

Product Revenue

The following geographic information includes product revenue to the Company’s U.S. and international customers based on the customers’ requested delivery locations, except for certain cases in which the customer directed the Company to deliver its products to a location that differs from the known ultimate location of use. In such cases, the ultimate location of use, rather than the delivery location, is reflected in the table below.

	Years Ended December 31,
	2018			2017			2016
	(In thousands, except for percentages)
Product revenue by geographic location:
United States	$	1,645		$	1,706		$	1,203
International	59,380			56,317			48,512
Total product revenue	$	61,025		$	58,023		$	49,715
Product revenue by country:
Egypt	17		%	15		%	8		%
Saudi Arabia	31			13			14
China	8			9			13
Others(1)	44		%	63		%	65		%
Total	100		%	100		%	100		%

⁽¹⁾  Includes remaining countries not separately disclosed. No country in this line item individually accounted for more than 10% of the Company’s product revenue during any of the years presented.

Product Revenue - Customer Concentration

Product revenue from customers representing 10% or more of product revenue varies from period to period. For the year ended December 31, 2018, two customers represented 15% and 11% of the Company’s product revenue. For the year ended December 31, 2017 no customer represented 10% or more of the Company’s product revenue, and for the year ended December 31, 2016, one customer represented 11% of the Company’s product revenues.

License and Development

One international Oil & Gas segment customer accounts for 100% of the Company’s license and development revenue for the years ended December 31, 2018, 2017 and 2016.

Customers

The Company’s accounts receivable is derived from sales to customers located around the world. The Company generally does not require collateral to support customer receivables, but frequently requires export letters of credit securing payment. The Company performs ongoing evaluations of its customers’ financial condition and periodically reviews credit risk associated with receivables. An allowance for doubtful accounts is determined with respect to receivable amounts that we have determined to be doubtful of collection using specific identification of doubtful accounts and an aging of receivables analysis based on invoice due dates. Actual collection losses may differ from the Company’s estimates, and such differences could be material to the financial position, results of operations, and cash flows. Uncollectible receivables are written off against the allowance for doubtful accounts when all efforts to collect them have been exhausted, while recoveries are recognized when they are received.

Customers accounting for 10% or more of the Company’s combined accounts receivable and contract assets by segment are presented in the following table.

	Segment	December 31, 2018		December 31, 2017
Customer A	Water	**		16	%
Customer B	Water	**		10
Customer C	Water	**		11
Customer D	Water	**		**
Customer E	Water	20	%	**
Customer F	Water	11	%	**
Customer G	Oil & Gas	26		26

^**    Less than 10%

Vendor Concentration

Vendors accounting for 10% or more of the Company’s combined accounts payable by segment are presented in the following table.

	Segment	December 31, 2018		December 31, 2017
Vendor A	Oil & Gas	**		11	%
Vendor B	Oil & Gas	10	%	**

^**    Less than 10%

Long-lived Assets

All of the Company’s long-lived assets were located in the U.S. at December 31, 2018 and 2017.

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VorTeq Partnership and License Agreement

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VorTeq Partnership and License Agreement

VorTeq Partnership and License Agreement

The Company’s VorTeq technology enables oilfield service hydraulic fracturing operators to isolate their high-pressure hydraulic fracturing pumps from fracturing fluid thereby reducing operating and capital costs. In 2014, the Company entered into a strategic partnership with Liberty Oil Field Services (“Liberty”) to pilot and conduct field trials with the VorTeq. Through this agreement, Liberty has the rights to lease up to 20 VorTeq Missiles (defined below) for a period of up to five years following commercialization.

On October 14, 2015, the Company and the VorTeq Licensee entered into the VorTeq License Agreement, which provides the VorTeq Licensee with exclusive worldwide rights to the Company’s VorTeq technology for use in hydraulic fracturing onshore applications. The VorTeq License Agreement provides an exception for Liberty’s contractual rights to utilize the VorTeq. In performing the obligations under the agreement, the Company provides research and development services to commercialize the technology in accordance with the KPIs, defined in the VorTeq License Agreement. After commercialization is achieved, royalty payments will be received for the supply and servicing of cartridges. All payments are non-refundable.

The VorTeq is made up of Pressure Exchanger cartridges, housed in a high-pressure manifold (the “Missile”) though which a motive fluid is used to pressurize hydraulic fracturing fluid, which is processed and sent down the well bore. The VorTeq License Agreement includes up to $125.0 million in upfront consideration paid in stages: (i) a $75.0 million non-refundable upfront exclusivity payment; and (ii) two milestone payments of $25.0 million each upon achievement of successful tests in accord with KPIs specified in the VorTeq License Agreement (“Milestone Payment 1 and 2”). Milestone Payment 1 of $25.0 million is payable upon a successful five stage yard test at the VorTeq Licensee’s test facility. The Milestone Payment 2 of $25.0 million is payable upon a successful twenty stage hydraulic fracturing at one of the VorTeq Licensee’s customer’s live wells. The achievement of each milestone and the receipt of each of the related payments are subject to a high degree of uncertainty.

After initial commercialization, the VorTeq Licensee will begin paying ongoing recurring royalty fees to the Company for supply and service of the cartridges based on the number of VorTeqs in operation which is subject to the greater of a minimum adoption curve or the adoption rate of the technology. During the period, from initial commercialization to full commercialization, the technology will be deployed commercially; and through continuous improvement and cost refinement, the efficiency and effectiveness of the product will fully stabilize. The exclusive nature of the agreement terminates if the VorTeq Licensee does not meet the specified minimum adoption curves. In the event the Company is not able to achieve full commercialization under the terms of the VorTeq License Agreement, the exclusivity right of the VorTeq Licensee under the VorTeq License Agreement continues throughout the term.

See Note 2, “Recent Accounting Pronouncements,” and Note 3, “Revenues,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of revenue recognition.

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Litigation

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Litigation

Litigation

The Company is named in and subject to various proceedings and claims in connection with our business. The Company is contesting the allegations in these claims, and the Company believes that there are meritorious defenses in each of these matters. The outcome of matters the Company has been, and currently are, involved in cannot be determined at this time, and the results cannot be predicted with certainty. There can be no assurance that these matters will not have a material adverse effect on our results of operations in any future period and a significant judgment could have a material adverse impact on our financial condition, results of operations and cash flows. The Company may in the future become involved in additional litigation in the ordinary course of its business, including litigation that could be material to its business.

The Company considers all claims on a quarterly basis and based on known facts assesses whether potential losses are considered reasonably possible, probable and estimable. Based upon this assessment, the Company then evaluates disclosure requirements and whether to accrue for such claims in its consolidated financial statements. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case.

On September 10, 2014, the Company terminated the employment of its Senior Vice President, Sales, Borja Blanco, on the basis of breach of duty of trust and conduct leading to conflict of interest. On October 24, 2014, Mr. Blanco filed a labor claim against ERI Iberia in Madrid, Spain, challenging the fairness of his dismissal and seeking compensation (“Case 1”). A hearing was held on November 13, 2015, after which the labor court ruled that it did not have jurisdiction over the matter. Mr. Blanco appealed and the appeals court reversed the labor court’s finding and instructed the labor court to make a ruling on the merits on November 21, 2017. On February 14, 2018, the Company received notice that the labor court issued a ruling in favor of Mr. Blanco declaring the termination an unjustified dismissal and ordered the Company to pay a dismissed severance. The Company appealed the decision on February 21, 2018.  The Company denies any allegations of wrongdoing and intends to continue to vigorously defend against this lawsuit.  Based on currently available information and review with outside counsel, the Company has estimated and accrued a potential loss.

On November 24, 2014, Mr. Blanco filed a second action based on breach of contract theories in the same court as Case 1 (“Case 2”), but the cases are separate. In Case 2, Mr. Blanco seeks payment of an unpaid bonus, stock options, and non-compete compensation. The court ruled that this case is stayed until a final ruling is issued in Case 1. The Company denies any allegations of wrongdoing and intends to continue to vigorously defend against this lawsuit. Based on currently available information and review with outside counsel, the Company has determined that an award to Mr. Blanco is not probable. While a loss may be reasonably possible, an estimate of loss, if any, cannot reasonably be determined at this time.

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Supplementary Data — Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Supplementary Data — Quarterly Financial Data (unaudited)

Supplementary Data — Quarterly Financial Data (unaudited)

The following tables present certain unaudited consolidated quarterly financial information for each of the four fiscal quarters in the periods ended December 31, 2018 and December 31, 2017. Due to the Company’s full retrospective adoption of ASC 606, period numbers for years 2017 are recast. This quarterly information has been prepared on the same basis as the audited Consolidated Financial Statements and includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The results for these quarterly periods are not necessarily indicative of the operating results for a full year or any future period.

2018 QUARTERLY FINANCIAL DATA ⁽¹⁾ 

(unaudited)

	Three Months Ended
	March 31, 2018			June 30, 2018			September 30, 2018		December 31, 2018
	(In thousands, except per share amounts)
Product revenue	$	11,058		$	17,406		$	18,578	$	13,983
Product cost of revenue	3,314			5,976			5,022		3,561
Product gross profit	7,744			11,430			13,556		10,422
License and development revenue	2,749			3,358			3,661		3,723
Operating expenses:
General and administrative	5,837			4,927			5,266		5,446
Sales and marketing	1,912			1,858			1,873		1,903
Research and development	3,917			3,605			4,270		5,220
Amortization of intangible assets	158			158			158		156
Total operating expenses	$	11,824		$	10,548		$	11,567	$	12,725
Income (loss) from operations	$	(1,331	)	$	4,240		$	5,650	$	1,420
Provision for (benefit from) income taxes(2)	$	(357	)	$	(11,122	)	$	1,339	$	(516	)
Net income (loss)	$	(726	)	$	15,743		$	4,658	$	2,421
Income (loss) per share:
Basic	$	(0.01	)	$	0.29		$	0.09	$	0.04
Diluted	$	(0.01	)	$	0.28		$	0.08	$	0.04

⁽¹⁾  Quarterly results may not add up to annual results due to rounding.

⁽²⁾  During second quarter of 2018, the Company recognized an income tax benefit of $11.1 million, which included a $12.1 million discrete tax benefit. This discrete tax benefit includes an $11.9 million tax benefit related to the income tax effects of a tax election related to a change to the Company’s international tax structure in Ireland that was effective Q2 2018. 

2017 QUARTERLY FINANCIAL DATA ⁽¹⁾ 

(unaudited)

	Three Months Ended
	March 31, 2017(2)		June 30, 2017(2)		September 30, 2017(2)		December 31, 2017(2)
	(In thousands, except per share amounts)
Product revenue	$	12,245	$	10,864	$	13,860	$	21,054
Product cost of revenue	4,612		3,572		4,217		6,660
Product gross profit	7,633		7,292		9,643		14,394
License and development revenue	2,248		3,050		3,197		2,611
Operating expenses:
General and administrative	4,408		3,927		4,034		4,985
Sales and marketing	2,453		2,174		2,061		2,703
Research and development	2,509		3,077		3,038		4,819
Amortization of intangible assets	158		158		157		158
Total operating expenses	$	9,528	$	9,336	$	9,290	$	12,665
Income (loss) from operations	$	353	$	1,006	$	3,550	$	4,340
Provision for (benefit from) income taxes(2)	48		188		310		(8,971		)
Net income	$	422	$	929	$	3,472	$	13,531
Income per share:
Basic	$	0.03	$	0.02	$	0.06	$	0.25
Diluted	$	0.02	$	0.02	$	0.06	$	0.24

⁽¹⁾  Quarterly results may not add up to annual results due to rounding.

⁽²⁾  Due to the full retrospective adoption of ASC 606, period numbers for the year 2017 are recast.

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Description of Business and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s Consolidated Financial Statements include the accounts of Energy Recovery, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Reclassifications and Retroactive Adjustments

Certain prior year amounts have been reclassified in the Consolidated Statements of Cash Flows and certain Notes to Consolidated Financial Statements to conform to the current year presentation. In addition, as of January 1, 2018 the Company adopted “ASU 2014-09”, “ASU 2016-08” and “ASU 2016-10” (the combination is also known as “ASC 606” or “New Revenue Standard”) using the full retrospective transition method, and the Company early adopted ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842), also referred to as “ASC 842” or “New Lease Standard,” The Company also adopted ASU 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash, also referred to as “New Cash Flow Presentation Standard” on January 1, 2018. See Note 2, “Recent Accounting Pronouncements,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K regarding the impact of these recent accounting pronouncements on our Consolidated Financial Statements.

Use of Estimates

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) requires the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements.

The accounting policies that reflect the Company’s more significant estimates and judgments and that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results are revenue recognition; capitalization of research and development assets; allowance for doubtful accounts; allowance for product warranty; valuation of stock options; valuation and impairment of goodwill and acquired intangible assets; valuation adjustments for excess and obsolete inventory; deferred taxes and valuation allowances on deferred tax assets; and evaluation and measurement of contingencies. Those estimates could change, and as a result, actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents are maintained primarily in demand deposit accounts with large financial institutions and in institutional money market funds. The Company monitors the creditworthiness of the financial institutions and institutional money market funds in which the Company invests its surplus funds. The Company has experienced no credit losses from its cash investments.

Allowances for Doubtful Accounts

Allowances for Doubtful Accounts

The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and general economic conditions. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance.

Short-Term and Long-Term Investments

Short-Term and Long-Term Investments

The Company’s short-term and long-term investments consist primarily of investment-grade debt securities, all of which are classified as available-for-sale. Available-for-sale securities are carried at fair value. Amortization or accretion of premium or discount is included in other income (expense) on the Consolidated Statements of Operations. Changes in the fair value of available-for-sale securities are reported as a component of accumulated other comprehensive loss within stockholders’ equity on the Consolidated Balance Sheet. Realized gains and losses on the sale of available-for-sale securities are determined by specific identification of the cost basis of each security. Short-term investments mature within 12 months and long-term investments mature greater than 12 months.

Inventories

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out “FIFO” method) or net realizable value. The Company calculates inventory valuation adjustments for excess and obsolete inventory based on current inventory levels, movement, expected useful lives, and estimated future demand of the products and spare parts.

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost and reduced by accumulated depreciation. Depreciation expense is recognized over the estimated useful lives of the assets using the straight-line method. Estimated useful lives are three to ten years. Certain equipment used in the development and manufacturing of ceramic components is depreciated over estimated useful lives of up to 10 years. Leasehold improvements represent remodeling and retrofitting costs for leased office and manufacturing space and are depreciated over the shorter of either the estimated useful lives or the term of the lease. Software purchased for internal use consists primarily of amounts paid for perpetual licenses to third-party software providers and installation costs. Software is depreciated over the estimated useful lives of three to five years. Tangible assets acquired for research and development (“R&D”) activities and have alternative use are capitalized over the useful life of the acquired asset. Estimated useful lives are periodically reviewed, and when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. Maintenance and repairs are charged directly to expense as incurred.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual purchase price recorded as goodwill. The determination of the value of the intangible assets acquired involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from one to 20 years. Acquired intangible assets with contractual terms are amortized over their respective legal or contractual lives. Customer relationships and other non-contractual intangible assets with determinable lives are amortized over periods ranging from five to 20 years.

The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses over the expected remaining useful life of the related asset. A shortfall in these estimated operating cash flows could result in an impairment charge in the future.

Goodwill is not amortized, but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present. The Company estimates the fair value of the reporting unit using the discounted cash flow and market approaches. Forecast of future cash flows are based on the Company’s best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment, and general economic conditions.

As of December 31, 2018 and 2017, acquired intangibles, including goodwill, relate to the acquisition of Pump Engineering, LLC during the fourth quarter of 2009. See Note 7, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of intangible assets.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, restricted cash, investments in marketable securities, accounts receivable, accounts payable, and debt. The carrying amounts for these financial instruments reported in the Consolidated Balance Sheets approximate their fair values. See Note 6, “Investments and Fair Value Measurements,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of fair value.

Revenue Recognition

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. At the inception of each contract, performance obligations are identified and the total transaction price is allocated to the performance obligations.

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price. The Company generally determines standalone selling prices based on the prices charged to customers.

With respect to termination, the Company does not have the ability to cancel a contract for convenience. In general, customers can cancel for convenience upon the payment of a termination fee that covers costs and profit. It is rare for customers to cancel contracts.

See Note 3, “Revenues” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K ,for more detail on product and service revenue recognition - Water segment, cost-to-total cost (“CTC”) revenue recognition- Oil and Gas segment, license and development revenue recognition - Oil and Gas segment.

For license and development revenue, performance obligations identified under ASC 606 differ somewhat from contingent and non-contingent deliverables identified under ASC 605 due to transfer of control considerations.

Under ASC 606, the Company concluded that the Missile license represents functional intellectual property and that the license is not distinct from the research and development services to be provided prior to product commercialization. The transaction price allocated to this combined performance obligation of a continually evolving license will be recognized over the estimated period required to result in full commercial launch using an input measure of progress of the cost of salaries and wages and travel expenses related to the project prior to full commercial launch.

The milestone method of accounting has been eliminated under ASC 606. Instead of recognizing the full amount of each milestone payment as revenue in the period in which it is achieved, the Company will revise its estimate of the transaction price to include development milestone payments only when they become probable of achievement and revenue will be recognized consistent with the input measure of progress.

The Company has concluded that its obligation to provide when and if available updates to its technology in the period subsequent to full commercial launch represents a performance obligation. The transaction price allocated to this stand-ready performance obligation will be recognized ratably over the period commencing after full commercial launch until the expiration of the contract.

Water Segment Revenue. Performance obligations identified under ASC 606, are consistent with deliverables identified under ASC 605. Revenue recognition for performance obligations accounted for under ASC 606 is consistent with ASC 605 given the transfer of control of the promised goods or services follows the same pattern. Adoption of ASC 606 did not have a material impact on the timing of revenue and expense recognition.

Oil & Gas Segment - Cost-to-Total Cost (“CTC”) Revenue. Performance obligations identified under ASC 606, are consistent with deliverables identified under ASC 605. Revenue recognition for performance obligations accounted for under ASC 606 is consistent with ASC 605 given the transfer of control of the promised goods or services follows the same pattern. Adoption of ASC 606 did not have a material impact on the timing of revenue and expense recognition.

Oil & Gas Segment - License and Development Revenue. License and development revenue associated with the up-front non-refundable $75.0 million exclusivity payment received in connection with the VorTeq license agreement (the “VorTeq License Agreement”) that the Company entered into with a technology corporation (the “VorTeq Licensee”) under ASC 605 was recognized on a straight-line basis over the 15-year term of the license, while the two subsequent milestone payments of $25.0 million that could each be earned under the VorTeq License Agreement were to be recognized in full when achieved under milestone accounting.

License and development revenue under ASC 606, which includes both the upfront non-refundable $75.0 million exclusivity payment and the two milestone payments of $25.0 million each, when determined probable, is comprised of:

• revenue recognition over time based on an input measure of progress based on a cost driver, which management has determined is the best estimate of the progress made on the project during the period from inception until full commercialization, for the amount allocated to the exclusive Missile (as defined in Note 15, “VorTeq Partnership and License Agreement”) license, and research and development services, and

• revenue recognition related to stand-ready, when and if available, upgrades subsequent to full commercialization, recognized over time ratably over the period, which matches the transfer of benefit to the customer on a daily basis, commencing after full commercial launch until the expiration of the contract.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. At the inception of each contract, performance obligations are identified and the total transaction price is allocated to the performance obligations.

The Company’s payment terms vary based on the credit risk of its customer. For certain customer types, the Company requires payment before the products or services are delivered to the customer. The Company performs an evaluation of customer credit worthiness on an individual contract basis to assess whether collectability is reasonably assured at the inception of the contract. As part of this evaluation, the Company considers many factors about the individual customer, including the underlying financial strength of the customer and/or partnership consortium and the Company’s prior history or industry-specific knowledge about the customer and its supplier relationships. For smaller projects, the Company requires the customer to remit payment generally within 30 to 60 days after product delivery. In some cases, if credit worthiness cannot be determined, prepayment or other security is required.

Sales commissions are expensed as incurred when product revenue is earned. These costs are recorded within sales and marketing expenses.

Contract Costs

The Company recognizes the incremental cost of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The costs of obtaining contracts are included in sales and marketing expenses.

Product and Service Revenue Recognition - Water Segment

In the Water segment, a contract is established by a written agreement (executed sales order, executed purchase order or stand-alone contract) with the customer with fixed pricing, and a credit risk assessment is completed prior to the signing of the agreement to ensure that collectability is reasonably assured.

The Company does not bundle performance obligations in the Water segment. The Company identifies each performance obligation separately along with its associated relative standalone selling price based on the prices and discounts that the Company would sell a promised good or service separately to a customer.

Generally, performance obligations consist of delivery of products, such as PX energy recovery devices, turbochargers, pumps, and spare parts. Service obligation amounts which are not material, are deferred as contract liabilities until the services are performed.

The transfer of control for the Company’s products follows transfer of title which typically occurs upon shipment of the equipment in accordance with International Commercial Terms (commonly referred to as “Incoterms”). The specified product performance criteria for the Company’s products pertain to the ability of the Company’s product to meet its published performance specifications and warranty provisions, which the Company’s products have demonstrated on a consistent basis. This factor, combined with historical performance metrics, provides the Company’s management with a reasonable basis to conclude that the products will perform satisfactorily upon commissioning of the plant. Installation is relatively simple, requires no customization, and is performed by the customer under the supervision of the Company’s personnel. Based on these factors, the Company concluded that performance has been completed upon shipment when title transfers based on the shipping terms, and that product revenue is recognized at a point in time.

The Company does not provide its customers with a right of product return; however, the Company will accept returns of products that are deemed to be damaged or defective when delivered that are covered by the terms and conditions of the product warranty. Product warranty is provided consistent with the industry and is considered to be an assurance warranty, not a separate performance obligation. Product returns and warranty charges have not been significant.

Revenue allocable to the Company’s product is limited to the amount that is not contingent upon the delivery of additional items or meeting specified performance conditions. The Company adheres to consistent pricing in the stand-alone sale of products and services.

For large projects, stand-alone contracts are utilized. For these contracts, consistent with industry practice, the Company’s customers typically require their suppliers, including the Company, to accept contractual holdback provisions (also referred to as a retention payment) whereby the final amounts due under the sales contract are remitted over extended periods of time or alternatively, stand-by letters of credit are issued. These retention payments are generally 10% or less of the total contract amount and are due and payable upon the passage of time, generally up to 24 to 36 months from the date of product delivery. These retention payments are generally replaced by bank guarantees which have had no history of being exercised, and they align with the product warranty period. Given that they are not material in the context of the contract, they are not considered to be a financing component. The Company has no performance obligation and they are recorded as contract assets.

Shipping and handling charges billed to customers is a pass-through from the freight forwarder and is included in product revenue. The cost of shipping to customers is included in cost of revenue.

Cost-to-Total Cost (“CTC”) Revenue Recognition - Oil & Gas Segment

IsoBoost and IsoGen systems are highly engineered, customized solutions that are designed and manufactured over an extended period of time and are built specifically to meet a customer’s specifications. Given the facts and circumstances of these projects, the Company concluded that the CTC method of accounting is appropriate for IsoBoost and IsoGen systems. In the event that a purchase order for an IsoBoost or IsoGen system does not meet these facts and circumstances, then the CTC method of accounting does not apply. The Company had one CTC contract for IsoBoost turbochargers in fiscal years 2016 through 2018, which was completed in 2018, and last units were shipped in the first quarter of 2019. A standard assurance type warranty was provided.

Revenue from fixed price contracts is recognized with progress measured in the ratio of costs incurred to estimated final costs. Contract costs include all direct material and labor costs related to contract performance. Pre-contract costs with no future benefit were expensed in the period in which they were incurred. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revisions become known, using the cumulative catchup method. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is recorded in the period in which the loss becomes evident. No loss has been incurred to date. Revenue is recognized only to the extent costs have been recognized in the same period.

Arrangements with Multiple Performance Obligations and Termination for Convenience

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative stand-alone selling price. The Company generally determines stand-alone selling prices based on the prices charged to customers.

With respect to termination, the Company does not have the ability to cancel the contract for convenience. In general, customers can cancel for convenience upon the payment of a termination fee that covers costs and profit. It is rare for customers to cancel contracts.

Practical Expedients and Exemptions

In the Water segment, the time period between when the Company transfers control of products to the customer and the payment for the products is, in general, less than one year and, therefore, the practical expedient with respect to a financing component has been adopted by the Company.

With respect to taxes, the Company has made the policy election to exclude taxes from the measurement of the transaction price.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Unbilled project costs and Cost and estimated earnings in excess of billings are included in Contract assets and Contract liabilities on the Condensed Consolidated Balance Sheets, respectively.

License and Development Revenue Recognition - Oil & Gas Segment

License and development revenue is comprised of revenue recognition over time of the upfront non-refundable $75.0 million exclusivity fee received in connection with the VorTeq License Agreement, as well as the revenue recognition over time of the two milestone payments of $25.0 million each when uncertainty of receipt is resolved and receipt of each milestone payment is considered probable.

The VorTeq License Agreement is comprised of a 15-year exclusive license for the Company’s VorTeq technology (“VorTeq”). In performing the obligations under the license, the Company provides research and development services to commercialize the technology in accordance with the Key Performance Indicators (“KPIs”), defined in the VorTeq License Agreement. After commercialization is achieved, payments will be received for the supply and servicing of certain components of the VorTeq. All payments are non-refundable. See Note 15, “VorTeq Partnership and License Agreement.”of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further details.

The Company recognizes license and development revenue in accordance with ASC 606. Revenue is recognized when control of the promised goods or services is transferred to customers. Stand-alone selling price was established at the inception of the VorTeq License Agreement by taking the transaction to market on a non-exclusive basis, and pricing in an exclusivity premium. Since the VorTeq License Agreement included an up-front non-refundable payment at the inception of the VorTeq License Agreement and future products and services are provided after initial commercialization, the Company completed an analysis and concluded that there was no material right included in the pricing of the VorTeq License Agreement.

Performance obligations, such as the exclusive license to the Missile technology and upgrades prior to and subsequent to the date of full commercial launch, have been identified. Value has been allocated to the performance obligations and revenue is recognized over time based on the input measure of progress of the cost of salaries and wages related to the project prior to full commercialization, and ratably for the unspecified upgrades for the period subsequent to full commercialization until the expiration of the VorTeq License Agreement.

Once commercial launch is achieved and cartridges are provided under the contract, revenue from those royalty payments will be recognized in accordance with ASC 842, with the Company as the lessor. It is expected that the cartridge leases will be classified as operating leases, and lease revenue will be recognized as earned.

Research and Development Expense

Research and Development (“R&D”) Expense and Capitalization of R&D Assets

R&D expense consists of costs incurred for internal projects and for technology licensed to third parties. These costs include the Company’s direct and research-related overhead expenses, which include salaries and other personnel-related expenses (including stock-based compensation), occupancy-related costs, depreciation of facilities, as well as external costs for equipment and supplies. Costs to acquire technologies that are utilized in research and development and that have no alternative future use are expensed when incurred. All R&D costs are expensed as incurred and are included in operating expenses.

The costs of materials that are acquired for research and development activities and have no alternative future uses (in research and development projects or otherwise) are expensed as incurred.  With respect to tangible assets acquired or constructed for R&D activities, if the costs of materials that are acquired or constructed for a particular research and development project have alternative future uses (in other research and development projects or otherwise), they are capitalized as an asset and the cost of depreciation is charged to expense. 

Warranty Costs

Warranty Costs

The Company sells products with a limited warranty for a period ranging from 18 months to five years. The Company accrues for warranty costs based on estimated product failure rates, historical activity, and expectations of future costs. Periodically, the Company evaluates and adjusts the warranty costs to the extent that actual warranty costs vary from the original estimates.

Share-based Compensation

Stock-based Compensation

The Company measures and recognizes stock-based compensation expense based on the fair value measurement for all stock-based awards made to its employees and directors, including restricted stock units (“RSUs”), and employee stock options over the requisite service period (typically the vesting period of the awards). The fair value of RSUs based on the Company’s stock price on the date of grant. The fair value of stock options is calculated on the date of grant using the Black-Scholes option pricing model, which requires a number of complex assumptions including expected life, expected volatility, risk-free interest rate, and dividend yield. The estimation of awards that will ultimately vest requires judgment, and to the extent that actual results or updated estimates differ from our current estimates, such amounts are recorded as a cumulative adjustment in the period in which the estimates are revised. See Note 12, “Stock-Based Compensation,” for further discussion of stock-based compensation.

Foreign Currency

Foreign Currency

The Company’s reporting currency is the U.S. dollar. The functional currency of the Company’s Irish subsidiaries is the U.S. dollar, while the functional currency of the Company’s other foreign subsidiaries is their respective local currencies. The asset and liability accounts of the Company’s foreign subsidiaries are translated from their local currencies at the rates in effect on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the period. Gains and losses resulting from the translation of the Company’s subsidiary balance sheets are recorded as a component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are recorded in other income (expense) in the Consolidated Statements of Operations.

Income Taxes

Income Taxes

Current and non-current tax assets and liabilities are based upon an estimate of taxes refundable or payable for each of the jurisdictions in which the Company is subject to tax. In the ordinary course of business, there is inherent uncertainty in quantifying income tax positions. The Company assesses income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. When applicable, associated interest and penalties are recognized as a component of income tax expense. Accrued interest and penalties are included within the related tax asset or liability on the Consolidated Balance Sheets.

Deferred income taxes are provided for temporary differences arising from differences in bases of assets and liabilities for tax and financial reporting purposes. Deferred income taxes are recorded on temporary differences using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in determining whether and to what extent any valuation allowance is needed on the Company’s deferred tax assets. In making such a determination, the Company considers all available positive and negative evidence including recent results of operations, scheduled reversals of deferred tax liabilities, projected future income, and available tax planning strategies. See Note 10,“Income Taxes,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for further discussion of tax valuation allowances.

On December 22, 2017, President Trump signed into law the Tax Act, which significantly changed existing U.S. tax laws. Following the enactment of the Tax Act, the SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax law that were in effect immediately before the enactment of the Tax Act. Our adjustments were final in 2017. See Note 10,“Income Taxes,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a discussion of our income tax accounting related to the Tax Act.

The Company’s operations are subject to income and transaction taxes in the U.S. and in foreign jurisdictions. Significant estimates and judgments are required in determining the Company’s worldwide provision for income taxes. Some of these estimates are based on interpretations of existing tax laws or regulations. The ultimate amount of tax liability may be uncertain as a result.

Advertising Expense

Advertising Expense

Advertising expense is charged to operations during the year in which it is incurred.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company follows the authoritative guidance for fair value measurements and disclosures that, among other things, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

Level 3 — Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions that market participants would use in pricing.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, un-billed receivables, cost and estimated earnings in excess of billings, accounts payable, and other accrued expenses approximate fair value due to the short-term maturity of those instruments. For the Company’s investments in available-for-sale securities, if quoted prices in active markets for identical investments are not available to determine fair value (Level 1), then the Company uses quoted prices for similar assets or inputs other than quoted prices that are observable either directly or indirectly (Level 2). The investments included in Level 2 consist of corporate notes and bonds, municipal notes and bonds and U.S. Treasury securities.

Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606), referred to as Accounting Standards Codification (“ASC”) 606 (“ASC 606”) or the “New Revenue Standard.” ASC 606 supersedes the revenue recognition requirements of ASC 605, Revenue Recognition, and requires entities to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services.

The update also requires more detailed disclosures to enable readers of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASC 606 permits the use of either the full retrospective or cumulative effect transition (modified retrospective) method upon adoption.

In March and April 2016, the FASB issued ASU No. 2016-08 (“ASU 2016-08”), Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU No. 2016-10 (“ASU 2016-10”), Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing, respectively. The amendments in these updates are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and to clarify two aspects of ASC 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The effective date and transition requirements for both ASU 2016-08 and ASU 2016-10 are the same as those for ASU 2014-09, as referred.

The Company adopted “ASU 2014-09”, “ASU 2016-08” and “ASU 2016-10” (the combination is also known as “ASC 606” or “New Revenue Standard”) as of January 1, 2018 using the full retrospective transition method. To assess the impact of and to implement ASC 606, the Company formed a project team, which has operated since 2014, to evaluate internal processes. The Company has implemented changes to its current policies and practices, and internal controls over financial reporting to address the requirements of the standard.

Recently issued accounting pronouncements not yet adopted

In June 2016, the FASB issued ASU 2016-13 (“ASU 2016-13”), “Financial Instruments - Credit Losses” (Topic 326). The FASB issued this update to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company expects to adopt this standard on January 1, 2020 and does not expect the adoption of ASU 2016-13 to have a material impact on its financial statements.

In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment quantitative test and allows for the determination of impairment by comparing the fair value of the reporting unit with its carrying amount. The amendments in this update should be applied on a prospective basis. For public entities which are SEC filers, this amendment is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. The Company expects to adopt this standard on January 1, 2020 and does not expect the adoption of ASU 2017-04 to have a material impact on its financial statements.

In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842): which supersedes ASC 840, Leases (Topic 840), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The FASB has continued to clarify this guidance through the issuance of additional ASUs. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases.

The Company early adopted ASU 2016-02 on January 1, 2018 concurrent with the Company’s adoption of the New Revenue Standard and elected the available practical expedients. The adoption of ASU 2016-02 had no impact on the Company’s Consolidated Statements of Operations. The most significant impact was the recognition of right of use assets and liabilities for operating leases. Adoption of the standard required the Company to recast certain previously reported results, including the recognition of additional operating lease right of use assets and liabilities.

In November 2016, the FASB issued ASU 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash, also referred to as “New Cash Flow Presentation Standard.” ASU 2016-18 is intended to reduce diversity in practice in the classification and presentation of changes in restricted cash on the Consolidated Statement of Cash Flows. ASU 2016-18 requires that the Consolidated Statement of Cash Flows explain the change in total cash and equivalents and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The standard also requires reconciliation between the total cash and equivalents and restricted cash presented on the Consolidated Statement of Cash Flows and the cash and cash equivalents balance presented on the Consolidated Balance Sheet. ASU 2016-18 is effective retrospectively on January 1, 2018. The Company adopted ASU 2016-18 on January 1, 2018. The Company recast its Consolidated Statements of Cash Flows for the prior periods presented based on the restricted cash balance on the balance sheet date and has provided a reconciliation of cash, cash equivalents and restricted cash in Note 5, “Other Financial Information.”

In January 2016, the FASB issued ASU No. 2016-01 (“ASU 2016-01”), Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. For public entities, ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU 2016-01 on January 1, 2018. The adoption of ASU 2016-01 did not have a material impact on the Company’s financial position or results of operations.

In August 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 impacts all entities that are required to present a statement of cash flows under ASC 230, Statement of Cash Flows. The amendment provides guidance on eight specific cash flow issues. For public entities, ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and interim periods within those years. Adoption should be applied using a retrospective transition method to each period presented. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s financial position or results of operations.

In October 2016, the FASB issued ASU 2016-16 (“ASU 2016-16”), Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires recognition of the current and deferred income tax effects of an intra-entity asset transfer, other than inventory, when the transfer occurs, as opposed to legacy GAAP, which requires companies to defer the income tax effects of intra-entity asset transfers until the asset has been sold to an outside party. The income tax effects of intra-entity inventory transfers will continue to be deferred until the inventory is sold. ASU 2016-16 is effective on January 1, 2018, with early adoption permitted. The update is required to be adopted on a modified retrospective basis with the cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The Company adopted ASU 2016-16 on January 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the Company’s financial position or results of operations.

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-base payment award require an entity to apply modification accounting under ASC 718, Compensation – Stock Compensation. ASU 2017-09 is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s financial position or results of operations.

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Recent Accounting Pronouncements (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Changes and Error Corrections [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The changes in license and development revenue due to the adoption of ASC 606 are as follows.

	Years Ended December 31,
	2017		2016
	(In thousands)
License and development revenue, as previously reported	$	5,000	$	5,000
Increase in revenue due to adoption of the New Revenue Standard	6,106		3,069
License and development revenue, as adjusted	$	11,106	$	8,069

The changes in the contract liability balance related to license and development revenue due to the adoption of ASC 606 are as follows.

	December 31, 2017		December 31, 2016
	(In thousands)
License and development contract liability, as previously reported	$	63,958	$	68,958
Decrease in contract liability due to adoption of the New Revenue Standard	9,465		3,359
License and development contract liability, as adjusted	$	54,493	$	65,599

The following table illustrates changes in the Condensed Consolidated Balance Sheets as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard and New Lease Standard at January 1, 2018.

	December 31, 2017
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Lease Standard			As Adjusted
	(In thousands)
Assets
Current assets:
Contract assets	$	6,411		$	(133	)	$	—		$	6,278
Total current assets	126,196			(133		)	—			126,063
Non-current assets
Deferred tax assets, non-current	7,902			31			—			7,933
Operating lease, right of use asset	—			—			2,843			2,843
Total assets	161,744			(102		)	2,843			164,485
Liabilities and Stockholders’ Equity
Current liabilities:
Accrued expenses and other current liabilities	8,517			(469		)	(100		)	7,948
Lease liabilities	—			—			1,603			1,603
Contract liabilities	6,416			9,493			—			15,909
Total current liabilities	19,833			9,024			1,503			30,360
Non-current liabilities
Lease liabilities, non-current	—			—			1,698			1,698
Contract liabilities, non-current	59,006			(18,489		)	—			40,517
Other non-current liabilities	358			—			(358		)	—
Total liabilities	79,213			(9,465		)	2,843			72,591
Stockholders’ equity:
Accumulated deficit	(45,922		)	9,363			—			(36,559		)
Total stockholders’ equity	82,531			9,363			—			91,894
Total liabilities and stockholders’ equity	161,744			(102		)	2,843			164,485

The following table illustrates changes in the Condensed Consolidated Statement of Operations as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017									Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			As Adjusted			As Previously Reported			Adoption of New Revenue Standard		As Adjusted
	(In thousands, except for per share data)
Product revenue	$	58,156		$	(133	)	$	58,023		$	49,715		$	—	$	49,715
Product cost of revenue	19,061			—			19,061			17,849			—		17,849
Product gross profit	$	39,095		$	(133	)	$	38,962		$	31,866		$	—	$	31,866
License and development revenue	$	5,000		$	6,106		$	11,106		$	5,000		$	3,069	$	8,069
Income from operations	3,276			5,973			9,249			357			3,069		3,426
Income before income taxes	3,956			5,973			9,929			644			3,069		3,713
(Benefit from) provision for income taxes	(8,394		)	(31		)	(8,425		)	(390		)	384		(6		)
Net income	12,350			6,004			18,354			1,034			2,685		3,719
Income per share:
Basic	$	0.23		$	0.11		$	0.34		$	0.02		0.05		$	0.07
Diluted	$	0.22		$	0.11		$	0.33		$	0.02		0.05		$	0.07
Number of shares used in per share calculations:
Basic	53,701			—			53,701			52,341			—		52,341
Diluted	55,612			—			55,612			55,451			—		55,451

The following table illustrates changes in the Company’s segment activities as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017									Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			As Adjusted			As Previously Reported			Adoption of New Revenue Standard		As Adjusted
	(In thousands)
Water
Product revenue	$	54,301		$	—		$	54,301		$	47,545		$	—	$	47,545
Product cost of revenue	16,032			—			16,032			16,353			—		16,353
Product gross profit	$	38,269		$	—		$	38,269		$	31,192		$	—	$	31,192
Income from operations	$	29,386		$	—		$	29,386		$	23,073		$	—	$	23,073
Oil & Gas
Product revenue	$	3,855		$	(133	)	$	3,722		$	2,170		$	—	$	2,170
Product cost of revenue	3,029						3,029			1,496			—		1,496
Product gross profit	$	826		$	(133	)	$	693		$	674		$	—	$	674
License and development revenue	$	5,000		$	6,106		$	11,106		$	5,000		$	3,069	$	8,069
Income (loss) from operations	(10,184		)	5,973			(4,211		)	(7,016		)	3,069		(3,947		)

The following table illustrates changes in the Condensed Consolidated Statement of Comprehensive Income as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard effective January 1, 2018.

	Twelve Months Ended December 31, 2017						Twelve Months Ended December 31, 2016
	As Previously Reported		Adoption of New Revenue Standard		As Adjusted		As Previously Reported		Adoption of New Revenue Standard		As Adjusted
	(In thousands)
Net income	$	12,350	$	6,004	$	18,354	$	1,034	$	2,685	$	3,719
Comprehensive income	12,343		6,004		18,347		980		2,685		3,665

The following tables illustrate changes in the Condensed Consolidated Statement of Cash Flows as previously reported prior to, and as adjusted subsequent to, the adoption of the New Revenue Standard and New Cash Flow Presentation effective January 1, 2018.

	Twelve Months Ended December 31, 2017
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Cash Flow Presentation Standard			As Adjusted
	(In thousands)
Net income	$	12,350		$	6,004		$	—		$	18,354
Changes in operating assets and liabilities:
Accounts receivable	(761		)	—			—			(761		)
Contract assets	(4,396		)	133			—			(4,263		)
Inventories	(1,250		)	—			—			(1,250		)
Prepaid and other assets	(39		)	—			—			(39		)
Accounts payable	2,118									2,118
Accrued expenses and other liabilities	364			247			—			611
Income taxes	416			(31		)	—			385
Contract liabilities	(5,505		)	(6,353		)	—			(11,858		)
Net cash used in operating activities	2,895			—			—			2,895
Restricted cash	1,538			—			(1,538		)	—
Net cash used in investing activities	(37,373		)	—			(1,538		)	(38,911		)
Net change in cash, cash equivalents and restricted cash	(33,584		)	—			(1,538		)	(35,122		)
Cash, cash equivalents and restricted cash, beginning of year	61,364			—			4,384			65,748
Cash, cash equivalents and restricted cash, end of period	27,780			—			2,846			30,626

	Twelve Months Ended December 31, 2016
	As Previously Reported			Adoption of New Revenue Standard			Adoption of New Cash Flow Presentation Standard		As Adjusted
	(In thousands)
Net income	$	1,034		$	2,685		$	—	$	3,719
Changes in operating assets and liabilities:
Accounts receivable	(244		)	—			—		(244		)
Contract assets	(130		)	—			—		(130		)
Inventories	2,287			—			—		2,287
Prepaid and other assets	(402		)	—			—		(402		)
Accounts payable	(360		)	—			—		(360		)
Accrued expenses and other liabilities	1,259			(1,521		)	—		(262		)
Income taxes	14			384			—		398
Contract liabilities	(4,720		)	(1,548		)	—		(6,268		)
Net cash used in operating activities	4,965			—			—		4,965
Restricted cash	(577		)	—			577		—
Net cash used in investing activities	(40,706		)	—			577		(40,129		)
Net change in cash, cash equivalents and restricted cash	(38,567		)	—			577		(37,990		)
Cash, cash equivalents and restricted cash, beginning of year	99,931			—			3,807		103,738
Cash, cash equivalents and restricted cash, end of period	61,364			—			4,384		65,748

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Revenue (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present the Company’s revenues disaggregated by geography, based on the shipped to addresses of the Company’s customers and revenue source. Sales and usage-based taxes are excluded from revenues.

		Year Ended December 31, 2018
		Water		Oil and Gas		Total
	(In thousands)
Primary geographical market
Middle East and Africa		$	35,593	$	514	$	36,107
Americas		6,388		13,490		19,878
Asia		11,955		—		11,955
Europe		6,575		—		6,575
Total		$	60,511	$	14,004	$	74,515
Major product/service line
PX, pumps and turbo devices		$	60,511	$	6	$	60,517
License and development		—		13,490		13,490
Oil & gas products		—		508		508
Total		$	60,511	$	14,004	$	74,515

	Year Ended December 31, 2017						Year Ended December 31, 2016
	Water		Oil and Gas		Total		Water		Oil and Gas		Total
	(In thousands)
Primary geographical market
Middle East and Africa	$	26,190	$	3,708	$	29,898	$	19,436	$	2,170	$	21,606
Americas	7,023		11,120		18,143		5,419		8,069		13,488
Asia	12,974		—		12,974		17,397		—		17,397
Europe	8,114		—		8,114		5,293		—		5,293
Total	$	54,301	$	14,828	$	69,129	$	47,545	$	10,239	$	57,784
Major product/service line
PX, pumps and turbo devices	$	54,301	$	15	$	54,316	$	47,545	$	10	$	47,555
License and development	—		11,106		11,106		—		8,069		8,069
Oil & gas products	—		3,707		3,707		—		2,160		2,160
Total	$	54,301	$	14,828	$	69,129	$	47,545	$	10,239	$	57,784

Contract with Customer, Asset and Liability

Contract balances by category are presented in the following table. Prior year amounts have been adjusted for the adoption of ASC 606 on January 1, 2018. See Note 2, “Recent Accounting Pronouncements,”of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data,” of this Annual Report on Form 10-K for reconciliation of prior year “As Previously Reported” and “As Adjusted” amounts.

	December 31, 2018		December 31, 2017
	(In thousands)
Trade Receivable	$	10,212	$	12,465
Contract assets:
Current contract assets	4,083		6,278
Total contract assets	$	4,083	$	6,278
Current contract liabilities:
Customer deposits	$	706	$	414
Deferred revenue:
Cost and estimated earnings in excess of billings	264		805
License and development	14,518		14,024
Product	548		550
Service	234		116
Total current contract liability	16,270		15,909
Non-current contract liabilities, deferred revenue
License and development	26,485		40,469
Product	54		48
Total non-current contract liability	26,539		40,517
Total contract liability	$	42,809	$	56,426

The Company records un-billed receivables as contract assets. Significant changes in contract assets during the period were as follows.

	December 31, 2018			December 31, 2017
	(In thousands)
Balance, beginning of year	$	6,278		$	2,015
Transferred to receivables	(8,865		)	(2,909		)
Additional unbilled receivables	6,670			7,172
Balance, end of period	$	4,083		$	6,278

The Company records contract liabilities when cash payments are received or due in advance of the Company’s performance. Significant changes in contract liabilities during the period were as follows.

	December 31, 2018			December 31, 2017
	(In thousands)
Balance, beginning of year	$	56,426		$	62,232
Revenue recognized	(13,493		)	(5,892		)
Cash received	(124		)	86
Balance, end of period	$	42,809		$	56,426

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied.

	December 31, 2018
	(In thousands)
Year:
2019	$	14,544
2020	14,480
2021	6,328
2022 and thereafter	5,677
Total	$	41,029

Contract With Customer, Cost And Estimated Earnings On Uncompleted Contracts

Cost and estimated earnings on uncompleted contracts is presented in the following table.

				December 31, 2017
	December 31, 2018			As Previously Reported			Adoption of New Revenue Standard			As Adjusted
	(In thousands)
Estimated earnings to date	$	6,477		$	6,000		$	(133	)	$	5,867
Estimated costs to date	(5,289		)	(4,525		)	—			(4,525		)
Subtotal	1,188			1,475			(133		)	1,342
Net billings to date	(108		)	2,718			—			2,718
Total	$	1,080		$	4,193		$	(133	)	$	4,060
Included in accompanying balance sheets:
Unbilled project costs	$	1,343		$	4,998		$	(133	)	$	4,865
Cost and estimated earnings in excess of billings	(263		)	(805		)	—			(805		)
Total	$	1,080		$	4,193		$	(133	)	$	4,060

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Income Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computation of basic and diluted net income per share is presented in the following table.

	Year Ended December 31,
	2018		2017		2016
	(In thousands, except per share amounts)
Numerator:
Net income	$	22,093	$	18,354	$	3,719
Denominator:
Basic weighted average common shares outstanding	53,764		53,701		52,341
Weighted average effect of dilutive stock awards	1,574		1,911		3,110
Diluted weighted average common shares outstanding	55,338		55,612		55,451
Net income per share:
Basic	$	0.41	$	0.34	$	0.07
Diluted	$	0.40	$	0.33	$	0.07

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The potential common shares were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive is presented in the following table.

	Year Ended December 31,
	2018	2017	2016
	(In thousands)
Anti-dilutive shares excluded from net income per share calculation	2,176	1,810	2,987

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Investments and Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Investments, Fair Value Disclosure [Abstract]

Available-for-sale Securities

Available-for-sale investments as of December 31, 2018 and 2017 are presented in the following tables.

	December 31, 2018
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(In thousands)
Short-term investments
U.S. Treasury securities	$	8,102	$	1	$	(2	)	$	8,101
Corporate notes and bonds	65,324		1		(88		)	65,237
Total short-term investments	$	73,426	$	2	$	(90	)	$	73,338
Long-term investments
Corporate notes and bonds	$	1,269	$	—	$	—		$	1,269
Total long-term investments	$	1,269	$	—	$	—		$	1,269
Total available-for-sale investments	$	74,695	$	2	$	(90	)	$	74,607

	December 31, 2017
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(In thousands)
U.S. Treasury securities	$	16,755	$	—	$	(14	)	$	16,741
Corporate notes and bonds *	53,367		—		(77		)	53,290
Municipal notes and bonds	247		—		—			247
Total available-for-sale investments	$	70,369	$	—	$	(91	)	$	70,278

* $0.3 million of corporate bonds were classified as cash & cash equivalents.

Schedule Of Amortized Cost And Fair Value Of Available For Sale Securities

The amortized cost and fair value of available-for-sale securities that had stated maturities as of December 31, 2018 are shown by contractual maturity in the following table.

	December 31, 2018
	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	73,426	$	73,338
Due in greater than one year	1,269		1,269
	$	74,695	$	74,607

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The fair value of financial assets and liabilities measured on a recurring basis is presented in the following tables.

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
Assets:
Cash equivalents
Money market securities	$	6,661	$	6,661	$	—	$	—
Total cash equivalents	6,661		6,661		—		—
Short-term investments
U.S. Treasury securities	8,101		—		8,101		—
Corporate notes and bonds	65,237		—		65,237		—
Total short-term investments	73,338		—		73,338		—
Long-term investments
Corporate notes and bonds	$	1,269	$	—	$	1,269	$	—
Total long-term securities
Total assets	$	81,268	$	6,661	$	74,607	$	—

			Fair Value Measurement at Reporting Date Using
	December 31, 2017		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
Assets:
Cash equivalents
Money market securities	$	—	$	—	$	—	$	—
Corporate notes and bonds	258		—		258		—
Total cash equivalents	258		—		258		—
Short-term investments
U.S. Treasury securities	16,741		—		16,741		—
Corporate notes and bonds	$	53,032	$	—	$	53,032	$	—
Municipal notes and bonds	247		—		247		—
Total short-term investments	70,020		—		70,020		—
Total assets	$	70,278	$	—	$	70,278	$	—

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value

The fair value and gross unrealized losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument as of December 31, 2018 and 2017 are summarized in the following table. Available-for-sale investments that were in an unrealized gain position have been excluded from the following table.

	December 31, 2018					December 31, 2017
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(In thousands)
U.S. Treasury securities	$	8,101	$	(2	)	$	10,162	$	(14	)
Corporate notes and bonds	61,809		(88		)	53,222		(77		)
Municipal notes and bonds	—		—			247		—
Total available-for-sale investments	$	69,910	$	(90	)	$	63,631	$	(91	)

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Other Financial Information (Tables)

12 Months Ended

Dec. 31, 2018

Other Financial Information [Abstract]

Restrictions on Cash and Cash Equivalents

The Company’s cash, cash equivalents, and restricted cash are presented in the table below.

	December 31, 2018		December 31, 2017
	(In thousands)
Cash and cash equivalents	$	21,955	$	27,780
Restricted cash	183		2,846
Total cash, cash equivalents, and restricted cash	$	22,138	$	30,626

Schedule of Accounts, Notes, Loans and Financing Receivable

The allowance for doubtful accounts activities are presented in the table below.

	Allowance for Doubtful Accounts
	(In thousands)
As of December 31, 2015	166
Additions	76
Changes in Estimates	(112		)
Deductions	—
As of December 31, 2016	$	130
Additions	55
Changes in Estimates(1)	(77		)
Deductions(2)	(5		)
As of December 31, 2017	103
Additions	336
Changes in Estimates(1)	(43		)
As of December 31, 2018	$	396

(1) Collections of previously reserved accounts

(2) Uncollectible accounts written off, net of recoveries

Schedule of Inventory, Current

Inventories are stated at the lower of cost (using the first-in, first-out method) or net realizable value and are presented by category in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Raw materials	$	2,238	$	1,899
Work in process	2,689		2,191
Finished goods	2,211		1,424
Inventories, net	$	7,138	$	5,514

Schedule of Other Current Assets

Prepaid expenses and other current assets by category are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Interest receivable	$	478	$	439
Supplier advances	591		124
Insurance	238		256
Software license	161		193
Prepaid and refundable VAT and import duty	289		—
Income tax refund	465		—
Other prepaid expenses and current assets	588		330
Total prepaid and other current assets	$	2,810	$	1,342

Property, Plant and Equipment

Property and equipment held for use by category are presented in the following table.

	December 31, 2018			December 31, 2017
	(In thousands)
Machinery and equipment	$	23,675		$	20,813
Leasehold improvements	10,458			10,458
Software	3,013			2,985
Office equipment, furniture, and fixtures	2,970			2,699
Automobiles	199			114
Construction in progress	945			466
Total property and equipment	41,260			37,535
Less: accumulated depreciation and amortization	(26,641		)	(24,142		)
Property and equipment, net	$	14,619		$	13,393

Depreciation, Depletion, and Amortization [Policy Text Block]

Depreciation expense related to all depreciable property and equipment is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Depreciation expense	$	3,228	$	3,035	$	3,049

Schedule of Accrued Liabilities

Accrued expenses and other current liabilities by category are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Payroll and commissions payable	$	5,843	$	6,071
Other accrued expenses and current liabilities	2,176		1,877
Total accrued expenses and other current liabilities	$	8,019	$	7,948

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The components of identifiable intangible assets, all of which are finite-lived, as of the date indicated were as follows in the table below. All intangible assets are amortized on a straight-line basis over their useful life.

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Losses			Net Carrying Amount		Weighted Average Useful Life
	(In thousands, except for weighted average useful life)
Developed technology	$	6,100	$	(5,541	)	$	—		$	559	10
Patents	585		(462		)	(42		)	81		18
Total	$	6,685	$	(6,003	)	$	(42	)	$	640

	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Losses			Net Carrying Amount		Weighted Average Useful Life
	(In thousands, except for weighted average useful life)
Developed technology	$	6,100	$	(4,931	)	$	—		$	1,169	10
Patents	585		(443		)	(42		)	100		18
Total	$	6,685	$	(5,374	)	$	(42	)	$	1,269

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Future estimated amortization expense as of December 31, 2018 on intangible assets is presented in the following table.

	Future Amortization
	(In thousands)
Year:
2019	$	576
2020	16
2021	12
2022	11
2023	11
Thereafter	14
Total	$	640

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Long-term Debt and Lines of Credit (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt as of December 31, 2018 and 2017 is presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Loan payable	$	—	$	27
Less: current portion	—		(11		)
Total long-term debt	$	—	$	16

Schedule Of Outstanding Amounts Of Standby Letters Of Credit By Financial Institution

The financial institutions where the outstanding amounts of stand-by letters of credit are collateralized by restricted cash or pledged U.S. investments are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Financial Institution 1	$	92	$	1,687
Financial Institution 2	8,680		7,745
Financial Institution 3	—		990
Total	$	8,772	$	10,422

Schedule Of Outstanding Amounts Collateralized By Restricted Cash By Financial institution

The Company’s total restricted cash balances by financial institution are presented in the following table.

	December 31, 2018		December 31, 2017
	(In thousands)
Financial Institution 1	$	97	$	1,771
Financial Institution 2 (1)	—		—
Financial Institution 3	—		990
Financial Institution 4	86		85
Total	$	183	$	2,846

⁽¹⁾Financial Institution 2 requires pledged U.S. Investments in lieu of restricted cash balances as of January 27, 2017.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Rent Expense

Rent and lease expense related to all of the Company’s leased property is presented in the following table.

	Twelve Months Ended December 31, 2018		Twelve Months Ended December 31, 2017		Twelve Months Ended December 31, 2016
Operating lease cost	$	1,888	$	1,699	$	1,422

Other information related to the operating leases are presented in the following table.

	Twelve Months Ended December 31, 2018		Twelve Months Ended December 31, 2017		Twelve Months Ended December 31, 2016
Cash payments	$	964	$	1,395	$	1,337

The weighted average remaining lease term and discount rate as of December 31, 2018 related to the operating leases are presented in the following table.

Weighted average remaining lease term	9.8 years
Weighted average discount rate	6.95	%

Schedule of Future Minimum Rental Payments for Operating Leases

The Company leases facilities under fixed non-cancellable operating leases that expire on various dates through December 2028. Maturities of lease liabilities as of December 31, 2018 are presented in the following table:

	Lease Amounts
	(In thousands)
Year:
2019	$	1,855
2020	1,653
2021	1,811
2022	1,714
2023	1,922
Thereafter	8,122
Imputed interest	(3,595		)
Total	$	13,482

Schedule of Product Warranty Liability

Changes in the Company’s accrued product warranty reserve are presented in the following table.

	Years Ended December 31,
	2018			2017			2016
	(In thousands)
Balance, beginning of year	$	366		$	406		$	461
Warranty costs charged to cost of revenue	340			246			208
Utilization charges against reserve	(48		)	(86		)	(27		)
Release of accrual related to expired warranties	(180		)	(200		)	(236		)
Balance, end of year	$	478		$	366		$	406

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The Company’s U.S. and foreign components of consolidated income before income taxes and the benefit from income taxes is presented in the following table.

	Years Ended December 31,
	2018			2017 (1)			2016 (1)
	(In thousands)
Income (loss) before income taxes:
U.S.	$	12,139		$	11,549		$	6,158
Foreign	(699		)	(1,620		)	(2,445		)
Total income before income taxes	$	11,440		$	9,929		$	3,713
Current tax provision (benefit):
Federal	$	(297	)	$	441		$	—
State	(2		)	12			16
Foreign	25			18			46
Current tax provision (benefit)	$	(274	)	$	471		$	62
Deferred tax (benefit) provision:
Federal	$	(9,773	)	$	(9,025	)	$	248
State	(606		)	(1,141		)	3
Foreign	—			1,270			(319		)
Total deferred tax benefit	$	(10,379	)	$	(8,896	)	$	(68	)
Total benefit for income taxes	$	(10,653	)	$	(8,425	)	$	(6	)

(1) Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 are recast.

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of income taxes computed at the statutory federal income tax rate to the effective tax rate implied by the accompanying Statements of Operations is presented in the following table.

	Years Ended December 31,
	2018		2017 (1)		2016 (1)
U.S. federal taxes at statutory rate	21	%	34	%	34	%
State income tax, net of federal benefit	(6	)%	1	%	—	%
Deemed repatriation transition tax	—	%	71	%	—	%
Deferred tax re-measurement - Change in tax rates	1	%	24	%	—	%
Foreign rate differential	(1	)%	(10	)%	45	%
Change in tax status of foreign operations	(102	)%	—	%	—	%
Stock-based compensation	(3	)%	(6	)%	—	%
Non-deductible expenses	1	%	1	%	2	%
Federal research credits	(6	)%	(4	)%	(11	)%
Valuation allowance	3	%	(197	)%	(70	)%
Other	(1	)%	1	%	—	%
Effective tax rate	(93	)%	(85	)%	—	%

(1) Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 are recast.

Schedule of Deferred Tax Assets and Liabilities

The Company’s total deferred tax assets and liabilities is presented in the following table.

	December 31, 2018			December 31, 2017(1)
	(In thousands)
Deferred tax assets:
Net operating loss carry forwards	$	5,636		$	5,918
Accruals and reserves	12,157			2,847
Research and development credit carry forwards	4,609			3,957
Acquired intangibles	859			909
Charitable contributions	24			11
Total deferred tax assets	23,285			13,642
Valuation allowance	(2,850		)	(3,411		)
Net deferred tax assets	20,435			10,231
Deferred tax liabilities:
Depreciation on property and equipment	(937		)	(650		)
Unrecognized gain on translation of foreign currency	(9		)	(5		)
Goodwill	(1,171		)	(1,643		)
Total deferred tax liabilities	(2,117		)	(2,298		)
Net deferred tax assets	$	18,318		$	7,933
As reported on the balance sheet:
Non-current assets	$	18,318		$	7,933
Non-current liabilities	—			—
Net deferred tax assets	$	18,318		$	7,933

Summary of Operating Loss Carryforwards

The following table presents the Company’s Federal, California, and foreign net operating loss carryforwards.

	December 31, 2018		December 31, 2017
	(In thousands)
Federal	$	16,838	$	14,227
California	12,681		12,081
Ireland	9,363		16,644
Total net operating loss carryforwards	$	38,882	$	42,952

Summary of Tax Credit Carryforwards

The following table presents the Company’s Federal and California R&D credit, minimum tax credit and foreign tax credit carryforwards.

	December 31, 2018		December 31, 2017
	(In thousands)
Federal	$	2,925	$	2,572
California	2,132		1,753
Total credit carryforwards	$	5,057	$	4,325

Schedule of Unrecognized Tax Benefits Roll Forward

The aggregate changes in the balance of the gross unrecognized tax benefits is presented in the following table.

	December 31, 2018		December 31, 2017		December 31, 2016
	(In thousands)
Unrecognized tax benefits as of December 31,	$	911	$	603	394
Increases related to prior year tax position	—		117		—
Increases related to current year tax position	251		191		209
Unrecognized tax benefits as of December 31,	$	1,162	$	911	603

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Stock-based compensation expense related to the fair value measurement of awards granted to employees by financial line and by type of award is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Stock-based compensation expense by financial line:
Cost of revenue	$	87	$	158	$	113
General and administrative	3,266		2,218		$	2,057
Sales and marketing	694		821		$	524
Research and development	1,193		890		$	569
Total stock-based compensation expense	$	5,240	$	4,087	$	3,263
Stock-based compensation expense by type of award:
Options	$	3,873	$	3,331	$	3,005
RSUs	1,367		756		$	258
Total stock-based compensation expense	$	5,240	$	4,087	$	3,263

Schedule of Forfeiture Rates

The estimated forfeiture rates used in determining the expense in the table above are presented in the following table.

	For years ended December 31,
	2018	2017	2016
4-year options	14.866%	16.275%	13.513%
1-year options	—%	—%	—%

Schedule of Unamortized Compensation Cost and Weighted Average Service Period

The following table presents the unamortized compensation cost and weighted average service period of all unvested outstanding awards as of December 31, 2018.

	Unamortized Compensation Costs		Weighted Average Service Period
	(In thousands)		(In years)
Stock options	$	5,065	2.5
RSUs	2,128		2.2

Schedule of Grant Date Fair Value of Equity Instruments Vested

The total grant date fair value of stock options and RSUs vested during the period are presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Stock options	$	3,607	$	3,375	2,977
RSUs	841		783		—
Total grant date fair value of stock options and RSUs vested during the period	$	4,448	$	4,158	2,977

Share-based Compensation, Stock Options, Activity

The following table summarizes the stock option activity under the 2016 Plan and 2008 Plan.

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value(1)
	(In thousands, except for weighted average exercise price and weighted average remaining contractual life)
Balance, December 31, 2015	7,198		3.97
Granted	904		8.63
Exercised	(1,936	)	3.41			14,665
Forfeited	(283	)	5.30
Balance, December 31, 2016	5,883		4.81
Granted	677		9.57
Exercised	(1,226	)	4.49			6,798
Forfeited	(242	)	6.60
Balance, December 31, 2017	5,092		$	5.43	6.6	$	17,735
Granted	1,232		$	7.96
Exercised	(1,160	)	$	3.73
Forfeited	(183	)	$	3.98
Balance, December 31, 2018	4,982		$	6.36	6.56	$	6,572
Vested and exercisable as of December 31, 2018	3,193		$	5.44	5.39	$	6,124
Vested and exercisable as of December 31, 2018 and expected to vest thereafter	4,759		$	6.27	6.44	$	6,560

⁽¹⁾  The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock at the time of exercise. The aggregate intrinsic value at December 31, 2018 is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock as of the end of the period.

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table summarizes the RSU activity under the 2016 Plan.

	Shares		Weighted Average Grant-Date Fair Value
	(In thousands, except for weighted average grant-date fair value)
Balance, December 31, 2015	—		—
Awarded	214		8.65
Balance, December 31, 2016	214		8.65
Awarded	162		10.14
Vested	(91	)	8.65
Forfeited	(11	)	8.52
Balance, December 31, 2017	274		9.54
Awarded	280		9.54
Vested	(90	)	9.33
Balance, December 31, 2018	463		8.49

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The estimated grant date fair values of stock options granted to employees were calculated using the Black-Scholes option pricing model based on the assumptions in the following table.

	For years ended December 31,
	2018	2017	2016
Weighted average expected life (years)	4.19	4.50	4.38
Weighted average expected volatility	67.41%	80.22%	80.35%
Risk-free interest rate	2.48% – 3.01%	1.64% – 1.99%	1.03% – 1.32%
Weighted average dividend yield	—%	—%	—%

Schedule of Share Based Compensation, Awards Granted

On January 31, 2019 and February 1, 2019, the Company granted options and RSUs to certain officers. and on February 12, 2019, the Company granted options and RSUs to other employees. The options and RSUs granted are presented in the following table.

January 31, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	228,571	$	7.60	4 years	10 years
RSUs	136,510	7.60		4 years	**
Total	365,081

February 2, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	95,622	$	7.87	4 years	10 years
RSUs	19,059	$	7.87	4 years	**
Total	114,681

February 12, 2019 Grants	Shares	Exercise Price		Vesting Term(1)	Expiration from Date of Grant
Options	67,888	$	7.70	4 years	10 years
RSUs	228,228	$	7.70	4 years	**
Total	296,116

**    Not applicable.

⁽¹⁾    Any unvested options and RSUs are forfeited upon the employee’s termination.

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Business Segment (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The summary of financial information by segment is presented in the following tables.

	Year Ended December 31, 2018
	Water		Oil &Gas			Total
	(In thousands)
Product revenue	$	60,512	$	513		$	61,025
Product cost of revenue	17,211		662			17,873
Product gross profit	43,301		(149		)	43,152
License and development revenue	—		13,490			13,490
Operating expenses:
General and administrative	2,078		1,771			3,849
Sales and marketing	5,783		1,264			7,047
Research and development	1,711		15,276			16,987
Amortization of intangibles	629		—			629
Operating expenses	10,201		18,311			28,512
Operating income (loss)	$	33,100	$	(4,970	)	28,130
Less: Corporate operating expenses						18,152
Consolidated operating income						9,978
Non-operating income						1,462
Income before income taxes						$	11,440

	Year Ended December 31, 2017
	Water		Oil &Gas			Total
	(In thousands)
Product revenue	$	54,301	$	3,722		$	58,023
Product cost of revenue	16,032		3,029			19,061
Product gross profit	38,269		693			38,962
License and development revenue	—		11,106			11,106
Operating expenses:
General and administrative	1,401		1,565			2,966
Sales and marketing	5,787		2,228			8,015
Research and development	1,064		12,217			13,281
Amortization of intangibles	631		—			631
Operating expenses	8,883		16,010			24,893
Operating income (loss)	$	29,386	$	(4,211	)	25,175
Less: Corporate operating expenses						15,926
Consolidated operating income						9,249
Non-operating income						680
Income before income taxes						$	9,929

	Year Ended December 31, 2016
	Water		Oil &Gas			Total
	(In thousand)
Product revenue	$	47,545	$	2,170		$	49,715
Product cost of revenue	16,353		1,496			17,849
Product gross profit	31,192		674			31,866
License and development revenue	—		8,069			8,069
Operating expenses:
General and administrative	1,081		1,000			2,081
Sales and marketing	5,076		2,985			8,061
Research and development	1,331		8,705			10,036
Amortization of intangibles	631		—			631
Operating expenses	8,119		12,690			20,809
Operating income (loss)	$	23,073	$	(3,947	)	19,126
Less: Corporate operating expenses						15,700
Consolidated operating income						3,426
Non-operating income						287
Income before income taxes						$	3,713

Schedule of Segment Reporting Information, by Segment

Depreciation and amortization expense by segment and corporate is presented in the following table.

	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Water	$	2,060	$	2,723	$	3,043
Oil & Gas	1,377		448		244
Corporate	432		495		393
Total depreciation and amortization	$	3,869	$	3,666	$	3,680

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Geographical Information and Concentrations (Tables) - Customer Concentration Risk

12 Months Ended

Dec. 31, 2018

Accounts Receivable

Concentration Risk [Line Items]

Schedules of Concentration of Risk, by Risk Factor

Customers accounting for 10% or more of the Company’s combined accounts receivable and contract assets by segment are presented in the following table.

	Segment	December 31, 2018		December 31, 2017
Customer A	Water	**		16	%
Customer B	Water	**		10
Customer C	Water	**		11
Customer D	Water	**		**
Customer E	Water	20	%	**
Customer F	Water	11	%	**
Customer G	Oil & Gas	26		26

^**    Less than 10%

Product Revenue

Concentration Risk [Line Items]

Schedules of Concentration of Risk, by Risk Factor

Product Revenue

The following geographic information includes product revenue to the Company’s U.S. and international customers based on the customers’ requested delivery locations, except for certain cases in which the customer directed the Company to deliver its products to a location that differs from the known ultimate location of use. In such cases, the ultimate location of use, rather than the delivery location, is reflected in the table below.

	Years Ended December 31,
	2018			2017			2016
	(In thousands, except for percentages)
Product revenue by geographic location:
United States	$	1,645		$	1,706		$	1,203
International	59,380			56,317			48,512
Total product revenue	$	61,025		$	58,023		$	49,715
Product revenue by country:
Egypt	17		%	15		%	8		%
Saudi Arabia	31			13			14
China	8			9			13
Others(1)	44		%	63		%	65		%
Total	100		%	100		%	100		%

⁽¹⁾  Includes remaining countries not separately disclosed. No country in this line item individually accounted for more than 10% of the Company’s product revenue during any of the years presented.

Accounts Payable

Concentration Risk [Line Items]

Schedules of Concentration of Risk, by Risk Factor

Vendors accounting for 10% or more of the Company’s combined accounts payable by segment are presented in the following table.

	Segment	December 31, 2018		December 31, 2017
Vendor A	Oil & Gas	**		11	%
Vendor B	Oil & Gas	10	%	**

^**    Less than 10%

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Supplementary Data — Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information

The following tables present certain unaudited consolidated quarterly financial information for each of the four fiscal quarters in the periods ended December 31, 2018 and December 31, 2017. Due to the Company’s full retrospective adoption of ASC 606, period numbers for years 2017 are recast. This quarterly information has been prepared on the same basis as the audited Consolidated Financial Statements and includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The results for these quarterly periods are not necessarily indicative of the operating results for a full year or any future period.

2018 QUARTERLY FINANCIAL DATA ⁽¹⁾ 

(unaudited)

	Three Months Ended
	March 31, 2018			June 30, 2018			September 30, 2018		December 31, 2018
	(In thousands, except per share amounts)
Product revenue	$	11,058		$	17,406		$	18,578	$	13,983
Product cost of revenue	3,314			5,976			5,022		3,561
Product gross profit	7,744			11,430			13,556		10,422
License and development revenue	2,749			3,358			3,661		3,723
Operating expenses:
General and administrative	5,837			4,927			5,266		5,446
Sales and marketing	1,912			1,858			1,873		1,903
Research and development	3,917			3,605			4,270		5,220
Amortization of intangible assets	158			158			158		156
Total operating expenses	$	11,824		$	10,548		$	11,567	$	12,725
Income (loss) from operations	$	(1,331	)	$	4,240		$	5,650	$	1,420
Provision for (benefit from) income taxes(2)	$	(357	)	$	(11,122	)	$	1,339	$	(516	)
Net income (loss)	$	(726	)	$	15,743		$	4,658	$	2,421
Income (loss) per share:
Basic	$	(0.01	)	$	0.29		$	0.09	$	0.04
Diluted	$	(0.01	)	$	0.28		$	0.08	$	0.04

⁽¹⁾  Quarterly results may not add up to annual results due to rounding.

⁽²⁾  During second quarter of 2018, the Company recognized an income tax benefit of $11.1 million, which included a $12.1 million discrete tax benefit. This discrete tax benefit includes an $11.9 million tax benefit related to the income tax effects of a tax election related to a change to the Company’s international tax structure in Ireland that was effective Q2 2018. 

2017 QUARTERLY FINANCIAL DATA ⁽¹⁾ 

(unaudited)

	Three Months Ended
	March 31, 2017(2)		June 30, 2017(2)		September 30, 2017(2)		December 31, 2017(2)
	(In thousands, except per share amounts)
Product revenue	$	12,245	$	10,864	$	13,860	$	21,054
Product cost of revenue	4,612		3,572		4,217		6,660
Product gross profit	7,633		7,292		9,643		14,394
License and development revenue	2,248		3,050		3,197		2,611
Operating expenses:
General and administrative	4,408		3,927		4,034		4,985
Sales and marketing	2,453		2,174		2,061		2,703
Research and development	2,509		3,077		3,038		4,819
Amortization of intangible assets	158		158		157		158
Total operating expenses	$	9,528	$	9,336	$	9,290	$	12,665
Income (loss) from operations	$	353	$	1,006	$	3,550	$	4,340
Provision for (benefit from) income taxes(2)	48		188		310		(8,971		)
Net income	$	422	$	929	$	3,472	$	13,531
Income per share:
Basic	$	0.03	$	0.02	$	0.06	$	0.25
Diluted	$	0.02	$	0.02	$	0.06	$	0.24

⁽¹⁾  Quarterly results may not add up to annual results due to rounding.

⁽²⁾  Due to the full retrospective adoption of ASC 606, period numbers for the year 2017 are recast.

XML

Description of Business and Significant Accounting Policies (Details) $ in Millions		12 Months Ended
	Oct. 14, 2015 USD ($) payment	Dec. 31, 2018 USD ($)	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Weighted average useful life
VorTeq License Agreement
Property, Plant and Equipment [Line Items]
Up front non-refundable payment	$ 75.0
Number of milestone payments | payment	2
VorTeq License Agreement | Milestone Payment One Upon Successful Yard Test
Property, Plant and Equipment [Line Items]
VorTeq milestone payment to be received	$ 25.0
VorTeq License Agreement | Milestone Payment Two Upon Successful Fracing of ALive Well
Property, Plant and Equipment [Line Items]
VorTeq milestone payment to be received		$ 25.0
Minimum
Property, Plant and Equipment [Line Items]
Product warranty term		18 months
Customer payment period after product delivery		24 months
Weighted average useful life		1 year
Property, plant and equipment, useful life		3 years
Minimum | Customer Relationships and Other Non-contractual Intangible Assets
Property, Plant and Equipment [Line Items]
Weighted average useful life		5 years
Maximum
Property, Plant and Equipment [Line Items]
Product warranty term		5 years
Customer payment period after product delivery		36 months
Weighted average useful life		20 years
Property, plant and equipment, useful life		10 years
Maximum | Customer Relationships and Other Non-contractual Intangible Assets
Property, Plant and Equipment [Line Items]
Weighted average useful life		20 years
Equipment Used in Manufacture of Ceramic Components
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life		10 years
Software | Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life		3 years
Software | Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life		5 years

XML

Recent Accounting Pronouncements - Additional Details (Details) $ in Thousands		3 Months Ended								12 Months Ended
	Oct. 14, 2015 USD ($) payment	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue										$ 61,025	$ 58,023	$ 49,715
License and development contract liability						$ 54,493					54,493	65,599
VorTeq License Agreement
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Up front non-refundable payment	$ 75,000
License term	15 years
Number of milestone payments | payment	2
Milestone Payment One Upon Successful Yard Test | VorTeq License Agreement
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
VorTeq milestone payment to be received	$ 25,000
License and development revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue		$ 3,723	$ 3,661	$ 3,358	$ 2,749	2,611	$ 3,197	$ 3,050	$ 2,248	13,490	11,106	8,069
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
License and development contract liability						63,958					63,958	68,958
As Previously Reported | License and development revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue											5,000	5,000
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue										$ 6,000	3,000
License and development contract liability						$ 9,465					9,465	3,359
Restatement Adjustment | License and development revenue | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue											$ 6,106	$ 3,069

XML

Recent Accounting Pronouncements - Balance Sheet (Details) - USD ($) $ in Thousands		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current contract assets		$ 4,083	$ 6,278
Total current assets		119,648	126,063
Deferred tax assets, non-current		18,318	7,933
Operating lease, right of use asset		12,189	2,843
Total assets		179,841	164,485
Accrued expenses and other current liabilities		8,019	7,948
Lease liability		926	1,603
Contract liabilities		16,270	15,909
Total current liabilities		27,132	30,360
Lease liabilities, non-current		12,556	1,698
Contract liabilities, non-current		26,539	40,517
Other non-current liabilities		236	0
Total liabilities		66,463	72,591
Accumulated deficit		(14,466)	(36,559)
Total stockholders’ equity	[1]	113,378	91,894	$ 68,492		$ 64,333
Total liabilities and stockholders’ equity		$ 179,841	164,485
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current contract assets			6,411
Total current assets			126,196
Deferred tax assets, non-current			7,902
Operating lease, right of use asset			0
Total assets			161,744
Accrued expenses and other current liabilities			8,517
Lease liability			0
Contract liabilities			6,416
Total current liabilities			19,833
Lease liabilities, non-current			0
Contract liabilities, non-current			59,006
Other non-current liabilities			358
Total liabilities			79,213
Accumulated deficit			(45,922)
Total stockholders’ equity			82,531
Total liabilities and stockholders’ equity			161,744
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current contract assets			(133)
Total current assets			(133)
Deferred tax assets, non-current			31
Operating lease, right of use asset			0
Total assets			(102)
Accrued expenses and other current liabilities			(469)
Lease liability			0
Contract liabilities			9,493
Total current liabilities			9,024
Lease liabilities, non-current			0
Contract liabilities, non-current			(18,489)
Other non-current liabilities			0
Total liabilities			(9,465)
Accumulated deficit			9,363		$ (300)
Total stockholders’ equity			9,363
Total liabilities and stockholders’ equity			(102)
Restatement Adjustment | Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Current contract assets			0
Total current assets			0
Deferred tax assets, non-current			0
Operating lease, right of use asset			2,843
Total assets			2,843
Accrued expenses and other current liabilities			(100)
Lease liability			1,603
Contract liabilities			0
Total current liabilities			1,503
Lease liabilities, non-current			1,698
Contract liabilities, non-current			0
Other non-current liabilities			(358)
Total liabilities			2,843
Accumulated deficit			0
Total stockholders’ equity			0
Total liabilities and stockholders’ equity			$ 2,843

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

XML

Recent Accounting Pronouncements - Income Statement (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									$ 61,025		$ 58,023		$ 49,715
Operating Expenses	$ 12,725	$ 11,567	$ 10,548	$ 11,824	$ 12,665	$ 9,290	$ 9,336	$ 9,528	46,664		40,819		36,509
Income (loss) from operations	1,420	5,650	4,240	(1,331)	4,340	3,550	1,006	353	9,978		9,249		3,426
(Loss) income before income taxes									11,440		9,929		3,713
Benefit from income taxes	(516)	1,339	(11,122)	(357)	(8,971)	310	188	48	(10,653)		(8,425)		(6)
Net income	$ 2,421	$ 4,658	$ 15,743	$ (726)	$ 13,531	$ 3,472	$ 929	$ 422	$ 22,093	[1]	$ 18,354	[1]	$ 3,719	[1]
Basic (in dollars per share)	$ 0.04	$ 0.09	$ 0.29	$ (0.01)	$ 0.25	$ 0.06	$ 0.02	$ 0.03	$ 0.41		$ 0.34		$ 0.07
Diluted (in dollars per share)	$ 0.04	$ 0.08	$ 0.28	$ (0.01)	$ 0.24	$ 0.06	$ 0.02	$ 0.02	$ 0.40		$ 0.33		$ 0.07
Basic (in shares)									53,764		53,701		52,341
Diluted (in shares)									55,338		55,612		55,451
Operating Segments
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Expenses									$ 28,512		$ 24,893		$ 20,809
Income (loss) from operations									28,130		25,175		19,126
Operating Segments | Water
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Expenses									10,201		8,883		8,119
Income (loss) from operations									33,100		29,386		23,073
Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Expenses									18,311		16,010		12,690
Income (loss) from operations									(4,970)		(4,211)		(3,947)
Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue	$ 13,983	$ 18,578	$ 17,406	$ 11,058	$ 21,054	$ 13,860	$ 10,864	$ 12,245	61,025		58,023		49,715
Product cost of revenue	3,561	5,022	5,976	3,314	6,660	4,217	3,572	4,612	17,873		19,061		17,849
Product gross profit	10,422	13,556	11,430	7,744	14,394	9,643	7,292	7,633	43,152		38,962		31,866
Product | Operating Segments
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									61,025		58,023		49,715
Product cost of revenue									17,873		19,061		17,849
Product gross profit									43,152		38,962		31,866
Product | Operating Segments | Water
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									60,512		54,301		47,545
Product cost of revenue									17,211		16,032		16,353
Product gross profit									43,301		38,269		31,192
Product | Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									513		3,722		2,170
Product cost of revenue									662		3,029		1,496
Product gross profit									(149)		693		674
License and development revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue	$ 3,723	$ 3,661	$ 3,358	$ 2,749	$ 2,611	$ 3,197	$ 3,050	$ 2,248	13,490		11,106		8,069
License and development revenue | Operating Segments
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									13,490		11,106		8,069
License and development revenue | Operating Segments | Water
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									0		0		0
License and development revenue | Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									13,490		11,106		8,069
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue									$ 6,000		3,000
Income (loss) from operations											5,973		3,069
(Loss) income before income taxes											5,973		3,069
Benefit from income taxes											(31)		384
Net income											$ 6,004		$ 2,685
Basic (in dollars per share)											$ 0.11		$ 0.05
Diluted (in dollars per share)											$ 0.11		$ 0.05
Basic (in shares)											0		0
Diluted (in shares)											0		0
Restatement Adjustment | Operating Segments | Water | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income (loss) from operations											$ 0		$ 0
Restatement Adjustment | Operating Segments | Oil & Gas | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income (loss) from operations											5,973		3,069
Restatement Adjustment | Product | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											(133)		0
Product cost of revenue											0		0
Product gross profit											(133)		0
Restatement Adjustment | Product | Operating Segments | Water | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											0		0
Product cost of revenue											0		0
Product gross profit											0		0
Restatement Adjustment | Product | Operating Segments | Oil & Gas | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											(133)		0
Product cost of revenue													0
Product gross profit											(133)		0
Restatement Adjustment | License and development revenue | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											6,106		3,069
Restatement Adjustment | License and development revenue | Operating Segments | Oil & Gas | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											6,106		3,069
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income (loss) from operations											3,276		357
(Loss) income before income taxes											3,956		644
Benefit from income taxes											(8,394)		(390)
Net income											$ 12,350		$ 1,034
Basic (in dollars per share)											$ 0.23		$ 0.02
Diluted (in dollars per share)											$ 0.22		$ 0.02
Basic (in shares)											53,701		52,341
Diluted (in shares)											55,612		55,451
As Previously Reported | Operating Segments | Water
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income (loss) from operations											$ 29,386		$ 23,073
As Previously Reported | Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income (loss) from operations											(10,184)		(7,016)
As Previously Reported | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											58,156		49,715
Product cost of revenue											19,061		17,849
Product gross profit											39,095		31,866
As Previously Reported | Product | Operating Segments | Water
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											54,301		47,545
Product cost of revenue											16,032		16,353
Product gross profit											38,269		31,192
As Previously Reported | Product | Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											3,855		2,170
Product cost of revenue											3,029		1,496
Product gross profit											826		674
As Previously Reported | License and development revenue
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											5,000		5,000
As Previously Reported | License and development revenue | Operating Segments | Oil & Gas
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Product revenue											$ 5,000		$ 5,000

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Recent Accounting Pronouncements - Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income	$ 2,421	$ 4,658	$ 15,743	$ (726)	$ 13,531	$ 3,472	$ 929	$ 422	$ 22,093	[1]	$ 18,354	[1]	$ 3,719	[1]
Comprehensive (loss) income									22,085		18,347		3,665
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent									$ (8)		(7)		(54)
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income											6,004		2,685
Comprehensive (loss) income											6,004		2,685
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income											12,350		1,034
Comprehensive (loss) income											$ 12,343		$ 980

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Recent Accounting Pronouncements - Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income	$ 2,421	$ 4,658	$ 15,743	$ (726)	$ 13,531	$ 3,472	$ 929	$ 422	$ 22,093	[1]	$ 18,354	[1]	$ 3,719	[1]
Accounts receivable									1,917		(761)		(244)
Contract assets											(4,263)		(130)
Inventories									(1,872)		(1,250)		2,287
Prepaid and other assets									(682)		(39)		(402)
Accounts payable									(2,274)		2,118		(360)
Accrued expenses and other liabilities									87		611		(262)
Income taxes payable									(447)		385		398
Contract liabilities											(11,858)		(6,268)
Net cash used in operating activities									7,565		2,895		4,965
Restricted cash											0		0
Net cash used in investing activities									(10,159)		(38,911)		(40,129)
Net change in cash, cash equivalents and restricted cash									(8,488)		(35,122)		(37,990)
Cash and cash equivalents and restricted cash, beginning of year				30,626				65,748	30,626		65,748		103,738
Cash and cash equivalents and restricted cash, end of year	$ 22,138				30,626				22,138		30,626		65,748
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income											6,004		2,685
Accounts receivable											0		0
Contract assets											133		0
Inventories											0		0
Prepaid and other assets											0		0
Accounts payable													0
Accrued expenses and other liabilities											247		(1,521)
Income taxes payable											(31)		384
Contract liabilities											(6,353)		(1,548)
Net cash used in operating activities											0		0
Restricted cash											0		0
Net cash used in investing activities											0		0
Net change in cash, cash equivalents and restricted cash											0		0
Cash and cash equivalents and restricted cash, beginning of year				0				0	0		0		0
Cash and cash equivalents and restricted cash, end of year					0						0		0
Restatement Adjustment | Accounting Standards Update 2016-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income											0		0
Accounts receivable											0		0
Contract assets											0		0
Inventories											0		0
Prepaid and other assets											0		0
Accounts payable													0
Accrued expenses and other liabilities											0		0
Income taxes payable											0		0
Contract liabilities											0		0
Net cash used in operating activities											0		0
Restricted cash											(1,538)		577
Net cash used in investing activities											(1,538)		577
Net change in cash, cash equivalents and restricted cash											(1,538)		577
Cash and cash equivalents and restricted cash, beginning of year				2,846				4,384	2,846		4,384		3,807
Cash and cash equivalents and restricted cash, end of year					2,846						2,846		4,384
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net income											12,350		1,034
Accounts receivable											(761)		(244)
Contract assets											(4,396)		(130)
Inventories											(1,250)		2,287
Prepaid and other assets											(39)		(402)
Accounts payable											2,118		(360)
Accrued expenses and other liabilities											364		1,259
Income taxes payable											416		14
Contract liabilities											(5,505)		(4,720)
Net cash used in operating activities											2,895		4,965
Restricted cash											1,538		(577)
Net cash used in investing activities											(37,373)		(40,706)
Net change in cash, cash equivalents and restricted cash											(33,584)		(38,567)
Cash and cash equivalents and restricted cash, beginning of year				$ 27,780				$ 61,364	$ 27,780		61,364		99,931
Cash and cash equivalents and restricted cash, end of year					$ 27,780						$ 27,780		$ 61,364

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Revenue - Narrative (Details) $ in Thousands		3 Months Ended								12 Months Ended
	Oct. 14, 2015 USD ($) payment	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jan. 01, 2016 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained earnings (accumulated deficit)		$ (14,466)				$ (36,559)				$ (14,466)	$ (36,559)
Revenue										$ 61,025	58,023	$ 49,715
Retention payments, percentage (or less)										10.00%
Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Customer payment period after product delivery										24 months
Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Customer payment period after product delivery										36 months
VorTeq License Agreement
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Up front non-refundable payment	$ 75,000
Number of milestone payments | payment	2
License term	15 years
VorTeq License Agreement | Milestone Payment One Upon Successful Yard Test
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
VorTeq milestone payment to be received	$ 25,000
License and development revenue
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue		$ 3,723	$ 3,661	$ 3,358	$ 2,749	2,611	$ 3,197	$ 3,050	$ 2,248	$ 13,490	11,106	8,069
Restatement Adjustment | Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained earnings (accumulated deficit)						$ 9,363					9,363		$ (300)
Revenue										$ 6,000	3,000
Restatement Adjustment | License and development revenue | Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue											$ 6,106	$ 3,069

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue [Line Items]
Revenues	$ 74,515	$ 69,129	$ 57,784
PX, pumps and turbo devices
Disaggregation of Revenue [Line Items]
Revenues	60,517	54,316	47,555
License and development
Disaggregation of Revenue [Line Items]
Revenues	13,490	11,106	8,069
Oil & gas products
Disaggregation of Revenue [Line Items]
Revenues	508	3,707	2,160
Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenues	36,107	29,898	21,606
Americas
Disaggregation of Revenue [Line Items]
Revenues	19,878	18,143	13,488
Asia
Disaggregation of Revenue [Line Items]
Revenues	11,955	12,974	17,397
Europe
Disaggregation of Revenue [Line Items]
Revenues	6,575	8,114	5,293
Water
Disaggregation of Revenue [Line Items]
Revenues	60,511	54,301	47,545
Water | PX, pumps and turbo devices
Disaggregation of Revenue [Line Items]
Revenues	60,511	54,301	47,545
Water | License and development
Disaggregation of Revenue [Line Items]
Revenues	0	0	0
Water | Oil & gas products
Disaggregation of Revenue [Line Items]
Revenues	0	0	0
Water | Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenues	35,593	26,190	19,436
Water | Americas
Disaggregation of Revenue [Line Items]
Revenues	6,388	7,023	5,419
Water | Asia
Disaggregation of Revenue [Line Items]
Revenues	11,955	12,974	17,397
Water | Europe
Disaggregation of Revenue [Line Items]
Revenues	6,575	8,114	5,293
Oil & gas products
Disaggregation of Revenue [Line Items]
Revenues	14,004	14,828	10,239
Oil & gas products | PX, pumps and turbo devices
Disaggregation of Revenue [Line Items]
Revenues	6	15	10
Oil & gas products | License and development
Disaggregation of Revenue [Line Items]
Revenues	13,490	11,106	8,069
Oil & gas products | Oil & gas products
Disaggregation of Revenue [Line Items]
Revenues	508	3,707	2,160
Oil & gas products | Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenues	514	3,708	2,170
Oil & gas products | Americas
Disaggregation of Revenue [Line Items]
Revenues	13,490	11,120	8,069
Oil & gas products | Asia
Disaggregation of Revenue [Line Items]
Revenues	0	0	0
Oil & gas products | Europe
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 0	$ 0

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Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue from Contract with Customer [Abstract]
Trade Receivable	$ 10,212	$ 12,465
Contract assets:
Current contract assets	4,083	6,278
Total contract assets	4,083	6,278	$ 2,015
Current contract liabilities:
Customer deposits	706	414
Deferred revenue:
Cost and estimated earnings in excess of billings	264	805
License and development	14,518	14,024
Product	548	550
Service	234	116
Contract with Customer, Liability, Current	16,270	15,909
Non-current contract liabilities, deferred revenue
License and development	26,485	40,469
Product	54	48
Total non-current contract liability	26,539	40,517
Contract with Customer, Liability	$ 42,809	$ 56,426	$ 62,232

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Revenue - Significant Changes in Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Change In Contract With Customer, Asset [Roll Forward]
Balance, beginning of year	$ 6,278	$ 2,015
Transferred to receivables	(8,865)	(2,909)
Additional unbilled receivables	6,670	7,172
Balance, end of period	4,083	6,278
Change In Contract With Customer, Liability [Roll Forward]
Balance, beginning of year	56,426	62,232
Revenue recognized	(13,493)	(5,892)
Cash received	(124)	86
Balance, end of period	$ 42,809	$ 56,426

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Revenue - Remaining Performance Obligation (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 41,029
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 14,544
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 14,480
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 6,328
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 5,677
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	4 years

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Revenue - Cost and Estimated Earnings on Uncompleted Contract (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Estimated earnings to date	$ 6,477	$ 6,000
Estimated costs to date	(5,289)	(4,525)
Subtotal	1,188	1,475
Net billings to date	(108)	2,718
Unbilled project costs	1,343	4,998
Cost and estimated earnings in excess of billings	(263)	(805)
Total	$ 1,080	4,193
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Estimated earnings to date		5,867
Estimated costs to date		(4,525)
Subtotal		1,342
Net billings to date		2,718
Unbilled project costs		4,865
Cost and estimated earnings in excess of billings		(805)
Total		4,060
Restatement Adjustment | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Estimated earnings to date		(133)
Estimated costs to date		0
Subtotal		(133)
Net billings to date		0
Unbilled project costs		(133)
Cost and estimated earnings in excess of billings		0
Total		$ (133)

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Income Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
Numerator:
Income (loss) from operations	$ 2,421	$ 4,658	$ 15,743	$ (726)	$ 13,531	$ 3,472	$ 929	$ 422	$ 22,093	[1]	$ 18,354	[1]	$ 3,719	[1]
Denominator:
Basic weighted average common shares outstanding (in shares)									53,764		53,701		52,341
Weighted average effect of dilutive stock awards (in shares)									1,574		1,911		3,110
Diluted weighted average common shares outstanding (in shares)									55,338		55,612		55,451
Net income (loss) per share - basic (in dollars per share)	$ 0.04	$ 0.09	$ 0.29	$ (0.01)	$ 0.25	$ 0.06	$ 0.02	$ 0.03	$ 0.41		$ 0.34		$ 0.07
Net income (loss) per share - diluted (in dollars per share)	$ 0.04	$ 0.08	$ 0.28	$ (0.01)	$ 0.24	$ 0.06	$ 0.02	$ 0.02	$ 0.40		$ 0.33		$ 0.07

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Income Per Share - Antidilutive Securities Excluded From Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares excluded from net income (loss) per share calculation (in shares)	2,176		2,987
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares excluded from net income (loss) per share calculation (in shares)		1,810

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Investments and Fair Value Measurements - Additional Information (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investments, Fair Value Disclosure [Abstract]
Transfer between Level 1 and Level 2	$ 0	$ 0
Transfers between Level 2 and Level 1	$ 0	$ 0

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Investments and Fair Value Measurements - Available-for-sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 74,695
Gross Unrealized Holding Gains	2
Gross Unrealized Holding Losses	(90)
Fair Value	74,607
Cash equivalents	6,661	$ 258
Short-term investments
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	73,426	70,369
Gross Unrealized Holding Gains	2	0
Gross Unrealized Holding Losses	(90)	(91)
Fair Value	73,338	70,278
Short-term investments | U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	8,102	16,755
Gross Unrealized Holding Gains	1	0
Gross Unrealized Holding Losses	(2)	(14)
Fair Value	8,101	16,741
Short-term investments | Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	65,324	53,367
Gross Unrealized Holding Gains	1	0
Gross Unrealized Holding Losses	(88)	(77)
Fair Value	65,237	53,290
Short-term investments | Municipal notes and bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		247
Gross Unrealized Holding Gains		0
Gross Unrealized Holding Losses		0
Fair Value		247
Long-term investments | U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,269
Gross Unrealized Holding Gains	0
Gross Unrealized Holding Losses	0
Fair Value	1,269
Long-term investments | Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,269
Gross Unrealized Holding Gains	0
Gross Unrealized Holding Losses	0
Fair Value	$ 1,269
Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Cash equivalents		$ 258

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Investments and Fair Value Measurements - Amortized Cost and Fair Value of Available-for-sale Securities (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Investments, Fair Value Disclosure [Abstract]
Due in one year or less, amortized cost	$ 73,426
Due in one year or less, fair value	73,338
Due in greater than one year, amortized cost	1,269
Due in greater than one year, fair value	1,269
Amortized Cost	74,695
Fair Value	$ 74,607

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Investments and Fair Value Measurements - Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Assets:
Cash equivalents	$ 6,661	$ 258
Short-term investments	73,338	70,020
Long-term investments	1,269	0
Total assets	81,268	70,278
Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Cash equivalents	6,661	0
Short-term investments	0	0
Total assets	6,661	0
Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Cash equivalents	0	258
Short-term investments	73,338	70,020
Total assets	74,607	70,278
Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Cash equivalents	0	0
Short-term investments	0	0
Total assets	0	0
U.S. Treasury securities
Assets:
Short-term investments	8,101	16,741
U.S. Treasury securities | Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Short-term investments	0	0
U.S. Treasury securities | Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Short-term investments	8,101	16,741
U.S. Treasury securities | Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Short-term investments	0	0
Corporate notes and bonds
Assets:
Short-term investments	65,237	53,032
Long-term investments	1,269
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Short-term investments	0	0
Long-term investments	0
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Short-term investments	65,237	53,032
Long-term investments	1,269
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Short-term investments	0	0
Long-term investments	0
Municipal notes and bonds
Assets:
Short-term investments		247
Municipal notes and bonds | Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Short-term investments		0
Municipal notes and bonds | Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Short-term investments		247
Municipal notes and bonds | Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Short-term investments		0
Money market securities
Assets:
Cash equivalents	6,661	0
Money market securities | Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Cash equivalents	6,661	0
Money market securities | Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Cash equivalents	0	0
Money market securities | Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Cash equivalents	$ 0	0
Corporate notes and bonds
Assets:
Cash equivalents		258
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 1 Inputs
Assets:
Cash equivalents		0
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 2 Inputs
Assets:
Cash equivalents		258
Corporate notes and bonds | Fair Value, Measurements, Recurring | Level 3 Inputs
Assets:
Cash equivalents		$ 0

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Investments and Fair Value Measurements - Gross Unrealized Losses and Fair Values of Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]
Fair Value	$ 69,910	$ 63,631
Gross Unrealized Losses	(90)	(91)
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Fair Value	8,101	10,162
Gross Unrealized Losses	(2)	(14)
Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Fair Value	61,809	53,222
Gross Unrealized Losses	(88)	(77)
Municipal notes and bonds
Debt Securities, Available-for-sale [Line Items]
Fair Value	0	247
Gross Unrealized Losses	$ 0	$ 0

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Other Financial Information - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2016	Dec. 31, 2017
Other Financial Information [Abstract]
Inventory valuation reserves	$ 700,000		$ 700,000
Reclassification from AOCI, current period	$ 0	$ 0

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Other Financial Information - Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	$ 21,955	$ 27,780
Restricted cash	183	2,846
Total cash, cash equivalents, and restricted cash	$ 22,138	$ 30,626	$ 65,748	$ 103,738

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Other Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Valuation Allowance [Line Items]
Deductions		$ (5)	$ 0
Allowance for Doubtful Accounts
Valuation Allowance [Line Items]
Balance at Beginning of Period	$ 103	130	166
Additions	336	55	76
Changes in Estimates	(43)	(77)	(112)
Balance at End of Years	$ 396	$ 103	$ 130

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Other Financial Information - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Other Financial Information [Abstract]
Raw materials	$ 2,238	$ 1,899
Work in process	2,689	2,191
Finished goods	2,211	1,424
Inventories, net	$ 7,138	$ 5,514

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Other Financial Information - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Other Financial Information [Abstract]
Interest receivable	$ 478	$ 439
Supplier advances	591	124
Insurance	238	256
Software license	161	193
Prepaid and refundable VAT and import duty	289	0
Income tax refund	465	0
Other prepaid expenses and current assets	588	330
Total prepaid and other current assets	$ 2,810	$ 1,342

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Other Financial Information - Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 41,260	$ 37,535
Less: accumulated depreciation and amortization	(26,641)	(24,142)
Property and equipment, net	14,619	13,393
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	23,675	20,813
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	10,458	10,458
Software
Property, Plant and Equipment [Line Items]
Total property and equipment	3,013	2,985
Office equipment, furniture, and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	2,970	2,699
Automobiles
Property, Plant and Equipment [Line Items]
Total property and equipment	199	114
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 945	$ 466

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Other Financial Information - Depreciation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Other Financial Information [Abstract]
Depreciation	$ 3,228	$ 3,035	$ 3,049

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Other Financial Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Other Financial Information [Abstract]
Payroll and commissions payable	$ 5,843	$ 6,071
Other accrued expenses and current liabilities	2,176	1,877
Total accrued expenses and other current liabilities	$ 8,019	$ 7,948

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Goodwill and Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 12,790,000				$ 12,790,000				$ 12,790,000	$ 12,790,000
Amortization of intangible assets	156,000	$ 158,000	$ 158,000	$ 158,000	158,000	$ 157,000	$ 158,000	$ 158,000	630,000	631,000	$ 631,000
Accumulated impairment loss	$ 0				$ 0				$ 0	$ 0

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Goodwill and Intangible Assets - Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 6,685	$ 6,685
Accumulated Amortization	(6,003)	(5,374)
Accumulated Impairment Losses	(42)	(42)
Net Carrying Amount	$ 640	$ 1,269
Weighted Average Useful Life
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 6,100	$ 6,100
Accumulated Amortization	(5,541)	(4,931)
Accumulated Impairment Losses	0	0
Net Carrying Amount	$ 559	$ 1,169
Weighted Average Useful Life	10 years	10 years
Patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 585	$ 585
Accumulated Amortization	(462)	(443)
Accumulated Impairment Losses	(42)	(42)
Net Carrying Amount	$ 81	$ 100
Weighted Average Useful Life	18 years	18 years

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Goodwill and Intangible Assets - Future Estimated Amortization Expense on Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
2019	$ 576
2020	16
2021	12
2022	11
2023	11
Thereafter	14
Net Carrying Amount	$ 640	$ 1,269

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Long-term Debt and Lines of Credit - Installment Loan (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2015
Debt Instrument [Line Items]
Less: current portion	$ 0	$ (11)
Total long-term debt	0	16
Loans Payable | March 2015 Installment Loan
Debt Instrument [Line Items]
Loan, face amount			$ 55
Interest rate, stated percentage			6.35%
Loan payable	0	27
Less: current portion	0	(11)
Total long-term debt	$ 0	$ 16

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Long-term Debt and Lines of Credit - Loan Agreements and Stand-by Letters of Credit (Details) - USD ($)		1 Months Ended
	Jan. 27, 2017	Jun. 30, 2015	Aug. 24, 2018	Jan. 24, 2017
The 2012 Agreement | Financial Institution 1
Line of Credit Facility [Line Items]
Cash collateral balance required by credit agreement		101.00%		105.00%
The 2012 Agreement | Revolving Credit Facility | Financial Institution 1
Line of Credit Facility [Line Items]
Unused capacity, commitment fee percentage		0.25%
Loan and Pledge Agreement | Financial Institution 2
Line of Credit Facility [Line Items]
Standby letters of credit, fee percentage	0.70%
Loan and Pledge Agreement | Uncommitted Revolving Credit Line | Financial Institution 2
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 4,000,000.0
Loan and Pledge Agreement | Committed Revolving Credit Line | Financial Institution 2
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 16,000,000.0
Foreign Subsidiary | Loan and Pledge Agreement | Financial Institution 2
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 66,000,000.0

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Long-term Debt and Lines of Credit - Stand-by Letters of Credit Outstanding by Financial Institution (Details) - Standby Letters of Credit - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount	$ 8,772	$ 10,422
Financial Institution 1
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount	92	1,687
Financial Institution 2
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount	8,680	7,745
Financial Institution 3
Line of Credit Facility [Line Items]
Letters of credit outstanding, amount	$ 0	$ 990

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Long-term Debt and Lines of Credit - Restricted Cash Requirements (Details) - Collateral for stand-by letters of credit - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 183	$ 2,846
Financial Institution 1
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	97	1,771
Financial Institution 2
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	0	0
Financial Institution 3
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	0	990
Financial Institution 4
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 86	$ 85

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Commitments and Contingencies - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Loss Contingencies [Line Items]
Long-term purchase commitment	$ 8,000,000
Warranty and product performance guarantees as percentage of total sales agreement	10.00%
Indemnification Agreement
Loss Contingencies [Line Items]
Guarantor obligations, current carrying value	$ 0	$ 0
Minimum
Loss Contingencies [Line Items]
Warranty and product performance guarantees, period	36 months

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Commitments and Contingencies - Operating Lease Obligations (Details) ft² in Thousands, $ in Thousands	1 Months Ended	12 Months Ended
	Apr. 30, 2018 USD ($) ft² term	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Oct. 30, 2017
Loss Contingencies [Line Items]
Operating lease cost		$ 1,888	$ 1,699	$ 1,422
Cash payments		$ 964	$ 1,395	$ 1,337
Weighted average remaining lease term		9 years 10 months
Weighted average discount rate		6.95%
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019		$ 1,855
2020		1,653
2021		1,811
2022		1,714
2023		1,922
Thereafter		8,122
Imputed interest		(3,595)
Total		$ 13,482
New Doolittle Lease
Loss Contingencies [Line Items]
Area of real estate property | ft²	170
Operating lease, number of renewal terms | term	1
Operating lease, renewal term	5 years
Operating lease, rent expense (per month)	$ 135
Operating lease, rent expense, annual increase, percent	3.00%
Operating lease, rent abatement period	9 months
Right-of-use asset obtained in exchange for operating lease liability	$ 10,400
Houston, TX | Office Space Lease
Loss Contingencies [Line Items]
Sublease agreement term					3 years

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Commitments and Contingencies - Industrial Lease Agreement (Details) - Katy, TX - Commercial Development Center For Oil And Gas Field Testing And Training - Subsequent Event $ in Thousands	Jan. 10, 2019 USD ($) ft² a term
Lessee, Lease, Description [Line Items]
Operating lease, rent expense (per month)	$ 26
Operating lease, rent expense, annual increase, percent	3.00%
Operating lease, operating expenses	$ 12
Lease initial term	120 months
Operating lease, number of renewal terms | term	2
Operating lease, renewal term	5 years
Operating lease, renewal to extend lease, written notice period	6 months
Office And Warehouse
Lessee, Lease, Description [Line Items]
Area of real estate property | ft²	25,200
Yard Space
Lessee, Lease, Description [Line Items]
Area of real estate property | a	4.5

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Commitments and Contingencies - Product Warranty Liability (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Balance, beginning of year	$ 366	$ 406	$ 461
Warranty costs charged to cost of revenue	340	246	208
Utilization charges against reserve	(48)	(86)	(27)
Release of accrual related to expired warranties	(180)	(200)	(236)
Balance, end of year	$ 478	$ 366	$ 406

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Examination [Line Items]
Provision for (benefit from) income taxes	$ (516,000)	$ 1,339,000	$ (11,122,000)	$ (357,000)	$ (8,971,000)	$ 310,000	$ 188,000	$ 48,000	$ (10,653,000)	$ (8,425,000)	$ (6,000)
Deferred tax benefit									10,379,000	8,896,000	68,000
Deferred tax assets	23,285,000				13,642,000				23,285,000	13,642,000
Valuation allowance	2,850,000				3,411,000				2,850,000	3,411,000
Current tax provision (benefit)									(274,000)	471,000	62,000
Tax Cuts And Jobs Act Of 2017, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense					7,000,000
Tax Cuts And Jobs Act Of 2017, incomplete accounting, provisional income tax expense, cash portion					300,000
Tax Cuts And Jobs Act Of 2017, incomplete accounting, net operating loss carryovers, provisional income tax expense					6,700,000
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense			$ 12,100,000							2,500,000
Operating loss carryforwards	38,882,000				42,952,000				38,882,000	42,952,000
Unrecognized tax benefits	1,162,000				911,000				1,162,000	911,000	$ 603,000	$ 394,000
Unrecognized tax benefits that would affect effective tax rate	600,000								600,000
Income tax penalties and interest accrued	0				0				0	0
Domestic and Foreign Tax Authority
Income Tax Examination [Line Items]
Current tax provision (benefit)										400,000
Domestic Tax Authority
Income Tax Examination [Line Items]
Deferred tax benefit									12,300,000	10,100,000
Deferred tax assets					1,400,000					1,400,000
Revenue Commissioners, Ireland
Income Tax Examination [Line Items]
Valuation allowance	1,200,000				1,300,000				1,200,000	1,300,000
Operating loss carryforwards	9,363,000				$ 16,644,000				9,363,000	$ 16,644,000
California Franchise Tax Board
Income Tax Examination [Line Items]
Valuation allowance	$ 1,700,000								$ 1,700,000

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Income Taxes - Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
U.S.									$ 12,139	$ 11,549	$ 6,158
Foreign									(699)	(1,620)	(2,445)
Total income before income taxes									11,440	9,929	3,713
Federal									(297)	441	0
State									(2)	12	16
Foreign									25	18	46
Current tax provision (benefit)									(274)	471	62
Federal									(9,773)	(9,025)	248
State									(606)	(1,141)	3
Foreign									0	1,270	(319)
Total deferred tax benefit									(10,379)	(8,896)	(68)
Total benefit for income taxes	$ (516)	$ 1,339	$ (11,122)	$ (357)	$ (8,971)	$ 310	$ 188	$ 48	$ (10,653)	$ (8,425)	$ (6)

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Income Taxes - Reconciliation of Income Taxes (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
U.S. federal taxes at statutory rate	21.00%	34.00%	34.00%
State income tax, net of federal benefit	(6.00%)	1.00%	0.00%
Deemed repatriation transition tax	0.00%	71.00%	0.00%
Deferred tax re-measurement - Change in tax rates	1.00%	24.00%	0.00%
Foreign rate differential	(1.00%)	(10.00%)	45.00%
Change in tax status of foreign operations	(102.00%)	0.00%	0.00%
Stock-based compensation	(3.00%)	(6.00%)	(0.00%)
Non-deductible expenses	1.00%	1.00%	2.00%
Federal research credits	(6.00%)	(4.00%)	(11.00%)
Valuation allowance	3.00%	(197.00%)	(70.00%)
Other	(1.00%)	1.00%	0.00%
Effective tax rate	(93.00%)	(85.00%)	0.00%

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Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Net operating loss carry forwards	$ 5,636	$ 5,918
Accruals and reserves	12,157	2,847
Research and development credit carry forwards	4,609	3,957
Acquired intangibles	859	909
Charitable contributions	24	11
Total deferred tax assets	23,285	13,642
Valuation allowance	(2,850)	(3,411)
Net deferred tax assets	20,435	10,231
Deferred Tax Liabilities, Net [Abstract]
Depreciation on property and equipment	(937)	(650)
Unrecognized gain on translation of foreign currency	(9)	(5)
Goodwill	(1,171)	(1,643)
Total deferred tax liabilities	(2,117)	(2,298)
Net deferred tax assets	18,318	7,933
Non-current assets	18,318	7,933
Non-current liabilities	$ 0	$ 0

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Income Taxes - Changes in Gross Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Unrecognized tax benefits as of December 31,	$ 911	$ 603	$ 394
Increases related to prior year tax position	0	117	0
Increases related to current year tax position	251	191	209
Unrecognized tax benefits as of December 31,	$ 1,162	$ 911	$ 603

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Income Taxes - Net Operating Loss Carryforwards (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 38,882	$ 42,952
Internal Revenue Service (IRS)
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	16,838	14,227
California Franchise Tax Board
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	12,681	12,081
Revenue Commissioners, Ireland
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 9,363	$ 16,644

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Income Taxes - Tax Credit Carryforwards (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Tax Credit Carryforward [Line Items]
Deferred Tax Assets, Tax Credit Carryforwards, Research	$ 4,609	$ 3,957
Research And Development, Minimum Tax and Foreign Tax Credit Carryforward
Tax Credit Carryforward [Line Items]
Deferred Tax Assets, Tax Credit Carryforwards, Research	5,057	4,325
Internal Revenue Service (IRS) | Research And Development, Minimum Tax and Foreign Tax Credit Carryforward
Tax Credit Carryforward [Line Items]
Deferred Tax Assets, Tax Credit Carryforwards, Research	2,925	2,572
California Franchise Tax Board | Research And Development, Minimum Tax and Foreign Tax Credit Carryforward
Tax Credit Carryforward [Line Items]
Deferred Tax Assets, Tax Credit Carryforwards, Research	$ 2,132	$ 1,753

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Stockholders' Equity - Preferred and Common Stock (Details) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Stockholders' Equity Note [Abstract]
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares outstanding (in shares)	0	0
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares issued (in shares)	59,396,020	58,168,433
Common stock, shares outstanding (in shares)	53,940,085	53,905,600

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Stockholders' Equity - Stock Repurchase Program (Details) - USD ($)	9 Months Ended	12 Months Ended						82 Months Ended
	Sep. 30, 2018	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2018	Mar. 07, 2018	Mar. 31, 2017	May 31, 2016	Jan. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Treasury stock, shares, acquired (in shares)								5,500,000
Treasury stock, value, acquired, cost method		$ 10,000,000	[1]	$ 4,276,000	[1]	$ 9,375,000	[1]	$ 30,300,000
Tax payment for employee shares withheld		$ 150,000		$ 270,000		$ 0
January 2016 Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount												$ 6,000,000
Treasury stock, shares, acquired (in shares)						673,700
Treasury stock, value, acquired, cost method						$ 4,100,000
May 2016 Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount											$ 10,000,000
Treasury stock, shares, acquired (in shares)						568,500
Treasury stock, value, acquired, cost method						$ 5,300,000
March 2017 Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount										$ 15,000,000
Treasury stock, shares, acquired (in shares)				541,177
Treasury stock, value, acquired, cost method				$ 4,300,000
March 2018 Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount									$ 10,000,000.0
Treasury stock, shares, acquired (in shares)	1,193,102
Treasury stock, value, acquired, cost method	$ 10,000,000

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.

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Stock-based Compensation - Additional Information (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Expiration period	10 years
Options granted in period (in shares)	1,232,000	677,000	904,000
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 7.96	$ 9.57	$ 8.63
Allocated share-based compensation expense | $	$ 5,240	$ 4,087	$ 3,263
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost not yet recognized | $	$ 5,065
Period for recognition	2 years 6 months
Allocated share-based compensation expense | $	$ 3,873	$ 3,331	$ 3,005
Expected dividend rate	0.00%	0.00%	0.00%
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years	4 years
Compensation cost not yet recognized | $	$ 2,128
Period for recognition	2 years 2 months
Awarded (in shares)	280,000	162,000	214,000
Award vesting rights percentage	25.00%	25.00%
Conversion ratio	1
Allocated share-based compensation expense | $	$ 1,367	$ 756	$ 258
Shares outstanding (in shares)	463,000	274,000	214,000	0
The 2016 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	4,441,083
Common stock, capital shares reserved for future issuance (in shares)	3,830,000
Number of shares available for grant (in shares)	2,603,183	3,945,653
The 2016 Incentive Plan | Employee Stock Options Created under New Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	611,083
The 2016 Incentive Plan | Employee Stock Options Unissued under Prior Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	7,635,410

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Stock-based Compensation - Share-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 5,240	$ 4,087	$ 3,263
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	3,873	3,331	3,005
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	1,367	756	258
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	87	158	113
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	3,266	2,218	2,057
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	694	821	524
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 1,193	$ 890	$ 569

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Stock-based Compensation - Forfeiture Rate (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
4 Year Employee Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeiture rate	14.866%	16.275%	13.513%
1 Year Employee Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeiture rate	0.00%	0.00%	0.00%

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Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning balance (in shares)	5,092	5,883	7,198
Granted (in shares)	1,232	677	904
Exercised (in shares)	(1,160)	(1,226)	(1,936)
Forfeited (in shares)	(183)	(242)	(283)
Ending balance (in shares)	4,982	5,092	5,883
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Beginning balance, Weighted Average Exercise Price (in dollars per share)	$ 5.43	$ 4.81	$ 3.97
Granted, weighted average exercise price (in dollars per share)	7.96	9.57	8.63
Exercised, weighted average exercise price (in dollars per share)	3.73	4.49	3.41
Forfeited, weighted average exercise price (in dollars per share)	3.98	6.60	5.30
Ending balance, Weighted average exercise price (in dollars per share)	$ 6.36	$ 5.43	$ 4.81
Weighted Average Remaining Contractual Life	6 years 6 months 22 days	6 years 7 months
Aggregate Intrinsic Value	$ 6,572	$ 17,735
Aggregate intrinsic value, exercised		$ 6,798	$ 14,665
Vested and exercisable options (in shares)	3,193
Vested and exercisable options, weighted average exercise price (in dollars per share)	$ 5.44
Vested and exercisable options, weighted average remaining contractual term	5 years 4 months 21 days
Vested and exercisable options, Aggregate Intrinsic Value	$ 6,124
Vested and exercisable, and expected to vest options (in shares)	4,759
Vested and exercisable, and expected to vest options, weighted average exercise price (in dollars per share)	$ 6.27
Vested and exercisable, and expected to vest options, weighted average remaining contractual life	6 years 5 months 9 days
Vested and exercisable, and expected to vest options, Aggregate Intrinsic Value	$ 6,560

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Stock-based Compensation - Unamortized Compensation Cost and Grant Date Fair Value (Details) - USD ($) $ / shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value	$ 4,448	$ 4,158	$ 2,977
Aggregate intrinsic value of options exercised (in thousands)		$ 6,798	$ 14,665
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unamortized Compensation Costs	$ 5,065
Weighted Average Service Period	2 years 6 months
Grant date fair value	$ 3,607	$ 3,375	$ 2,977
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unamortized Compensation Costs	$ 2,128
Weighted Average Service Period	2 years 2 months
Grant date fair value	$ 841	$ 783	$ 0

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Stock-based Compensation - Restricted Stock Units Activity (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights percentage	25.00%	25.00%
Award vesting period	4 years	4 years
Conversion ratio	1
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance (in shares) | shares	274	214	0
Awarded (in shares) | shares	280	162	214
Vested (in shares) | shares	(90)	(91)
Forfeited (in shares) | shares		(11)
Ending balance (in shares) | shares	463	274	214
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance, Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 9.54	$ 8.65	$ 0.00
Awarded, Weighted average grant-date fair value (in dollars per share) | $ / shares	9.54	10.14	8.65
Vested, Weighted average grant-date fair value, (in dollars per share) | $ / shares	9.33	8.65
Forfeited, Weighted average grant-date fair value (in dollars per share) | $ / shares		8.52
Ending balance, Weighted average grant-date fair value (in dollars per share) | $ / shares	$ 8.49	$ 9.54	$ 8.65
Vesting on The First Anniversary of Grant Date | Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights percentage			25.00%

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Stock-based Compensation - Black-Scholes Option Pricing Model Assumptions (Details) - Employee Stock Option	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average expected life (years)	4 years 2 months 9 days	4 years 6 months	4 years 138 days
Weighted average expected volatility	67.41%	80.22%	80.35%
Weighted average dividend yield	0.00%	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.48%	1.64%	1.03%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	3.01%	1.99%	1.32%

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Stock-based Compensation - Awards Granted (Details) - $ / shares				12 Months Ended
	Feb. 12, 2019	Feb. 02, 2019	Jan. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares)				1,232,000	677,000	904,000
Exercise Price (in dollars per share)				$ 7.96	$ 9.57	$ 8.63
Award vesting period				4 years
Expiration from Date of Grant				10 years
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded (in shares)				280,000	162,000	214,000
Award vesting period				4 years	4 years
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and RSUs granted (in shares)	296,116	114,681	365,081
Subsequent Event | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares)	67,888	95,622	228,571
Exercise Price (in dollars per share)	$ 7.70	$ 7.87	$ 7.60
Award vesting period	4 years	4 years	4 years
Expiration from Date of Grant	10 years	10 years	10 years
Subsequent Event | Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarded (in shares)	228,228	19,059	136,510
Exercise Price (RSUs) (in dollars per share)	$ 7.70	$ 7.87	$ 7.60
Award vesting period	4 years	4 years	4 years

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Business Segment - Summary of Financial Information by Segment (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Segment Reporting Information [Line Items]
Revenue									$ 61,025	$ 58,023	$ 49,715
General and administrative	$ 5,446	$ 5,266	$ 4,927	$ 5,837	$ 4,985	$ 4,034	$ 3,927	$ 4,408	21,476	17,354	16,626
Sales and marketing	1,903	1,873	1,858	1,912	2,703	2,061	2,174	2,453	7,546	9,391	9,116
Research and development	5,220	4,270	3,605	3,917	4,819	3,038	3,077	2,509	17,012	13,443	10,136
Amortization of intangibles	156	158	158	158	158	157	158	158	630	631	631
Total operating expenses	12,725	11,567	10,548	11,824	12,665	9,290	9,336	9,528	46,664	40,819	36,509
Income from operations	1,420	5,650	4,240	(1,331)	4,340	3,550	1,006	353	9,978	9,249	3,426
Non-operating income									1,462	680	287
Income before income taxes									11,440	9,929	3,713
Operating Segments
Segment Reporting Information [Line Items]
General and administrative									3,849	2,966	2,081
Sales and marketing									7,047	8,015	8,061
Research and development									16,987	13,281	10,036
Amortization of intangibles									629	631	631
Total operating expenses									28,512	24,893	20,809
Income from operations									28,130	25,175	19,126
Operating Segments | Water
Segment Reporting Information [Line Items]
General and administrative									2,078	1,401	1,081
Sales and marketing									5,783	5,787	5,076
Research and development									1,711	1,064	1,331
Amortization of intangibles									629	631	631
Total operating expenses									10,201	8,883	8,119
Income from operations									33,100	29,386	23,073
Operating Segments | Oil & Gas
Segment Reporting Information [Line Items]
General and administrative									1,771	1,565	1,000
Sales and marketing									1,264	2,228	2,985
Research and development									15,276	12,217	8,705
Amortization of intangibles									0	0	0
Total operating expenses									18,311	16,010	12,690
Income from operations									(4,970)	(4,211)	(3,947)
Corporate
Segment Reporting Information [Line Items]
Total operating expenses									18,152	15,926	15,700
Product
Segment Reporting Information [Line Items]
Revenue	13,983	18,578	17,406	11,058	21,054	13,860	10,864	12,245	61,025	58,023	49,715
Product cost of revenue	3,561	5,022	5,976	3,314	6,660	4,217	3,572	4,612	17,873	19,061	17,849
Product gross profit	10,422	13,556	11,430	7,744	14,394	9,643	7,292	7,633	43,152	38,962	31,866
Product | Operating Segments
Segment Reporting Information [Line Items]
Revenue									61,025	58,023	49,715
Product cost of revenue									17,873	19,061	17,849
Product gross profit									43,152	38,962	31,866
Product | Operating Segments | Water
Segment Reporting Information [Line Items]
Revenue									60,512	54,301	47,545
Product cost of revenue									17,211	16,032	16,353
Product gross profit									43,301	38,269	31,192
Product | Operating Segments | Oil & Gas
Segment Reporting Information [Line Items]
Revenue									513	3,722	2,170
Product cost of revenue									662	3,029	1,496
Product gross profit									(149)	693	674
License and development revenue
Segment Reporting Information [Line Items]
Revenue	$ 3,723	$ 3,661	$ 3,358	$ 2,749	$ 2,611	$ 3,197	$ 3,050	$ 2,248	13,490	11,106	8,069
License and development revenue | Operating Segments
Segment Reporting Information [Line Items]
Revenue									13,490	11,106	8,069
License and development revenue | Operating Segments | Water
Segment Reporting Information [Line Items]
Revenue									0	0	0
License and development revenue | Operating Segments | Oil & Gas
Segment Reporting Information [Line Items]
Revenue									$ 13,490	$ 11,106	$ 8,069

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Business Segment - Depreciation and Amortization Expense by Segment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Segment Reporting Information [Line Items]
Depreciation and amortization expense	$ 3,869	$ 3,666	$ 3,680
Operating Segments | Water
Segment Reporting Information [Line Items]
Depreciation and amortization expense	2,060	2,723	3,043
Operating Segments | Oil & Gas
Segment Reporting Information [Line Items]
Depreciation and amortization expense	1,377	448	244
Corporate
Segment Reporting Information [Line Items]
Depreciation and amortization expense	$ 432	$ 495	$ 393

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Geographical Information and Concentrations - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%
Long-Lived Assets | Geographic Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%
One Customer | Product Revenue | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	15.00%		11.00%
One Customer | License and development revenue | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%
Customer Two | Product Revenue | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%

XML

Geographical Information and Concentrations - Revenue Concentrations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Concentration Risk [Line Items]
Revenue	$ 61,025	$ 58,023	$ 49,715
Percentage of product revenue	100.00%	100.00%	100.00%
United States
Concentration Risk [Line Items]
Revenue	$ 1,645	$ 1,706	$ 1,203
International
Concentration Risk [Line Items]
Revenue	$ 59,380	$ 56,317	$ 48,512
Egypt | Product Revenue
Concentration Risk [Line Items]
Percentage of product revenue	17.00%	15.00%	8.00%
Saudi Arabia | Product Revenue
Concentration Risk [Line Items]
Percentage of product revenue	31.00%	13.00%	14.00%
China | Product Revenue
Concentration Risk [Line Items]
Percentage of product revenue	8.00%	9.00%	13.00%
Others | Product Revenue
Concentration Risk [Line Items]
Percentage of product revenue	44.00%	63.00%	65.00%

XML

Geographical Information and Concentrations - Accounts Receivable Concentrations (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%
Water | Customer A | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage		16.00%
Water | Customer B | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage		10.00%
Water | Customer C | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage		11.00%
Water | Customer E | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	20.00%
Water | Customer F | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%
Oil & Gas | Customer G | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	26.00%	26.00%

XML

Geographical Information and Concentrations - Accounts Payable Concentrations (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%
Oil & Gas | Vendor A | Accounts Payable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage		11.00%
Oil & Gas | Vendor B | Accounts Payable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%

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VorTeq Partnership and License Agreement (Details) - VorTeq License Agreement		12 Months Ended
	Oct. 14, 2015 USD ($) payment	Dec. 31, 2018 USD ($)	Dec. 31, 2014 missile
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
VorTeq license agreement payments	$ 125,000,000.0
Up front non-refundable payment	$ 75,000,000
Number of milestone payments | payment	2
Milestone Payment One Upon Successful Yard Test
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
VorTeq milestone payment to be received	$ 25,000,000
Milestone Payment Two Upon Successful Fracing of ALive Well
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
VorTeq milestone payment to be received		$ 25,000,000
Affiliated Entity | Liberty Oil Field Services
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of missiles available for lease | missile			20
License agreement term			5 years

XML

Supplementary Data — Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018		Dec. 31, 2017		Dec. 31, 2016
Revenue									$ 61,025		$ 58,023		$ 49,715
General and administrative	$ 5,446	$ 5,266	$ 4,927	$ 5,837	$ 4,985	$ 4,034	$ 3,927	$ 4,408	21,476		17,354		16,626
Sales and marketing	1,903	1,873	1,858	1,912	2,703	2,061	2,174	2,453	7,546		9,391		9,116
Research and development	5,220	4,270	3,605	3,917	4,819	3,038	3,077	2,509	17,012		13,443		10,136
Amortization of intangible assets	156	158	158	158	158	157	158	158	630		631		631
Operating Expenses	12,725	11,567	10,548	11,824	12,665	9,290	9,336	9,528	46,664		40,819		36,509
Total operating expenses	1,420	5,650	4,240	(1,331)	4,340	3,550	1,006	353	9,978		9,249		3,426
Provision for (benefit from) income taxes	(516)	1,339	(11,122)	(357)	(8,971)	310	188	48	(10,653)		(8,425)		(6)
Income (loss) from operations	$ 2,421	$ 4,658	$ 15,743	$ (726)	$ 13,531	$ 3,472	$ 929	$ 422	$ 22,093	[1]	$ 18,354	[1]	$ 3,719	[1]
Basic (in dollars per share)	$ 0.04	$ 0.09	$ 0.29	$ (0.01)	$ 0.25	$ 0.06	$ 0.02	$ 0.03	$ 0.41		$ 0.34		$ 0.07
Diluted (in dollars per share)	$ 0.04	$ 0.08	$ 0.28	$ (0.01)	$ 0.24	$ 0.06	$ 0.02	$ 0.02	$ 0.40		$ 0.33		$ 0.07
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense			$ 12,100								$ 2,500
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense (benefit)			11,900
Product
Revenue	$ 13,983	$ 18,578	17,406	$ 11,058	$ 21,054	$ 13,860	$ 10,864	$ 12,245	$ 61,025		58,023		$ 49,715
Product cost of revenue	3,561	5,022	5,976	3,314	6,660	4,217	3,572	4,612	17,873		19,061		17,849
Product gross profit	10,422	13,556	11,430	7,744	14,394	9,643	7,292	7,633	43,152		38,962		31,866
License and development revenue
Revenue	$ 3,723	$ 3,661	$ 3,358	$ 2,749	$ 2,611	$ 3,197	$ 3,050	$ 2,248	$ 13,490		$ 11,106		$ 8,069

[1] Due to the full retrospective adoption of ASC 606 as defined in Note 2,”Recent Accounting Pronouncements”, of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplemental Data” of this Annual Report on Form 10K, the balances for the years ended 2017 and 2016 were recast.