Investor Presentation January 2020 1 Forward-looking Statements - - PowerPoint PPT Presentation

TSXV: XBC

Investor Presentation

January 2020

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Forward-looking Statements

Certain statements in this presentation may constitute "forward-looking" statements within the meaning of applicable securities laws. This forward-looking information includes, but is not limited to, the expectations and/or claims of management of Xebec Adsorption Inc. (“Xebec”) with respect to information regarding the business,

• perations and financial condition of Xebec. Forward looking information involves known and unknown risks,

uncertainties and other factors which may cause the actual results, performance or achievements of Xebec or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements use words like "anticipate", "believe", "plan", "estimate", "expect", "intend", "may", "will" and other similar terminology. This list is not exhaustive of the factors that may affect forward-looking information contained in this presentation. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this

• presentation. Forward-looking statements involving significant risks and uncertainties should not be read as

guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements.

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What We Do

• Xebec is accelerating the adoption of renewable gases (renewable natural gas and renewable

hydrogen) to reduce carbon emissions in the gas grid

• We design, engineer and manufacture equipment used in the production of renewable gases
• Xebec provides customers such as utilities, municipalities, waste management companies and

energy suppliers the ability to transition to a sustainable future

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Cleantech Systems

Equipment used in the generation of renewable gases

Industrial Service & Support

Services our cleantech systems and contains our legacy equipment and parts business

Renewable Gas Infrastructure

Build, own, operate renewable gas infrastructure projects in Canada

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Investment Highlights

• 1. Join the Transition from Fossil to Renewable Gases
• Inflection point in the growth of renewable gases as the world needs to decarbonize
• Xebec is the world’s only focused “Renewable Gas Company” with exposure to both renewable natural

gas (RNG) and renewable hydrogen (H2)

• 2. Rapidly growing, profitable cleantech play with proprietary technology
• Accelerating traction with $100M+ in order backlog that validates the technology
• Over $60M invested into proprietary technology in combination with industry leading know how
• More than 65 RNG and 200 hydrogen projects deployed worldwide
• 3. Accretive Acquisition Strategy that Creates Unique Competitive Advantage
• Ability to acquire profitable service companies at attractive valuations to expand geographical reach of
• ur service network for cleantech systems
• Grows our recurring revenue base by allowing us to capture revenue through parts, service and local

support

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Financial Highlights

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2020 2019 Trailing 2018 2017 2016 (CAD million) FY Guidance Q3 12M FY FY FY Revenue $80 - $90 13.2 37.9 20.2 14.7 9.6 Gross Margin $24 - $27 4.0 11.4 5.7 5.8 2.2 Gross Margin % ~30% 30% 30% 28% 39% 23% Selling, General and Administrative Expenses $16 - $18 2.7 10.0 7.2 5.2 4.4 SG&A as % of Revenue < 20% 20% 26% 36% 35% 46% Adjusted EBITDA 11 – 13%* 1.5 1.9

• 1.4

0.8

• 2.2

Net Income (Loss) from Continuing Operations 7 – 9%* 1.0 0.0

• 2.9

0.1

• 2.7

Earnings Per Share

• 0.02

0.00

• 0.07

0.00

• 0.07

* Shown as a percentage of total FY2020 revenue

• Xebec has demonstrated the ability to deliver a significant revenue growth profile, while improving profitability

and efficiency of the business

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What are Renewable Gases?

• Two categories of gases in a sustainable future, renewable gases (renewable natural gas and

renewable hydrogen) and low carbon gases

• Renewable gases are sourced from feedstocks that are forms of waste or excess capacity

(electricity), that otherwise would have little to no value

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Renewable Gas Renewable Natural Gas (RNG) Green Hydrogen (RH2) Low Carbon Gas Blue Hydrogen

Feedstock: Organic waste (food, manure, agriculture, industry, waste water) Feedstock: Surplus renewable electricity (solar, wind, hydro) Feedstock: Fossil Natural Gas with Carbon Capture, Utilization and Storage (CCUS)

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Renewable Natural Gas 101

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Chemical Composition CH4

• Carbon neutral form of natural gas that is created from

decomposing organic matter

• Bacteria decompose organic matter to create a raw biogas
• Raw gas goes through a process of purification called

“biogas upgrading” to create RNG

• As a result, methane from landfills, wastewater treatment

plants, farms and industries can be captured, refined and converted into renewable energy

• Xebec specializes in the separation of molecules using the

“upgrading” process to create RNG

1 https://www.socalgas.com/1443741887279/SoCalGas_Renewable_Gas_Final-Report.pdf 2 https://www.snam.it/export/sites/snam-rp/repository/file/investor_relations/presentazioni/2019/Snam_role_of_gas.pdf

Carbon neutral or negative

(depending on the source)

Less costly than electrification

(2-3x savings1)

Interchangeable with fossil gas

(same composition)

Waste management tool

(completes circular economy)

Seasonal energy storage

(orders of magnitude more capacity than batteries2)

Relevant Xebec Technologies:

Biogas Upgrading

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Renewable Hydrogen 101

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• Hydrogen is the universe’s most abundant chemical

substance

• Today, majority (95%) is produced through a process called

steam methane reforming (SMR)

• Blue Hydrogen is becoming relevant and seeing growth from
• pportunities in mobility and industry, SMR process with

carbon capture and storage (CCUS)

• Future opportunity with electrolysis using low costs or

excess renewable energy producing Green Hydrogen for energy storage applications and/or industry Carbon neutral

(applicable to Blue or Green Hydrogen)

Versatile energy carrier

(created from wind, solar, hydro)

Zero tailpipe emissions

(from FCEV, improves air quality)

Existing industry applications

(food, glass, chemicals, steel, power)

Economic energy storage

(power to hydrogen today is 1/3 cost lithium ion batteries1)

Chemical Composition Relevant Xebec Technologies:

Steam Methane Reforming with CCUS

1 https://www.snam.it/export/sites/snam-rp/repository/file/investor_relations/presentazioni/2019/Snam_role_of_gas.pdf

H2

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A Paradigm Shift in Energy

• Shift away from fossil gases and continues to gain momentum
• Energy providers need renewable gases to reduce their emissions, create compatibility

with gas infrastructure and economic viability

• We’ve seen “greening” of the electric grid, but not yet of the gas grid
• Canada’s natural gas grid contains 0.02% renewable content while the electric grid is 66%

renewable1,2

• Gas utilities are threatened by electrification of their customer base
• Renewable gases offer a solution for utilities to safeguard their business and this has

created a massive market opportunity worldwide

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1 https://www.cer-rec.gc.ca/nrg/sttstc/lctrct/rprt/2017cndrnwblpwr/cndnvrvw-eng.html 2 https://www.cga.ca/wp-content/uploads/2016/05/RNG-publication-FINAL-April-2016-EN.pdf

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Global Market Opportunity

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Target or Mandate Geography Leader(s) 20% Renewable Gas by 2030 California, U.S.A SoCalGas 20% RNG by 2030 Vermont, U.S.A Vermont Gas 15% RNG by 2030, 30% by 2050 Oregon, U.S.A NW Natural 15% Renewable Gas by 2030 British Columbia, Canada FortisBC 5% RNG by 2025 Québec, Canada Énergir €4.8B Support Scheme for RNG Italy Snam 10% Renewable Gas by 2030, €800 million Investment France Engie 10 billion cubic meters of RNG by 2025 China 10 State Owned Enterprises

• Utilities are the driving force behind renewable gas adoption and have worked with regulators and

governments to enact targets and support schemes

• Suppliers of RNG can receive up to $105 USD / MMBtu1 of RNG, ~50x the price of fossil natural gas
• Based on targets we estimate the market exceeds $10.9B for our cleantech equipment based on estimated

2,300 project requirement in Xebec’s core target geographies (U.S, Canada, Italy, France, China)

1 https://www.epa.gov/sites/production/files/2018-11/documents/7._deanna_haines-508.pdf

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• 1. Cleantech Systems
• 2. Industrial Service & Support
• 3. Renewable Gas Infrastructure
• Biogas Upgrading
• Biogas Upgrading Plants
• Small-Scale Containerized

Biogas Upgrading Systems

• Steam Methane Reforming
• Small-Scale Containerized

Hydrogen Generators

• O&M Service Contracts for

Cleantech Installations

• Compressed Air Service Contracts
• Compressed Air Dryers
• Natural Gas Dryers
• Oxygen and Nitrogen Generators
• Industrial Air & Gas Purification

Systems

• Filters, Elements, Accessories
• Renewable Natural Gas Facilities in

Canada

Business Segments

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Cleantech Systems

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• Driver of our recent revenue and backlog growth with $50 to $55M in revenue guided for FY2020
• Includes systems for upgrading biogas to renewable natural gas, hydrogen purification and steam

methane reforming natural gas to hydrogen

Steam Methane Reforming Installation in South Korea Producing 500KG / day of Hydrogen for Buses Renewable Natural Gas plant in Italy Renewable Natural Gas plant in France with large scale project developer

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Industrial Service & Support

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2 Acquisitions Completed, 4 Targeted in 2020

• Services our cleantech systems and

contains our legacy equipment (air dryers, gas purification) and parts (filters, elements, etc.) business

• Repeat business through service

contracts and replacement parts, 65-70% recurring revenue

• Creates competitive advantage by

leveraging tuck-in acquisitions for cleantech service centers

• $30 - $35M revenue guided for

FY2020, includes acquisition growth

Acquisition Target Profile

• $5 - 8M CAD Revenue
• 10% EBITDA Margin
• ~12 employees

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Renewable Gas Infrastructure

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• Initiative to Build, Own, Operate renewable gas assets in Canada, first project to be announced in Q1 2020
• Canada has a unique dynamic where utilities such as FortisBC and Énergir will sign 20-year RNG purchase agreements

(GPA) at up to $30 CAD / GJ, thus creating significant recurring revenue

• Canada to introduce Clean Fuel Standard (CFS) mid-2020, requiring a 10% GHG reduction in carbon intensity of gas grid

which will have to be fulfilled by renewable gases (RNG and RH2)

• Estimate 600 to 800 projects will need to be built, only 11 currently operating in Canada

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Proprietary Technology

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• Two technology platforms that Xebec is deploying for renewable gases: pressure swing

adsorption (PSA) and steam methane reforming (SMR)

• Focus of R&D is to pursue innovation that can further drive down renewable gas production costs
• Our technology helps customers achieve the lowest project lifecycle costs through reduced

electricity consumption and higher reliability

Pressure Swing Adsorption (PSA)

Fast-cycle, rotary valve technology was created by Xebec to upgrade biogas or purify other gases efficiently

Steam Methane Reforming (SMR)

Licensed from JNK Heaters to produce Green or Blue Hydrogen from (renewable) natural gas

Future Technology

Continually exploring opportunities to expand our technology portfolio (electro-chemical applications)

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Recent Milestones and Upcoming Catalysts

üAcquired 2nd Service & Support Company in North California üCompleted Two Successful Bought Deal Offerings of $11.6M and $23M üEntered California Dairy RNG Market with LOI from Maas Energy Works üCommissioned First Italian Renewable Natural Gas Project

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2019

üWelcomed Brian Levitt as Advisor to Board of Directors

• First Renewable Gas Infrastructure Project (BOO)
• Hydrogen M&A Activity
• Additional Market Traction with Cleantech System Orders

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Municipalities

Customers

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Farmers EPC Waste Management Gas Utilities

• Diverse set of customers between different industries and geographies
• 260+ installations across the world with customers located in U.S.A, Canada, Italy, France, China,

Brazil, South Korea, Austria, Taiwan

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Comparables

18 Company Operating Margin (TTM) Revenue Growth (TTM) EV / Revenue (TTM) EV / Revenue (2020) EV / EBITDA (TTM) EV / EBITDA (2020) Questor Technology Inc. (QST.V) 38% 21% 4.4x 3.5x 9.7x 7.2x Bloom Energy Corporation (BE)

• 26%

35% 1.9x 1.7x

• 20.4x

Westport Fuel Systems Inc. (WPRT)

• 4%

9% 1.3x 1.1x

• 9.1x

Clean Energy Fuels Corp. (CLNE)

• 8%
• 6%

1.6x 1.5x 15.2x 8.3x Greenlane Renewables Inc. (GRN.V)

• 47%
• 1.6x
• EnviTec Biogas AG (ETG.DE)

6%

• 3%

1.2x

• 9.4x
• Ballard Power Systems Inc. (BLDP)
• 28%
• 14%

22.9x 16.2x

• FuelCell Energy, Inc. (FCEL)
• 77%
• 32%

9.1x 9.8x

• Nel ASA (NEL.OL)
• 51%

0% 24.8x 15.1x

• ITM Power Plc (ITM.L)
• 201%

36% 109.3x 86.5x

• Hydrogenics (HYGS)*
• 46%

37% 7.3x

• Plug Power Inc. (PLUG)
• 29%

32% 8.5x 5.6x

• 128.1x

Xebec Adsorption Inc. (XBC.V) 3% 118% 5.6x 2.5x 110.1x 17.7x

Source: Bloomberg as of January 23rd, 2020 with 2020 numbers based off analysts | * Numbers at time of acquisition by Cummins Inc.

NATURAL GAS CLEANTECH HYDROGEN

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Capital Structure

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As of January 23rd, 2020 Securities (#) Common Shares Issued & Outstanding 84,424,176 Options 4,081,860 Warrants – October 2018 ($1.05) 2,491,788 Warrants – July 2019 ($1.85) 8,272,357 Compensation Shares & Warrants 657,156 Total 100,428.937 Insider & Institutional Ownership % Total Shares Held Insiders 12.02% DNB Asset Management AS 1.30% Hillsdale Investment Management Inc. 0.65% LDIC Inc. 0.44% Purpose Canadian Equity Growth Sr F 0.35% As of January 23rd, 2020 Securities (#) Last Price $2.91 1 Year Performance +282% 30-day Average Volume 606,399 shares

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Management Team

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Kurt Sorschak

Chairman, President & CEO

Co-founder of Xebec, developed it from a local compressed air and gas dryer manufacturer into the international cleantech company it is today

• Dr. Prabhu Rao

Board Director, COO

Former CEO of McPhy Energy North America, former CCO of Nuvera Fuel Cells who was acquired by Hyster-Yale (NYSE:HY)

Louis Dufour

CFO

20+ years of corporate finance and

• perational experience, most recently as

Partner of CFO Optimum

• Dr. Amir Ghasdi

Director of Business Development

10+ years in process engineering, Xebec veteran with almost a decade at the company leading research and now business development

• Dr. Francesco Massari

General Manager, Xebec Europe

Former CTO at McPhy Energy S.A. (French Hydrogen Alkaline electrolyzer company)

• Dr. Peter Cheng

General Manager, Xebec China

Former executive with ABB, Ontario Power Generation, Hong Kong and China Gas Investment Limited, and A.T. Kearney

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Board of Directors & Advisors

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Bill Beckett

Lead Board Director

Former President and CEO of Dart Aerospace (acquired by Greenbriar Equity Group and First Aviation Services)

Joseph Petrowski

Board Director

Former CEO of Cumberland Farms Gulf Oil Group (65th largest private company), founder of Mercantor Partners, board member of South Jersey Industries (NYSE: SJI)

Guy Saint-Jacques

Board Director

Former Canadian ambassador to China, part

• f Department of External Affairs since

1977, served as Deputy Director of the Energy and Environment division

Brian Levitt

Board Advisor

Current chairman of The Toronto-Dominion Bank, former President and CEO of Imasco Limited, current board member of Domtar Corporation and TD Ameritrade Holding Corporation

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Kurt Sorschak

President & CEO 450-979-8701 ksorschak@xebecinc.com

Brandon Chow

Investor Relations Manager 450-979-8700 Ext. 5762 bchow@xebecinc.com TSXV: XBC