Targeting Global Leadership in Decentralized Water & Wastewater - - PowerPoint PPT Presentation

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Targeting Global Leadership in Decentralized Water & Wastewater - - PowerPoint PPT Presentation

www.fluencecorp.com Targeting Global Leadership in Decentralized Water & Wastewater Treatment Solutions Fluence Corporation (ASX: FLC) Corporate Overview August 2019 Executive Summary A leading water and wastewater treatment solutions


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Fluence Corporation (ASX: FLC) Corporate Overview August 2019

Targeting Global Leadership in Decentralized Water & Wastewater Treatment Solutions

www.fluencecorp.com

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Executive Summary

  • A leading water and wastewater treatment solutions

provider focused exclusively on the decentralized market – Over 7,000 installations in over 70 countries

  • Global water scarcity and contamination is real and

growing, with large centralized solutions not always being viable

  • Our decentralized solutions are CapEx efficient and

deploy rapidly – US$22B market by 2021(1) (one of the fastest growing segments)

  • 2018 Revenue of US$101.1M (+74% vs. 2017(2)) and

Gross Profit US$34.5M(3)

  • Backlog at the end of June 2019 of US$278M
  • Targeting sustainably positive EBITDA by Q4 2019

(1) Source: Global Water Intelligence, Global Water Market 2017 Volume 1 (2) 2017 pro-forma (consolidation of 12 months of RWL water) (3) Q4 and Full Year Audited Gross Profit include a $6.5M benefit of reversal of an onerous contract provision from prior years US$M US$M

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Water Shortages: Widespread & Growing

Water shortages affect 2.7B people now 2.4B people lack proper wastewater treatment now An additional 2.1B people need upgraded treatment Population growth from 7.4B in 2016 to 9.1B by 2050 60% increase in global food production by 2050 Manufacturing water demand will grow 400% by 2050 Global water consumption to double by 2050 Results in 40% water deficit by 2030

Sources: WWF, Water Scarcity, 2014; US Geological Survey, 2015; UN World Water Development Report, 2017; Water for Food, UNCTAD, 2011.

Global Population

Experiencing Water Shortages Sufficient Water Supply

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Major Milestones and Growth Momentum

Q2 2019

  • Largest booking in Brazil for

$10M desalination project with a repeat customer

  • First NIROBOX™ order in the

US Q1 2018

  • Received award for

Decentralized Water & Wastewater Company of the Year

  • First NIROBOX™
  • rders in Argentina

and Philippines Q3 2018

  • First MABR sale to

Hubei ITEST

  • First NIROBOX™

BOT signed in Philippines

  • First commercial

Aspiral™ sales in US and Philippines Q3 2017 Emefcy and RWL Water merged to form Fluence Corporation (ASX:FLC) Q4 2017 Opening of first MABR manufacturing plant in Changzhou, China Q1 2019

  • Record quarterly

bookings of $223M

  • Awarded €165M

landmark Ivory Coast contract

  • Largest individual order
  • f 40 Aspiral™ units in

China

  • Official launch of SUBRE

and first commercial

  • rders secured
  • Total backlog of $267M,

up 181% YoY Q2 2018

  • San Quintin

project reaches Financial Close

  • Aspiral™

product suite launch Q4 2018

  • Commencement of

San Quintin Project

  • Largest NIROBOX™
  • rder ever from Egypt

(12 units)

  • Announcement of

$50M Generate Capital debt facility FY 2018

  • Achieved organic

revenue growth of 74%

  • >200% increase in

Gross Profit

  • Reduced G&A by

30% FY 2019E

✓Targeting ~20% YoY

revenue growth of Smart Products

✓Increasing backlog of

projects with Recurring Revenue

✓Goal to achieve

sustainably positive EBITDA

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Complete Suite of Water & Wastewater Treatment Solutions

✓ ✓ ✓ ✓ ✓ ✓ ✓

Custom Engineered Solutions

Water Treatment Desalination Reuse Wastewater Treatment Wastewater-to- Energy Food & Beverage Processing

✓ ✓ ✓ ✓ ✓ ✓

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Focus on Decentralized Systems

Centralized Decentralized vs.

 2/3 of CAPEX before the plant (piping, pumping)  Expensive to maintain and upgrade  No flexibility and scalability  Mainly for well developed urban areas ✓ 1/3 of time-to-complete and lower, just-in-time CAPEX ✓ Capturing more value ✓ Scalable and customized to fit current needs ✓ Easy to upgrade and relocate

The Rationale Why Fluence Wins

Pre-engineered plug and play solutions

  • High margins
  • Fast delivery and installation
  • Scalability

Proprietary smart technologies and modular approach

  • High quality effluents
  • Lower energy and OPEX
  • Low maintenance needs

Urgent Need For Affordable, Fast-to-Deploy Solutions

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Fluence Growth Areas

Water and wastewater treatment solutions for customers across the industrial, commercial and municipal sectors

Smart Products Solutions Recurring Revenue and Aftermarket Services Custom-Engineered Solutions Aspiral, SUBRE, NIROBOX BOOT Complete range of O&M and Aftermarket offerings Waste-to-Energy, Large projects, EPC

Reporting Segment Products

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Growth Strategy

  • Leading suite of Smart Products Solutions for underserved

decentralized water and wastewater markets worldwide

  • Leverage global Custom Engineered Projects reputation on

decentralized plant sales enabling more repeat orders, faster delivery, higher margin

  • Growing BOOT pipeline funded by non-dilutive debt finance increases

recurring revenue

  • Target China’s wastewater treatment market with MABR-based

Aspiral™ Smart Packaged plants to drive rapid growth

  • Leverage partners to accelerate pipeline, bookings and revenue growth
  • Maintain healthy top-line growth
  • Increase total gross margin blend
  • Target sustainably positive EBITDA by Q4 2019
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Smart Products Solutions

Packaged MABR wastewater treatment solutions Packaged potable water treatment solutions MABR wastewater treatment solutions for existing or new plants

Market Drivers:

Stricter regulations Decentralization, Energy efficiency Increased urbanization, New-build infrastructure Water shortages Decentralization, Energy-efficiency Increased urbanization, New-build infrastructure Stricter regulations Process intensification Outdated infrastructure Energy efficiency 5,000-200,000 GPD raw municipal sewage 130,000-400,000 GPD Seawater, Fresh water, Brackish water 0.15-25 MGD raw municipal sewage

Market Adoption:

Plants USVI, Stanford (Title 22 validated), Oregon, Texas, Argentina, Ecuador, China, Philippines, Israel Plants globally including Egypt, South Africa, Philippines, Caribbean, Mexico, South America Ma’ayan Zvi, Israel Significant and growing pipeline Commercial launch Q1 2019 and first commercial contract in Jamaica

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Largest individual order

  • f 40 Aspiral™

units from ITEST Additional Aspiral™ plants in Hebei and Zhejiang Provinces

Feb 2019

Established local manufacturing Reference sites in multiple provinces Experienced local sales teams Network of strategic partners

Smart Products Solutions: Accelerating Activity in China

26 Partnerships covering 16 Provinces and 26 Installations

Mar 2018

Repeat order through Jinzi for the Local Government

  • f Zhenfeng

County

Oct 2018

Exclusive partnership agreement with ITEST in Hubei Province

Dec 2018

Bulk order of 35 Aspiral™ units under exclusive partnership agreement with ITEST in Hubei Province

Sep 2017

First production

  • f Aspiral™

modules in China

Nov 2017

First Aspiral™ plant in Henan Province via partner QSY Framework agreement for 6 Aspiral™ units via partner Jinzi

May 2018

First Aspiral™ Plant in Beijing area via partner Glory Land

Jun 2018

First Aspiral™ Plant in Hunan Province via partner Hunan Kaitian Tripartite framework agreement for Aspiral™ in 3 districts in Yiyang City

Jul 2018

Jinzi secures third contract in Guizhou Province First sale via partner Hubei ITEST. Shipped, delivered and installed in 6 weeks

Nov 2018

Sale of 6 Aspiral™ units via partner Zhongzi Huaze in Jilin Province

Mar 2019

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Recurring Revenue: Build Own Operate and Transfer (BOOT)

Wastewater Treatment Water Treatment

Complete Water and Wastewater Solutions Recurring High Margin Revenue

Capex

Multi-year Recurring Revenue

  • Fluence’s Aspiral™ and NIROBOX™ products are

ideal for BOOT projects → Footprint, energy efficiency, reliability, low maintenance and quality output → Using in-house proprietary technologies enhances margin

  • Uses Fluence’s equity to inject its own equipment
  • Ability to offer complete water/wastewater reuse

solutions

  • BOOT agreements offer lucrative, recurring

revenue for many years with higher valuations

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Recurring Revenue: BOOT Financing Facility in Place

  • Combination of equity and debt:

– 70% non-recourse financing – 30% equity, and optional minority partners – Fluence as EPC and O&M Contractor

  • Secured a US$50M non-recourse debt

facility from Generate Capital in 2018 – First drawdown of $2m in March 2019

  • Secured backlog of US$14.7 million of run-

rate annual billings after construction of 3 projects is completed

Project Company (SPV)

Equity Partner (Fluence) Client Operation and Maintenance (Fluence) EPC (Fluence + contractors) Lender (finance partner + Fluence)

Equity Dividend Payments Water Principal & interest Loan Payments Services Payments Construction

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Custom-Engineered Solutions: Solving Water and Wastewater Challenges

Industrial Water Treatment Wastewater-to-Energy Packaged Wastewater Treatment Aeration EPC Projects Industrial Wastewater Treatment Food & Beverage Processing Industrial Process Water

Bespoke solutions designed and built for customers worldwide

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Custom-Engineered Solutions: Landmark Project Win in Ivory Coast

  • €165M commercial agreement with Federal

Government of Ivory Coast, signed on February 26th, 2019

  • Turnkey supply of custom-engineered solution for

150,000 m3/day surface-water treatment plant

  • The plant will treat freshwater from the naturally

contaminated Lagune Aghien and provide potable water to the city of Abidjan (4.7M population)

  • Fluence’s scope: water intake and treatment, bulk

water piping, water towers and infrastructure

  • Project finance guaranteed through Export Credit

Agency (ASHRA, Israel) and financed through Israel Discount Bank

  • Financial Close and project commencement

expected later 2019

  • Contract revenue expectations: US$20M in 2019,

US$80M in 2020, remainder in 2021; all subject to achievement of Financial Close by Q3 2019

Water from Lagune Aghien will be treated to supply potable water for Abidjan CAD depiction of plant location and layout

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Fluence Growth Areas: Targeted Revenue Growth

Custom-Engineered Solutions Large projects Wastewater-to-energy Water purification Smart Products Solutions Aspiral, NIROBOX, SUBRE 2018: $22M 2019 target: $26M Recurring Revenue BOOT projects, Aftermarket

2018 Future Target Revenue Mix 2017

Shift towards higher margin proprietary solutions and recurring revenues

$58M $101M

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Fluence Growth Areas: Target Growing Gross Margin

Increasing Gross Margin Large Project Smart Packaged Plant Proprietary Smart Packaged Plant Proprietary Product

>EUR165M (Ivory Coast project) NIROBOX™ Aspiral™ SUBRE Example:

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Outlook for Continued Growth in 2019

  • ~20% year over year growth of

Smart Products from $22M to $26M

  • Increase backlog of projects with

Recurring Revenue

  • Achieve sustainable positive

EBITDA by Q4 2019

SUBRE installation, Ma’ayan Zvi, Israel Fluence MABR manufacturing plant, Changzhou, China

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KEY CONTACTS

Key Contacts

Ronn Bechler Market Eye +61 400 009 774 Ronn.Bechler@marketeye.com.au Adam Hinckley VP Investor Relations +1 914 998 3304 ahinckley@fluencecorp.com

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Appendix

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Corporate Overview

Capital Structure as at 31 July 2019 ASX: FLC Ordinary Shares on Issue 537.4M Options on issue 44.6M Share Price A$0.47 Undiluted Market Capitalization A$252.6M Cash at 30 June 2019 $15.6M External debt (except non-recourse project debt) $0.8M Liquidity (average shares traded per day for the 3 months to 31 July 2019) 650,377 Top Holders ASX: FLC 31 July 2019 Shares (M) % of FLC RSL Investments Corporation and RSL Capital, LLC 157.2 29.3 Watermark Services, LLC 47.8 8.9 Pond Ventures Nominees and Richard Irving 37.3 6.9 Plan B Ventures 20.5 3.8 Other top 20 108.6 20.2 Top 20 total 371.4 69.1

Notes:

  • Over 58% of Fluence shares held by US entities (1)
  • Generate Capital $50M non-recourse debt facility,
  • f which, only $2M has been drawn

1) As of April 1, 2019

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21 Management Team

World-Class Board and Leadership

Board of Directors

  • 35 years’ tech and

Venture Capital experience

  • US$3B value

created Richard Irving Chairman

  • Former CTO of

GE Water

  • 30 years’ operating,

acquisition and tech experience Rengarajan Ramesh Non-executive Director

  • 30 years’ tech and

Venture Capital experience

  • US$4B value created

Ross Haghighat Non-executive Director

  • 30 years’ capital

markets experience Peter Marks Non-executive Director

  • Over 30 years’

international financial services experience Paul Donnelly Non-executive Director

  • Over 30 years’

industrial experience Arnon Goldfarb Non-executive Director Henry J. Charrabé Managing Director & CEO

  • Former CEO of RWL

Water

  • Over 15 years’ water

industry experience Henry J. Charrabé Managing Director & CEO

  • 20 years’ finance

experience in renewable energy and water treatment Francesco Fragasso CFO

  • Over 15 years’

marketing strategy experience Erik Arfalk CMO

  • 15 years’ as an

investor, advisor and sell-side analyst Adam Hinckley VP Investor Relations & Project Finance

  • Over 22 years’ water

industry experience

  • Former VP Sales of

Emefcy Ilan Wilf Global VP Sales

  • Co-Founder of

Emefcy

  • Over 25 years’

water technology experience Ronen Schechter CTO Tony Hargrave COO

  • Over 30 years’ water

industry management experience

  • Former CEO of RWL

Water

  • Over 15 years’ water

industry experience

  • Over 15 years of

corporate law and M&A experience

  • Former GC of RWL

Water

Spencer D. Smith

CLO

  • Over 30 years’

experience as Company Secretary Ross Kennedy Company Secretary & Advisor to the Board

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Global Footprint Diversifies Revenue

Leverages an optimal mix of sales channels (integrators, operators, representatives, distributors, financial partners) across the key water markets

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Large Diversified Customer Base

Historical and Existing Customers and Partners

Water and wastewater treatment solutions for customers across the industrial, commercial and municipal sectors

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How MABR Works

  • 3. Blood (with
  • xygen) flows out
  • 1. Air breathed in
  • 2. Oxygen dissolved

naturally into blood through lung material

MABR - Inspired by Nature

  • 1. Air passes through
  • 2. Oxygen

dissolves naturally into wastewater through membrane

  • 3. Wastewater picks up
  • xygen to digest waste

O2

Semi-permeable membrane

Biofilm

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Fluence’s MABR validated for California Water Recycling Standard by CR2C at Stanford

  • Fluence MABR demonstration unit installed

since January 2018 at the Codiga Resource Recovery Center (CR2C) at Stanford University

  • CR2C’s research validates compliance of

Fluence’s MABR technology with California’s Title 22 water recycling legislation

  • Title 22 is among the strictest water and

wastewater treatment standards for water and wastewater recycling and reuse in the United

  • States. Additional testing parameters included

enhanced nutrient removal in the form of “Total Nitrogen”.

  • Successful tests conducted on higher

concentration of nitrogen and phosphorous than typical wastewater Fluence MABR plant at CR2C in Stanford “… the system achieved the objectives of mean Total Nitrogen concentrations below 10mg/L and met T22 requirements as measured by Turbidity and Total Coliform in the Tertiary Effluent”

  • CR2C Research Report

Research report available at: https://cr2c.stanford.edu/resources/software

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Disclaimer

This presentation has been prepared by Fluence Corporation Limited (ASX: FLC). All currencies quoted as “$” are US$ unless otherwise specified. This presentation may contain forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of past and present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this presentation, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors many of which are beyond the control of the Company, its Directors and management. Although the Company believes that the expectations reflected in and the assumptions underlying the forward looking statements included in this presentation are reasonable, readers are cautioned not to place undue reliance

  • n them, as the Company cannot give any assurance that the results, performance or achievements covered by the forward-looking statements will actually
  • ccur.

This presentation should not be considered as an offer or invitation to subscribe for or purchase any shares in FLC or as an inducement to make an offer or invitation to subscribe for or purchase any shares in FLC. No agreement to subscribe for securities in the FLC will be entered into on the basis of this presentation

  • r any information, opinions or conclusions expressed in the course of this presentation. This presentation is not a prospectus, product disclosure document or
  • ther offering document under Australian law or under the law of any other jurisdiction. It has been prepared for information purposes only and does not

constitute an offer or invitation to apply for any securities, including in any jurisdiction where, or to any person to whom, such an offer or invitation would be unlawful. To the maximum extent permitted by law, the Company and its professional advisors and their related bodies corporate, affiliates and each of their respective directors, officers, management, employees, advisers and agents and any other person involved in the preparation of this presentation disclaim all liability and responsibility (including without limitation and liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use of or reliance on anything contained in, or omitted from, this presentation. Neither the Company nor its advisors have any responsibility or

  • bligation to update this presentation or inform the reader of any matter arising or coming to their notice after the date of this presentation document which

may affect any matter referred to in the presentation. Readers should make their own independent assessment of the information and take their own independent professional advice in relation to the information and any proposed action to be taken on the basis of the information. 2018 consolidated financial figures presented on IFRS basis are audited, and after reclassifications for non-cash foreign currency adjustment relating to hyperinflation accounting in Argentina (IAS29).