Fluence Corporation (ASX: FLC) Corporate Overview August 2019
Targeting Global Leadership in Decentralized Water & Wastewater Treatment Solutions
www.fluencecorp.com
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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
Fluence Corporation (ASX: FLC) Corporate Overview August 2019
Targeting Global Leadership in Decentralized Water & Wastewater Treatment Solutions
www.fluencecorp.com
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provider focused exclusively on the decentralized market – Over 7,000 installations in over 70 countries
growing, with large centralized solutions not always being viable
deploy rapidly – US$22B market by 2021(1) (one of the fastest growing segments)
Gross Profit US$34.5M(3)
(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 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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Q2 2019
$10M desalination project with a repeat customer
US Q1 2018
Decentralized Water & Wastewater Company of the Year
and Philippines Q3 2018
Hubei ITEST
BOT signed in Philippines
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
bookings of $223M
landmark Ivory Coast contract
China
and first commercial
up 181% YoY Q2 2018
project reaches Financial Close
product suite launch Q4 2018
San Quintin Project
(12 units)
$50M Generate Capital debt facility FY 2018
revenue growth of 74%
Gross Profit
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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✓ ✓ ✓ ✓ ✓ ✓ ✓
Custom Engineered Solutions
Water Treatment Desalination Reuse Wastewater Treatment Wastewater-to- Energy Food & Beverage Processing
✓ ✓ ✓ ✓ ✓ ✓
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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
Proprietary smart technologies and modular approach
Urgent Need For Affordable, Fast-to-Deploy Solutions
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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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decentralized water and wastewater markets worldwide
decentralized plant sales enabling more repeat orders, faster delivery, higher margin
recurring revenue
Aspiral™ Smart Packaged plants to drive rapid growth
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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
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
26 Partnerships covering 16 Provinces and 26 Installations
Mar 2018
Repeat order through Jinzi for the Local Government
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
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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Wastewater Treatment Water Treatment
Complete Water and Wastewater Solutions Recurring High Margin Revenue
Capex
Multi-year Recurring Revenue
ideal for BOOT projects → Footprint, energy efficiency, reliability, low maintenance and quality output → Using in-house proprietary technologies enhances margin
solutions
revenue for many years with higher valuations
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– 70% non-recourse financing – 30% equity, and optional minority partners – Fluence as EPC and O&M Contractor
facility from Generate Capital in 2018 – First drawdown of $2m in March 2019
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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Government of Ivory Coast, signed on February 26th, 2019
150,000 m3/day surface-water treatment plant
contaminated Lagune Aghien and provide potable water to the city of Abidjan (4.7M population)
water piping, water towers and infrastructure
Agency (ASHRA, Israel) and financed through Israel Discount Bank
expected later 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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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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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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Smart Products from $22M to $26M
Recurring Revenue
EBITDA by Q4 2019
SUBRE installation, Ma’ayan Zvi, Israel Fluence MABR manufacturing plant, Changzhou, China
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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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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:
1) As of April 1, 2019
21 Management Team
Board of Directors
Venture Capital experience
created Richard Irving Chairman
GE Water
acquisition and tech experience Rengarajan Ramesh Non-executive Director
Venture Capital experience
Ross Haghighat Non-executive Director
markets experience Peter Marks Non-executive Director
international financial services experience Paul Donnelly Non-executive Director
industrial experience Arnon Goldfarb Non-executive Director Henry J. Charrabé Managing Director & CEO
Water
industry experience Henry J. Charrabé Managing Director & CEO
experience in renewable energy and water treatment Francesco Fragasso CFO
marketing strategy experience Erik Arfalk CMO
investor, advisor and sell-side analyst Adam Hinckley VP Investor Relations & Project Finance
industry experience
Emefcy Ilan Wilf Global VP Sales
Emefcy
water technology experience Ronen Schechter CTO Tony Hargrave COO
industry management experience
Water
industry experience
corporate law and M&A experience
Water
Spencer D. Smith
CLO
experience as Company Secretary Ross Kennedy Company Secretary & Advisor to the Board
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Leverages an optimal mix of sales channels (integrators, operators, representatives, distributors, financial partners) across the key water markets
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Historical and Existing Customers and Partners
Water and wastewater treatment solutions for customers across the industrial, commercial and municipal sectors
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naturally into blood through lung material
MABR - Inspired by Nature
dissolves naturally into wastewater through membrane
O2
Semi-permeable membrane
Biofilm
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Fluence’s MABR validated for California Water Recycling Standard by CR2C at Stanford
since January 2018 at the Codiga Resource Recovery Center (CR2C) at Stanford University
Fluence’s MABR technology with California’s Title 22 water recycling legislation
wastewater treatment standards for water and wastewater recycling and reuse in the United
enhanced nutrient removal in the form of “Total Nitrogen”.
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”
Research report available at: https://cr2c.stanford.edu/resources/software
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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
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
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
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).