Third Quarter 2019 Earnings Call November 6, 2019 Safe Harbor - PowerPoint PPT Presentation

Third Quarter 2019 Earnings Call November 6, 2019

Safe Harbor Statement Statements in this presentation regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, include, without limitation, statements relating to AquaVenture’s strategic focus; its forecast of full-year 2019 financial results; our ability to produce positive operating cash flows; expectations regarding future business development and acquisition activities; its expectations regarding performance, growth, cash flows and margins from recently completed and pending acquisitions; its ability to capitalize on vertical integration opportunities; and the impacts on operating results of the timing, size, integration and accounting treatment of acquisitions, constitute forward-looking statements. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Such forward- looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors detailed in AquaVenture’s filings with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, AquaVenture’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. AquaVenture is providing the information in this presentation as of this date and assumes no obligations to update the information included in this presentation or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

Third Quarter 2019 Financial Highlights S Revenues grew 43.8% over Q3 2018, comprised of 10.5% organic growth and 33.3% inorganic growth − Includes revenue growth of 44.7% in Quench and 42.5% in Seven Seas Water S Net loss of $3.9M compared to $2.7M in Q3 2018 S Adjusted EBITDA increase of 60.5% over Q3 2018 S Adjusted EBITDA Margin expansion of 400 bps Adjusted EBITDA (1) and Adjusted EBITDA plus principal Revenues collected on the Peru construction contract (2) ($ in millions) ($ in millions) 150 $100.0 $80.0 100 $59.5 $60.0 $150.9 $37.9 $40.0 $103.8 50 $21.7 $55.6 $13.9 $20.0 $52.9 $34.2 $36.8 $20.4 $12.7 0 $- 3Q'2018 3Q'2019 YTD 2018 YTD 2019 3Q'2018 3Q'2019 YTD 2018 YTD 2019 Adj. EBITDA Margin % 34.4% 38.4% 33.0% 36.8% (1) See appendix for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure. (2) See appendix for a description of the principal collected on the Peru construction contract. 3

Operational Update 2019 Acquisitions Quench Continues Execution of M&A Strategy S Quench completed two acquisitions on October 1 – Mirex AquaPure Solutions (Houston, TX) and Flowline Canada (Edmonton, Canada) S Four acquisitions completed year-to-date, collectively adding ~7,600 rental units − Acquisitions were immediately integrated upon closing − Total installed asset base now exceeds 155,000 units SSW Contract Updates S SSW extended its agreement in The Bahamas by 9 years − In addition to continuing to deliver potable water and wastewater treatment services, SSW is performing equipment upgrade services for its customer S Completed volume expansion for Limetree Bay Terminal customer as of November 1 st 4

Seven Seas Water Financial Overview Q3 2019 Financial Highlights S Revenues of $22.2M S Gross margin of 51.5% S Net income of $0.6M S Adjusted EBITDA of $11.9M and Adjusted EBITDA Margin of 53.4% (1) S Adjusted EBITDA plus principal on the Peru construction contract of $13.2M (2) Adjusted EBITDA (1) and Adjusted EBITDA plus principal Revenues collected on the Peru construction contract (2) ($ in millions) ($ in millions) 60 $60.0 50 40 $38.3 $40.0 $65.2 30 $25.8 $45.7 20 $20.0 $13.2 $34.4 $8.9 $22.2 10 $22.2 $15.6 $11.9 $7.7 0 $- 3Q'2018 3Q'2019 YTD 2018 YTD 2019 3Q'2018 3Q'2019 YTD 2018 YTD 2019 Adj. EBITDA Margin % 49.2% 53.4% 48.6% 52.7% (1) See appendix for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure. (2) See appendix for a description of the principal collected on the Peru construction contract. 5

Quench Financial Overview Q3 2019 Financial Highlights S Revenues of $30.7M S Gross margin of 48.9% S Net Loss of $2.0M S Adjusted EBITDA of $9.4M and Adjusted EBITDA Margin of 30.6% Adjusted EBITDA (1) Revenues ($ in millions) ($ in millions) 80 $40.0 60 $30.0 $85.7 40 $20.0 $58.1 20 $24.2 $10.0 $30.7 $14.5 $21.2 $9.4 $5.7 0 $- 3Q'2018 3Q'2019 YTD 2018 YTD 2019 3Q'2018 3Q'2019 YTD 2018 YTD 2019 Adj. EBITDA Margin % 27.0% 30.6% 24.9% 28.2% (1) See appendix for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure. 6

Select Balance Sheet and Cash Flow Items Select Balance Sheet Items (in thousands) September 30, December 31, 2019 2018 Cash and cash equivalents $ 109,520 $ 56,618 Restricted cash 4,268 4,153 Total cash, cash equivalents and restricted cash $ 113,788 $ 60,771 Corporate credit agreement $ 300,000 $ 300,000 BVI loan 16,278 20,468 Vehicle financing 3,127 1,842 Total face value of debt 319,405 322,310 Less: unamortized debt discounts and deferred financing fees (1,829) (2,601) Total debt $ 317,576 $ 319,709 Total Net Debt (1) $ 203,788 $ 258,938 Select Cash Flow Statement Items (in thousands) Nine Months Ended September 30, September 30, 2019 2018 Cash flow (used in) provided by operating activities $ 20,211 $ 22,048 Capital expenditures $ (28,639) $ (12,930) S Capital expenditures are largely composed of growth-related activities (POU unit placements, AUC growth, Limetree) that will result in the generation of additional revenues and Adjusted EBITDA in future years S Completed follow-on offering of ~4.7 million ordinary shares in July, raising ~$75M of net proceeds (1) Total Net Debt , a non-GAAP financial measure, is defined as total debt less cash, cash equivalents and restricted cash as reported on the Consolidated Balance Sheets. 7

2019 Outlook S Due to the strong financial performance reported through Q3 2019 year-to-date and the anticipated impact of the completed 2019 Quench acquisitions, the Company is increasing its previously provided guidance ranges. S For the full-year 2019 outlook, the Company is currently targeting: Previous FY 2019 FY 2019 Outlook Outlook Revenue $197M - $201M $192M - $197M Adjusted EBITDA $72M - $75M $69M - $72M Principal Collected on the Peru $5.3M $5.3M Construction Contract Adjusted EBITDA plus Principal Collected $77M - $80M $74M - $77M on the Peru Construction Contract S Outlook does not include any pending or future acquisitions The above statements are based on current targets. These statements are forward-looking and actual results may differ materially. AquaVenture does not provide GAAP financial measures on a forward-looking basis because we are unable to predict with reasonable certainty the ultimate outcome of unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments, among other factors, without unreasonable effort. These items are uncertain, depend on various factors, and could be material to our results computed in accordance with GAAP. 8

Appendix: Supplemental Information and Reconciliations 9

Income Statement AquaVenture Holdings Limited and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (In Thousands) Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 Revenues: Bulk water $ 14,992 $ 14,626 $ 44,916 $ 42,682 Rental 24,286 16,261 68,660 45,041 Product sales 12,769 4,952 34,511 13,012 Financing 900 985 2,809 3,048 Total revenues 52,947 36,824 150,896 103,783 Cost of revenues: Bulk water 6,958 6,771 20,481 20,021 Rental 11,245 7,130 30,898 20,240 Product sales 8,271 3,256 22,157 8,624 Total cost of revenues 26,474 17,157 73,536 48,885 Gross profit 26,473 19,667 77,360 54,898 Selling, general and administrative expenses 23,518 20,826 69,256 59,689 Income (loss) from operations 2,955 (1,159) 8,104 (4,791) Other expense: Interest expense, net (6,214) (3,396) (19,282) (10,000) Other expense, net (233) (228) (381) (520) Loss before income tax expense (3,492) (4,783) (11,559) (15,311) Income tax benefit (expense) 445 (2,051) 1,517 (1,312) Net loss (3,937) (2,732) (13,076) (13,999) Other comprehensive income: Foreign currency translation adjustment (67) 106 169 (84) Comprehensive loss $ (4,004) $ (2,626) $ (12,907) $ (14,083) Loss per share – basic and diluted $ (0.13) $ (0.10) $ (0.46) $ (0.53) Weighted-average shares outstanding – basic and diluted 31,201 26,590 28,354 26,544 10