Energy Recovery, Inc. · NASDAQ:ERII
Energy Recovery — Shareholder Meeting (June 2019)
21 slides from Energy Recovery's shareholder meeting presentation, June 2019
Slide 1: Annual Shareholder Meeting Presentation
Energy Recovery Annual Shareholder Meeting Presentation June 2019 NASDAQ: ERII
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT This presentation contains forward‐looking statements within the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward‐looking statements in this report include, but are not limited to, statements about our expectations, objectives, antic
Slide 3: Energy Recovery Snapshot
ENERGY RECOVERY SNAPSHOT Who Are We o An engineering‐driven technology company delivering innovative solutions for industrial fluid flow processes o Our technologies drive meaningful cost savings and operational efficiencies for customers Our Approach o Convert wasted pressure energy into a reusable
Slide 4: Our Solutions
OUR SOLUTIONS Water Oil & Gas Energy Recovery Devices Hydraulic Fracturing Solution PX® Pressure Exchanger® AT™ Turbocharger VorTeq™ Pumps Mud Pumping Solution AquaBold™ High Vertical Circulation Horizontal MTeq™ Pressure Pump Pump Circulation Pump 4
Slide 5: Our Global Reach of Energy Recovery Solutions
OUR GLOBAL REACH OF ENERGY RECOVERY SOLUTIONS ~17M cubic >11.5M metric tons ~$2.0B/year saved ~20,000 devices meters/day of potable CO2 offset/year ‐ for customers2 installed worldwide water produced1 equal to >2.4M cars3 5 1Assuming all deployed devices are in operation; 2Energy Recovery estimates;
Slide 6: Historical Financial Results
HISTORICAL FINANCIAL RESULTS Revenue: 25% CAGR 2014‐2018 Product Gross Margin Strength $75M $69M 70.7% $58M 67.1% 64.1% $45M 56.2% 54.9% $30M 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Net Cash and Securities Position of over $91M o We are positioned to make critical investments in our busine
Slide 7: Reinvigorating Energy Recovery
Reinvigorating Energy Recovery Transforming our organization
Slide 8: Realignment + Refocus = A Reinvigorated Energy Recovery
REALIGNMENT + REFOCUS = A REINVIGORATED ENERGY RECOVERY Realigned organization to ensure proper focus on execution and resource allocation o Separated into Water and Oil & Gas business units o Assembled separate Water and Oil & Gas teams to reinvigorate each business vertical o Reorganized R&D to be
Slide 9: Strategically Shifting to an Engineering Driven Organization
STRATEGICALLY SHIFTING TO AN ENGINEERING DRIVEN ORGANIZATION o Investing in multi‐disciplinary engineering talent R&D Spend as % of OPEX o Realigning R&D organization to improve focus 36.5% and ability to execute 32.9% 27.8% o Building necessary infrastructure 20.5% o Enhancing capabilities critical
Slide 10: Evolving Manufacturing Capabilities
EVOLVING MANUFACTURING CAPABILITIES Advanced Ceramics Manufacturing Capabilities Help Drive Water Success o Vertically integrated ceramics manufacturing facility located in‐house in CA Creates potential competitive barrier to entry o Best practices ensure high‐quality production process Approxim
Slide 11: Water
Water Global water macro trends driving robust future outlook for Energy Recovery
Slide 12: Fresh Water Scarcity Is Increasing
FRESH WATER SCARCITY IS INCREASING Fresh water demand is increasing, creating global demand gaps o Water demand driven by population growth, industrialization, rapid urbanization, climate change o The world will only have 60% of the water it needs by 20301 o Potable water demand expected to increase
Slide 13: Thermal Desalination Decommissioning Creating Incremental Demand
THERMAL DESALINATION DECOMMISSIONING CREATING INCREMENTAL DEMAND o Thermal seawater desalination was the dominant technology through the 1990s o Operational savings from devices like the PX made SWRO significantly cheaper than thermal Thermal OPEX costs today are roughly 2x higher than SWRO $1B
Slide 14: Focused on Expanding Our Water Business
FOCUSED ON EXPANDING OUR WATER BUSINESS We Currently Focus on Only 1‐2% of a Project’s Average Desalination Project Capital Spend1 Capital Spend o Energy recovery devices make up a small fraction of CAPEX, but are critical to make plant Intake/Outfalls 7% Pretreatment operations affordable 6% Engine
Slide 15: Global Water Macro Trends Driving Robust Future Outlook
GLOBAL WATER MACRO TRENDS DRIVING ROBUST FUTURE OUTLOOK Factors driving forecasted growth o Macro demand trends Population growth, industrialization, rapid urbanization, climate change o Macro supply trends SWRO water supply expansion Thermal to SWRO water retrofits to maintain supply o Water
Slide 16: Oil & Gas
Oil & Gas Material progress made on path to commercializing the VorTeq system
Slide 17: We Are Applying Our Water Expertise to Oil & Gas
WE ARE APPLYING OUR WATER EXPERTISE TO OIL & GAS Water and Oil & Gas have similarities o High pressure fluid environments o Potential transference of hydraulic energy from a high‐pressure fluid to a low‐pressure fluid o Opportunities to eliminate waste in system – increase efficiencies and decrease
Slide 18: VorTeq Commercialization Remains Our Focus
VORTEQ COMMERCIALIZATION REMAINS OUR FOCUS Materially advancing VorTeq technology o Confident in core pressure exchanger technology o Substantial progress in advancing and implementing system level design enhancements Required prior to Milestone 1 Critical for technology commercialization o Tech
Slide 19: Our Commercial Development Center Is Critical to Growth
OUR COMMERCIAL DEVELOPMENT CENTER IS CRITICAL TO GROWTH Rigorous VorTeq system testing and validation ongoing o Facility uses industry standard equipment to simulate the pressures, flow, and operating conditions of a real frac site o Allows us to confirm system reliability and repeatability in varia
Slide 20: We Are Proactively Preparing for Post Commercialization Execution
WE ARE PROACTIVELY PREPARING FOR POST COMMERCIALIZATION EXECUTION Manufacturing o Construction has begun on manufacturing facility o Building infrastructure to support testing and commercial production levels Procuring advanced equipment to precision machine, inspect and test tungsten carbide comp
Slide 21: OB energy recovery’
OB energy recovery’