Energy Recovery, Inc. · NASDAQ:ERII
Energy Recovery — Investor Presentation (March 2018)
20 slides from Energy Recovery's investor presentation, Mar 21, 2018
Slide 1: ERI Investor Presentation 2018
ERI INVESTOR PRESENTATION (NASDAQ: ERII) 2018
Slide 2: 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, anticipations, plans, hopes, be
Slide 3: VorTeq Update
Page 3 VORTEQ UPDATE o Significant internal lab testing on harder-grade components • Performed 9600 psi, 45,000 lbs proppant test on single cartridge with one end cover in harder-grade and one end cover in softer-grade • Harder-grade performed as expected showing no signs of material degradation • S
Slide 4: VorTeq Update - Continued
Page 4 VORTEQ UPDATE - CONTINUED o Based on internal testing, Company opts to utilize harder-grade for all cartridge components o Cartridge components have arrived and will continue to arrive into April o Final machining and qualification of received components to continue in parallel o Timing of co
Slide 5: Energy Recovery Snapshot
ENERGY RECOVERY SNAPSHOT Page 5 What We Do/Product Strategy An energy solutions provider and technology leader in applying fluid dynamics and advanced materials science Who We Are Create markets to preserve or eliminate pumps that are subject to and destroyed by hostile process fluids Convert wa
Slide 6: Material Science Arbitrage – Pump Preservation
MATERIAL SCIENCE ARBITRAGE – PUMP PRESERVATION Page 6 Typical pumps present design and material composition challenges: Multiple moving parts, multiple potential points of failure Components chiefly comprised of alloys, coated alloys and polymers Susceptible to abrasion, erosion, fatigue and cor
Slide 7: Pressure Energy Recycling - Convert Wasted Pressure to Electricity
PRESSURE ENERGY RECYCLING - CONVERT WASTED PRESSURE TO ELECTRICITY Page 7 Pressure energy is being needlessly wasted: Dissipation of energy through valves, chokes or geological mass wastes valuable energy Wasted pressure energy = wasted electricity and $$$ We recycle otherwise wasted pressure en
Slide 8: Core Technology – The Pressure Exchanger
CORE TECHNOLOGY – THE PRESSURE EXCHANGER Page 8 Fluid Flows in Pressure Exchanger Hydraulic Piston Concept Pressure Exchange Snapshot
Slide 9: Pump Preservation – Pressure Pumping
PUMP PRESERVATION – PRESSURE PUMPING Page 9 Status Quo With VorTeq NO SAND OR CHEMICALS ENTER THE PUMPS
Slide 10: Pump Preservation – VorTeq Creates Significant Value
PUMP PRESERVATION – VORTEQ CREATES SIGNIFICANT VALUE Page 10 Existing Pumping Model with 15 to 20 PD Pumps New Pumping Model with 3 to 4 Centrifugal Pumps Centrifugal Pump Model $8M to $12M p/yr p/fleet* Reduced Maintenance: $3M to $4M p/yr p/fleet* Decreased Pump Redundancy / Lower CAPEX: $1M to $2
Slide 11: VorTeq Commercialization Path
Page 11 VORTEQ COMMERCIALIZATION PATH Commercialization is twofold: Schlumberger Licensing Agreement • Acceptance standards inclusive of M1 & M2 as well as other performance tests • SLB responsible for missile manufacturing, ERII to provide PXs, housing and motors • Five years from first unit to
Slide 12: Pump Preservation – MTeq Mud Pumping Solution
PUMP PRESERVATION – MTEQ MUD PUMPING SOLUTION Page 12 Status Quo With MTeq NO MUD PASSES THROUGH THE PUMPS
Slide 13: Pump Preservation – MTeq Unlocks Value for Operators
PUMP PRESERVATION – MTEQ UNLOCKS VALUE FOR OPERATORS Page 13 Drilling Configuration with MTeq & Centrifugal Pumps Reduced Operating Cost Reduced R&M Increased pump life Fewer pumps Reduced Logistics Lower load requirements Less rig-up and rig-down time Increased Productivity Reduction in
Slide 14: Pressure Energy Recycling – Desalination
PRESSURE ENERGY RECYCLING – DESALINATION Page 14 Status Quo With Pressure Exchanger From first sale to 90% market share in under 10 years* 18,000 PX devices installed worldwide Up to 25-year life with virtually no maintenance 60%+ gross margins Wasted Pressure Energy Toward Geologic Mass 60%
Slide 15: Industry Agnostic R&D Allocation Process
INDUSTRY AGNOSTIC R&D ALLOCATION PROCESS Page 15 What criteria qualifies a market opportunity? High rates of flow High pressure differentials High capital intensity Hostile process fluids Fracing Upstream Drilling Desalination
Slide 16: Execution of Strategic R&D
Page 16 EXECUTION OF STRATEGIC R&D Evaluation Criteria to Determine Funding Value to Customer Market Size Net Present Value IP Potential Technical Difficulty Strategic Fit Internal Competency Time to Market Ease of Entry Concept Uniqueness
Slide 17: Disrupting Global Pumping Market
DISRUPTING GLOBAL PUMPING MARKET Page 17 Global Pumping Market Exceeded $53B in 2017 Significant Arbitrage Opportunity in the Pumping Market Pump aftermarket components cost industries $9 billion in 2017 Replacement pump sales exceed $25 billion in 2017 Source: McIlvaine Pump Report and Manageme
Slide 18: Wasted Pressure Energy Market Opportunity
WASTED PRESSURE ENERGY MARKET OPPORTUNITY Page 18 Source: McIlvaine Pump Report and Management Estimates Energy Recovery Devices Target Control Valve and High Performance Pump Applications Wasted Pressure Energy Opportunity in Excess of $5.5B in 2017 TOTAL MARKET OPPORTUNITY IS SEVERAL ORDERS OF MAG
Slide 19: Ubiquitous Technology with Significant Growth
Page 19 UBIQUITOUS TECHNOLOGY WITH SIGNIFICANT GROWTH *Pro Forma Water Business Provides Funding Mechanism for Future R&D Future Derivative Applications Annual R&D Spend: $9.7MM (27.5% of OPEX) in 2014 $7.6MM (20.5% of OPEX) in 2015 $10.1MM (27.8% of OPEX) in 2016 $11.5MM (30.6% of OPEX) in
Slide 20: Thank You
THANK YOU energy recovery”