Energy Recovery, Inc. · NASDAQ:ERII
Energy Recovery — Investor Presentation (May 2018)
19 slides from Energy Recovery's investor presentation, May 8, 2018
Slide 1: ERI Investor Presentation 2018
ERI INVESTOR PRESENTATION (NASDAQ: ERII) 2018
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 We Are An energy solutions provider and technology leader in applying fluid dynamics and advanced materials science Pressure Energy is our Arbitrage What We Do/Product Strategy ▪ Create markets to preserve or eliminate pumps that are subject to and destroyed by hostile p
Slide 4: Material Science Arbitrage – Pump Preservation
MATERIAL SCIENCE ARBITRAGE – PUMP PRESERVATION Status Quo Challenge Pressure Exchanger Advantage Typical pumps present design and material The pressure exchanger is elegant in design composition challenges: and robust in material composition: ▪ Multiple moving parts, multiple potential points ▪ One
Slide 5: Pressure Energy Recycling - Convert Wasted Pressure to Electricity
PRESSURE ENERGY RECYCLING - CONVERT WASTED PRESSURE TO ELECTRICITY Status Quo Challenge Pressure Exchanger Advantage Pressure energy is being needlessly wasted: We recycle otherwise wasted pressure energy: ▪ Dissipation of energy through valves, chokes ▪ Pressure energy can be recovered and utilized
Slide 6: Core Technology – The Pressure Exchanger
CORE TECHNOLOGY – THE PRESSURE EXCHANGER Hydraulic Piston Concept Fluid Flows in Pressure Exchanger Pressure Exchange Snapshot Page 6
Slide 7: Pump Preservation – Pressure Pumping
PUMP PRESERVATION – PRESSURE PUMPING Status Quo With VorTeq NO SAND OR CHEMICALS ENTER THE PUMPS Page 7
Slide 8: Pump Preservation – VorTeq Creates Significant Value
PUMP PRESERVATION – VORTEQ CREATES SIGNIFICANT VALUE Status Quo With VorTeq Centrifugal Pump Model Existing Pumping Model New Pumping Model with 4 to 5 with 15 to 20 PD Pumps Centrifugal Pumps 1 Reduced Maintenance: 3 Centrifugal Pump Model $3M to $4M p/yr p/fleet* $8M to $12M p/yr p/fleet* 2 Decrea
Slide 9: VorTeq Commercialization Path
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 full de
Slide 10: Pump Preservation – MTeq Mud Pumping Solution
PUMP PRESERVATION – MTEQ MUD PUMPING SOLUTION Status Quo With MTeq NO MUD PASSES THROUGH THE PUMPS Page 10
Slide 11: Pump Preservation – MTeq Unlocks Value for Operators
PUMP PRESERVATION – MTEQ UNLOCKS VALUE FOR OPERATORS Drilling Configuration with MTeq & Centrifugal Pumps Reduced Logistics Increased Productivity ✓ Lower load requirements ✓ Less rig-up and rig-down ✓ Reduction in planned and time unplanned rig downtime Reduced Operating Cost Higher Reliability & S
Slide 12: Pressure Energy Recycling – Desalination
PRESSURE ENERGY RECYCLING – DESALINATION Dominating the Energy Recycling Market in Desalination – Our First Market Disrupted Status Quo With Pressure Exchanger 60% reduction in size and subsequent energy reduction Wasted Pressure Energy Toward Geologic Mass Investment Highlights ▪ From first sale to
Slide 13: Desalination – Industry Growth Projections
DESALINATION – INDUSTRY GROWTH PROJECTIONS Steady Forecast for Capacity Additions in Opportunity for Growth & Desalination Over Next Several Years Expansion Beyond ERDs & Pumps 5,000,000 Intake/Outfalls Pretreatment 4,500,000 7% 6% Engineering & Design 4,000,000 Installation & 22% Fabrication 3,500,
Slide 14: Industry Agnostic R&D Allocation Process
INDUSTRY AGNOSTIC R&D ALLOCATION PROCESS What criteria qualifies a Fracing market opportunity? ✓ High rates of flow ✓ High pressure differentials Upstream Drilling ✓ High capital intensity ✓ Hostile process fluids Desalination Page 14
Slide 15: Execution of Strategic R&D
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 Page 15
Slide 16: Disrupting Global Pumping Market
DISRUPTING GLOBAL PUMPING MARKET Global Pumping Market Significant Arbitrage Opportunity Exceeded $53B in 2017 in the Pumping Market US dollars in millionsin US dollars ▪ Pump aftermarket components cost industries $9 billion in 2017 ▪ Replacement pump sales exceed $25 billion in 2017 PUMP PRESERVAT
Slide 17: Wasted Pressure Energy Market Opportunity
WASTED PRESSURE ENERGY MARKET OPPORTUNITY Energy Recovery Devices Target Wasted Pressure Energy Opportunity in Control Valve and High Performance Excess of $5.5B in 2017 Pump Applications TOTAL MARKET OPPORTUNITY IS SEVERAL ORDERS OF MAGNITUDE GREATER THAN COMPANY REVENUES Source: McIlvaine Pump Rep
Slide 18: Ubiquitous Technology → Growth
UBIQUITOUS TECHNOLOGY → GROWTH Future Derivative Applications Water Business Provides Funding Mechanism for Future R&D Annual R&D Spend: ▪ $9.7MM (27.5% of OPEX) in 2014 ▪ $7.7MM (20.5% of OPEX) in 2015 ▪ $10.1MM (27.8% of OPEX) in 2016 ▪ $13.4MM (32.9% of OPEX) in 2017 Page 18
Slide 19: Energy Recovery
energy recovery”