Energy Recovery, Inc. · NASDAQ:ERII
Energy Recovery — Investor Presentation (November 2017)
30 slides from Energy Recovery's investor presentation, Nov 27, 2017
Slide 1: ERI Investor Presentation 2017
ERI INVESTOR PRESENTATION (NASDAQ: ERII) 2017
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: Energy Recovery Snapshot
ENERGY RECOVERY SNAPSHOT Page 3 What We Do An energy solutions provider and technology leader in applying fluid dynamics and advanced materials science Pressure Energy is our Arbitrage Who We Are Create markets to preserve or eliminate pumps that are subject to and destroyed by hostile process flu
Slide 4: VorTeq Commercialization Update
Page 4 VORTEQ COMMERCIALIZATION UPDATE o VorTeq private testing deemed highly successful Tested all 12 PXs individually up to 8.5 barrels per minute each at 9000 psi clean (no proppant) Achieved long duration runs in excess of 60 bpm at 9000 psi clean Pumped a total of 100,000 pounds of proppa
Slide 5: VorTeq – A Matter of Engineering Not Physics
Page 5 VORTEQ – A MATTER OF ENGINEERING NOT PHYSICS o System excitation (vibration / shaking) at elevated flow rates was primary failure mode – resulting in: Axial bearing failure – increase in friction, cartridge rotation impeded PX cartridge liftoff – PX not seated flush / correctly within hou
Slide 6: History of Energy Recovery
1992 - 2014 2015 Developed Pressure Exchanger Technology Established Market Leadership in Desalination Increased shipments of Energy Recovery Devices Worldwide Invested in R&D New Corporate Strategy and Management Team Revenues up 47% in 2015 Signed 15-year license with Schlumberger Installed first
Slide 7: Investment Highlights
INVESTMENT HIGHLIGHTS Page 7 Growth Commercialize VorTeq technology MTeq product introduction and commercialization Alderley agreement to further penetrate Saudi Aramco & greater GCC Expand water desalination segment’s total addressable market Perpetual Innovation Pressure exchanger techno
Slide 8: Core Technology – The Pressure Exchanger
CORE TECHNOLOGY – THE PRESSURE EXCHANGER Page 8 Sleeve Rotor with ducts (only moving part) End covers Desalination - Ceramic PX Energy Applications - Tungsten Carbide PX Pressure Exchange Motion Snapshot
Slide 9: Product Portfolio
PRODUCT PORTFOLIO Page 9 Hydraulic Fracturing: VorTeq IsoGen Applications Gas Processing Pipelines Ammonia IsoBoost Applications Gas Processing Ammonia Making Desalination Affordable 18,000 Installations on 7 continents WATER CHEMICALS OIL & GAS Pressure Exchanger
Slide 10: Ubiquitous Technology with Significant Growth
UBIQUITOUS TECHNOLOGY WITH SIGNIFICANT GROWTH Page 10 $54.7M $200M+ 2016 2020+ Incremental Revenue Opportunity ~$50M ~$80M to $200M per annum $?M Desal SLB Licensing Revenue Derivative of Pressure Exchanger Develop derivatives of Pressure Exchanger Technology every 24 months, in annual cycles Contin
Slide 11: New Product and Market Development
Page 11 NEW PRODUCT AND MARKET DEVELOPMENT Flow x Pressure Differential = Energy Density High rates of flow ✔ High pressure differentials ✔ High capital intensity in the form of pumps and ancillary equipment ✔ Hostile process fluid applications ✔
Slide 12: Efficient Frontier of Product Optionality
EFFICIENT FRONTIER OF PRODUCT OPTIONALITY Page 12 Risk (technology, execution, capital) R et u rn IsoBoost™ – 2016 secured PO totaling up to $11M IsoGen™ – 2015, installed first ERD in Saudi Aramco facility VorTeq™ – 2015, exclusive licensing agreement with SLB PX / VorTeq derivatives – target rich
Slide 13: Go To Market Strategy
Page 13 GO TO MARKET STRATEGY Targeting 24 month development cycles, commencing every twelve months 1 Next concept cycle begins Concept cycle begins Proof of concept Months 12 24 Concept Size and segment market Derive value proposition Consummate early adoption partnership Prototype design and manuf
Slide 14: $4.1B Addressable Market Opportunity
$4.1B ADDRESSABLE MARKET OPPORTUNITY Page 14 WATER CHEMICALS OIL & GAS $50M $4.1B TAM (Bi llio n s) $4.0B $3.5B $3.0B $2.5B $2.0B $1.5B $1.0B $0.5B 0 Water Upstream Midstream New Opportunities Ammonia TOTAL $2.0B $1.2B $840M DEVELOPING ? $600M $4.5B Mud Pumping
Slide 15: Desalination
Click to edit Master text styles − Second level • Third level Desalination Page 15
Slide 16: Desalination – Our First Disruptive Technology
The “PX Pressure Exchanger” 18,000 PX devices installed worldwide 25-year life with no maintenance Dominant global market share 60%+ gross margins Compelling short and long term market opportunity Global water demand / supply gap Expand product offering to increase total addressable mark
Slide 17: Emerging Markets: Upstream Oil & Gas
17 Page 17 Emerging Markets Upstream Oil & Gas
Slide 18: VorTeq Hydraulic Pumping System
VORTEQ HYDRAULIC PUMPING SYSTEM Page 18 Hydraulic Piston Concept PX on Missile Fluid Flows in Pressure Exchanger VorTeq Missile
Slide 19: VorTeq Integration
VORTEQ INTEGRATION STRICTLY PRIVATE AND CONFIDENTIAL Page 19 Status Quo With VorTeq
Slide 20: Is VorTeq Disruptive?
IS VORTEQ DISRUPTIVE? Page 20 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 $2M p/yr p/fleet* With VorTeq Sta
Slide 21: SLB Licensing Agreement Structure
Page 21 SLB LICENSING AGREEMENT STRUCTURE o Agreement provides exclusive rights to ERI’s VorTeq™ Hydraulic Pumping System for on-shore hydraulic fracturing (Field of Use) Commercializes the VorTeq™ technology with one of the industry’s most respected oil-field services companies o Highlights Sch
Slide 22: MTeq Mud Pumping System
MTEQ MUD PUMPING SYSTEM Page 22 Status Quo With MTeq
Slide 23: MTeq Unlocks Value for Operators
MTEQ UNLOCKS VALUE FOR OPERATORS Page 23 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 planned and unplann
Slide 24: Emerging Markets: Midstream & Chemicals
Emerging Markets Midstream & Chemicals Page 24
Slide 25: Our Solution – Gas Processing, Ammonia, and Pipelines
OUR SOLUTION – GAS PROCESSING, AMMONIA, AND PIPELINES Page 25 IsoBoost and IsoGen recover pressure energy and increase reliability of pumping systems Save millions of dollars in energy over life of plant Improve reliability, availability, maintainability Decrease carbon footprint Licensing Agr
Slide 26: Our Solution – Gas Processing and Ammonia
Status Quo With IsoBoost OUR SOLUTION – GAS PROCESSING AND AMMONIA SWEET GAS CONTACTOR SOUR GAS RICH AMINE LETDOWN VALVE HEAT EXCHANGER TO REGENERATOR HIGH PRESSURE PUMP HIGH PRESSURE PUMP HIGH PRESSURE PUMP FROM REGENERATOR LEAN AMINE SWEET GAS LEAN AMINE CONTACTOR SOUR GAS RICH AMINE HEAT EXCHANGE
Slide 27: Our Solution – Pipelines
Status Quo With IsoGen OUR SOLUTION - PIPELINES Page 27 Vertical Pipelines Must Be Depressurized Pressure Generating Power
Slide 28: Strategic Imperatives: Short Term and Long Term Goals
Strategic Imperatives Short Term and Long Term Goals Page 28
Slide 29: Strategic Imperatives
STRATEGIC IMPERATIVES Page 29 Commercialize VorTeq On schedule to achieve Milestone success in 2017 Deployment estimated to commence in 2018 Monetize Centrifugal Product Lines Alderley relationship provides path for growth in GCC Execute similar structure for monetization in other regions ar
Slide 30: Thank You
THANK YOU energy recovery”
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