Energy Recovery, Inc. · NASDAQ:ERII
Energy Recovery — Investor Presentation (October 2015)
38 slides from Energy Recovery's investor presentation, Oct 30, 2015
Slide 1: Investor Presentation October 2015
INVESTOR PRESENTATION OCTOBER 2015 energy recovery”
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 presentation include statements about market trends, possible future revenue growth, and bus
Slide 3: Corporate Overview
CORPORATE OVERVIEW o NASDAQ: ERII o Market Cap ~$400M o IPO in 2008 o Headquartered in San Leandro, CA © 105+ employees o Global presence o Strong Balance Sheet — ($100M Cash, No debt)
Slide 4: About Us
ABOUT US Who We Are o Energy solutions provider Core Competencies o Fluid dynamics o Advanced material science What We Do o Convert wasted pressure energy into reusable asset © Preserve or eliminate pumping technology in hostile processing environments 4 energyrecovery.com e<op
Slide 5: Product Portfolio
PRODUCT PORTFOLIO ROI Turbine Upto 70% Efficiency TkoGen Applications + Gas Procesing + Pipelines Fracing: Vorteq™ — Desal: PX Pressure Exchanger Upto 98% Efficiency {soBoost Applications * Gas Processing + Ammonia > Efficiency nergyrecovery.com CS energy recovery:
Slide 6: Key Milestones & Performance
KEY MILESTONES & PERFORMANCE Recent Key Developments ° ° CEO Transition (Joel Gay appointed CEO in April 2015) Management reconstituted (CFO and VP of Strategy joined in June 2015) Strategy Reloaded — Bias towards execution (March 2015) Liberty Field Trial Commencement of VorTeq™ for Hydraulic Fract
Slide 7: Strategy Reloaded - Extreme Bias Towards Execution
STRATEGY RELOADED - EXTREME BIAS TOWARDS EXECUTION © Shot-gun to rifle shot market penetration + Strategically rationalized ¥ P-1: Hydraulic Fracturing ¥ P-2: Gas Processing v P-3: Ammonia ¥ P-4: Pipelines + Geographically rationalized ¥ Global to Americas and Middle East * Cost structure right-size
Slide 8: $4 Billion Global Recurring Markets
$4 BILLION GLOBAL RECURRING MARKETS WATER Desal $50M Gas Processing $369M Pipelines $936M Hydraulic Fracturing $1.4B CHEMICALS ‘Ammonia $838M Urea $364M
Slide 9: Strategic and Geographic Rationalization
STRATEGIC AND GEOGRAPHIC RATIONALIZATION Rifle-shot Account Marketing Engagement
Slide 10: Desalination
Slide 11: Desalination - Our First Disruptive Technology
DESALINATION - OUR FIRST DISRUPTIVE TECHNOLOGY ©. The “PX Pressure Exchanger” = 16,000 PX Devices Installed Worldwide = 3-Month Payback = 25-year Life with No Maintenance = Dominant Global Market Share * 60%+ Gross Margins o Compelling Short and Long Term Market Opportunity = Global Water Demand / S
Slide 12: Desalination with PX Pressure Exchanger
DESALINATION WITH PX PRESSURE EXCHANGER MEMBRANES. v4
Slide 13: PX Pressure Exchanger at Work
PX PRESSURE EXCHANGER AT WORK Low-prossure feed water fills rotor chamber, displacing brine High Pressure brine pressurizes Rotor chamber seals, containing ‘and displaces feedwater high pressure brine | Genezyrmcomey
Slide 14: Case Study - Carlsbad
CASE STUDY - CARLSBAD ‘Top-5 Reasons Carlsbad Picked PX Pressure Exchangers: . Consistent Performance (97% efficiency, 0.11% Std. Deviation) . Highest Availability (99.8%) . Advanced Materials (Life of 25+ years) . Reduced Noise Levels (72 dBA) . Proven Results (15,000 install base) vaene PX Pressur
Slide 15: Growth Markets: Hydraulic Fracturing
Slide 16: Pain Point
PAIN POINT Pump Failures are the #1 Operational Challenge Faced by the Industry ..» High Pump Maintenance Costs Sporadic and Excessive Downtime (Pump Failures) _ High Levels of Redundancy (Mitigate Pump Failures) The Mechanical Equivalent of Adding Sand to Your Car's Engine | PS} energy recovery
Slide 17: Our Solution
OUR SOLUTION Possibly the Most Disruptive Product Ever Developed by ERI Vorleq PURE GRIT,
Slide 18: Status Quo - Hydraulic Fracturing Without VorTeq
STATUS QUO - HYDRAULIC FRACTURING WITHOUT VORTEQ BLENDER
Slide 19: Our Solution - Hydraulic Fracturing with VorTeq
OUR SOLUTION - HYDRAULIC FRACTURING WITH VORTEQ™ ——— oo “y l WATER FLUID ig pressuRe waen . np Frac oe rueer w CLEA VorTeq’ Et ar ‘OUP | Genezyrmcomey
Slide 20: Our Proven Technologies Adapt to Other Industries
OUR PROVEN TECHNOLOGIES ADAPT TO OTHER INDUSTRIES o Innovation + As ERI has changed the desalination industry, we stand ready to do the same with hydraulic fracturing o Validation + Recent deal with Schlumberger Technology, the global leader in oilfield technology, underscores this reality o Value C
Slide 21: Signed 15-Year License Agreement with Schlumberger
SIGNED 15-YEAR LICENSE AGREEMENT WITH SCHLUMBERGER © Agreement provides exclusive rights to ERI’s VorTeq™ hydraulic pumping system + Commercializes the VorTeq™ technology with one of the industry's most respected oil-field services companies © Financial Terms of Agreement with Schlumberger = 2015: S
Slide 22: Value Proposition - Value Creation
VALUE PROPOSITION - VALUE CREATION _ Reduced Maintenance _ Decreased Pump Redundancy / Lower CAPEX _Pumping “ paradigm Shift | Genezyrmcomey
Slide 23: 1st Order Value Prop - Reduced Maintenance Cost
1ST ORDER VALUE PROP - REDUCED MAINTENANCE COST VorTeq Optimized os, me $1.1M > VorTeq Royalty $1.5M Pump Maintenance $4.1M Fleet Impact Per Year (Based on 2,000 pumping hours piyt)
Slide 24: 2nd Order Value Prop - Reduced Redundancy
2° ORDER VALUE PROP - REDUCED REDUNDANCY Decreased Pump Redundancy / Lower CAPEX Avg # of Redundant Pumps pifleet: 4 Eliminate Future CAPEX and Maintenance: - 2 = Eliminate Opportunity Cost of Idle ‘Avg. Cost Capacity: p/Pump: $1.5M $10 - 14M p/Yr Revenue Generation Pumpers will be able to decrease
Slide 25: 3rd Order Value Prop - Paradigm Shift
30 ORDER VALUE PROP - PARADIGM SHIFT ae VORTEQ IS THE GATEWAY TECHNOLOGY TO A reciolleed Oe NEW PUMPING MODEL. Effective Pumping Modet VorTeq Optimized 3:4 Centrifugal Pumps with Gas Turbines Dramatically Decrease Operational Footprint Alleviates Pumping Constraints Faced by ‘Completions Engineers 5
Slide 26: Timeline - VorTeq Evolution
TIMELINE - VORTEQ EVOLUTION VorTeq Concept Invented
Slide 27: Growth Markets: Gas Processing
}) Growth Markets | Gas Processing _
Slide 28: Gas Market - Gas Processing Eco-System
GAS MARKET - GAS PROCESSING ECO-SYSTEM THE
Slide 29: Pain Points
PAIN POINTS Excessive Redundancy & High Energy Downtime is Costly Maintenance Consumption Common Denominator: Pumps
Slide 30: Our Solution - IsoBoost System
OUR SOLUTION - ISOBOOST SYSTEM
Slide 31: Growth Markets
Growth Markets
Slide 32: The Market - Ammonia
THE MARKET - AMMONIA
Slide 33: Pain Points
PAIN POINTS Excessive Redundancy & High Energy Downtime is Costly Maintenance Consumption Common Denominator: Pumps
Slide 34: Our Solution - IsoBoost
OUR SOLUTION - ISOBOOST
Slide 35: Growth Markets: Pipelines
Slide 36: Pain Point
PAIN POINT Wasted Energy | Genezyrmcomey
Slide 37: The Solution - IsoGen
THE SOLUTION - ISOGEN Vertical Pipelines Must be Depressurized Pressure Generating Power
Slide 38: $4 Billion Global Recurring Markets
$4 BILLION GLOBAL RECURRING MARKETS WATER Desal $50M 38 Gas Processing $369M Pipelines $936M Hydraulic Fracturing $1.4B CHEMICALS ‘Ammonia $838M Urea $364M
Energy Recovery — Investor Presentation (October 2015) on 6ix