TSXV: XBC Investor Presentation January 2020 1
Forward-looking Statements TSXV: XBC Certain statements in this presentation may constitute "forward-looking" statements within the meaning of applicable securities laws. This forward-looking information includes, but is not limited to, the expectations and/or claims of management of Xebec Adsorption Inc. (“Xebec”) with respect to information regarding the business, operations and financial condition of Xebec. Forward looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Xebec or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements use words like "anticipate", "believe", "plan", "estimate", "expect", "intend", "may", "will" and other similar terminology. This list is not exhaustive of the factors that may affect forward-looking information contained in this presentation. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this presentation. Forward-looking statements involving significant risks and uncertainties should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. 2
What We Do TSXV: XBC • Xebec is accelerating the adoption of renewable gases (renewable natural gas and renewable hydrogen) to reduce carbon emissions in the gas grid • We design, engineer and manufacture equipment used in the production of renewable gases • Xebec provides customers such as utilities, municipalities, waste management companies and energy suppliers the ability to transition to a sustainable future Cleantech Systems Industrial Service & Support Renewable Gas Infrastructure Equipment used in the generation of Services our cleantech systems and Build, own, operate renewable gas renewable gases contains our legacy equipment and parts infrastructure projects in Canada business 3
Investment Highlights TSXV: XBC 1. Join the Transition from Fossil to Renewable Gases • Inflection point in the growth of renewable gases as the world needs to decarbonize • Xebec is the world’s only focused “Renewable Gas Company” with exposure to both renewable natural gas (RNG) and renewable hydrogen (H2) 2. Rapidly growing, profitable cleantech play with proprietary technology • Accelerating traction with $100M+ in order backlog that validates the technology • Over $60M invested into proprietary technology in combination with industry leading know how • More than 65 RNG and 200 hydrogen projects deployed worldwide 3. Accretive Acquisition Strategy that Creates Unique Competitive Advantage • Ability to acquire profitable service companies at attractive valuations to expand geographical reach of our service network for cleantech systems • Grows our recurring revenue base by allowing us to capture revenue through parts, service and local support 4
Financial Highlights TSXV: XBC 2020 2019 Trailing 2018 2017 2016 (CAD million) FY Guidance Q3 12M FY FY FY Revenue 13.2 37.9 20.2 14.7 9.6 $80 - $90 Gross Margin 4.0 11.4 5.7 5.8 2.2 $24 - $27 Gross Margin % 30% 30% 28% 39% 23% ~30% Selling, General and Administrative Expenses 2.7 10.0 7.2 5.2 4.4 $16 - $18 SG&A as % of Revenue 20% 26% 36% 35% 46% < 20% Adjusted EBITDA 1.5 1.9 -1.4 0.8 -2.2 11 – 13%* Net Income (Loss) from Continuing Operations 1.0 0.0 -2.9 0.1 -2.7 7 – 9%* Earnings Per Share 0.02 0.00 -0.07 0.00 -0.07 - • Xebec has demonstrated the ability to deliver a significant revenue growth profile, while improving profitability and efficiency of the business * Shown as a percentage of total FY2020 revenue 5
What are Renewable Gases? TSXV: XBC • Two categories of gases in a sustainable future, renewable gases (renewable natural gas and renewable hydrogen) and low carbon gases • Renewable gases are sourced from feedstocks that are forms of waste or excess capacity (electricity), that otherwise would have little to no value Low Carbon Gas Renewable Gas Renewable Natural Green Blue Hydrogen Gas (RNG) Hydrogen (RH 2 ) Feedstock: Organic waste Feedstock: Surplus renewable Feedstock: Fossil Natural Gas (food, manure, agriculture, electricity (solar, wind, hydro) with Carbon Capture, Utilization industry, waste water) and Storage (CCUS) 6
Renewable Natural Gas 101 TSXV: XBC Chemical Composition Relevant Xebec Technologies: Carbon neutral or negative Biogas Upgrading (depending on the source) CH 4 • Carbon neutral form of natural gas that is created from Less costly than electrification decomposing organic matter (2-3x savings 1 ) • Bacteria decompose organic matter to create a raw biogas Interchangeable with fossil gas • Raw gas goes through a process of purification called (same composition) “biogas upgrading” to create RNG • As a result, methane from landfills, wastewater treatment Waste management tool plants, farms and industries can be captured, refined and (completes circular economy) converted into renewable energy • Xebec specializes in the separation of molecules using the Seasonal energy storage “upgrading” process to create RNG (orders of magnitude more capacity than batteries 2 ) 7 1 https://www.socalgas.com/1443741887279/SoCalGas_Renewable_Gas_Final-Report.pdf 2 https://www.snam.it/export/sites/snam-rp/repository/file/investor_relations/presentazioni/2019/Snam_role_of_gas.pdf
Renewable Hydrogen 101 TSXV: XBC Chemical Composition Relevant Xebec Technologies: Carbon neutral Steam Methane Reforming with CCUS (applicable to Blue or Green Hydrogen) H 2 • Hydrogen is the universe’s most abundant chemical Versatile energy carrier substance (created from wind, solar, hydro) • Today, majority (95%) is produced through a process called steam methane reforming (SMR) Zero tailpipe emissions (from FCEV, improves air quality) • Blue Hydrogen is becoming relevant and seeing growth from opportunities in mobility and industry, SMR process with Existing industry applications carbon capture and storage (CCUS) (food, glass, chemicals, steel, power) • Future opportunity with electrolysis using low costs or excess renewable energy producing Green Hydrogen for Economic energy storage energy storage applications and/or industry (power to hydrogen today is 1/3 cost lithium ion batteries 1 ) 1 https://www.snam.it/export/sites/snam-rp/repository/file/investor_relations/presentazioni/2019/Snam_role_of_gas.pdf 8
A Paradigm Shift in Energy TSXV: XBC • Shift away from fossil gases and continues to gain momentum • Energy providers need renewable gases to reduce their emissions, create compatibility with gas infrastructure and economic viability • We’ve seen “greening” of the electric grid, but not yet of the gas grid • Canada’s natural gas grid contains 0.02% renewable content while the electric grid is 66% renewable 1,2 • Gas utilities are threatened by electrification of their customer base • Renewable gases offer a solution for utilities to safeguard their business and this has created a massive market opportunity worldwide 1 https://www.cer-rec.gc.ca/nrg/sttstc/lctrct/rprt/2017cndrnwblpwr/cndnvrvw-eng.html 9 2 https://www.cga.ca/wp-content/uploads/2016/05/RNG-publication-FINAL-April-2016-EN.pdf
Global Market Opportunity TSXV: XBC • Utilities are the driving force behind renewable gas adoption and have worked with regulators and governments to enact targets and support schemes • Suppliers of RNG can receive up to $105 USD / MMBtu 1 of RNG, ~50x the price of fossil natural gas • Based on targets we estimate the market exceeds $10.9B for our cleantech equipment based on estimated 2,300 project requirement in Xebec’s core target geographies (U.S, Canada, Italy, France, China) Target or Mandate Geography Leader(s) 20% Renewable Gas by 2030 California, U.S.A SoCalGas 20% RNG by 2030 Vermont, U.S.A Vermont Gas 15% RNG by 2030, 30% by 2050 Oregon, U.S.A NW Natural 15% Renewable Gas by 2030 British Columbia, Canada FortisBC 5% RNG by 2025 Québec, Canada Énergir € 4.8B Support Scheme for RNG Italy Snam 10% Renewable Gas by 2030, € 800 million France Engie Investment 10 billion cubic meters of RNG by 2025 China 10 State Owned Enterprises 10 1 https://www.epa.gov/sites/production/files/2018-11/documents/7._deanna_haines-508.pdf
Business Segments TSXV: XBC 1. Cleantech Systems 2. Industrial Service & Support 3. Renewable Gas Infrastructure Biogas Upgrading O&M Service Contracts for Renewable Natural Gas Facilities in • • • Biogas Upgrading Plants Cleantech Installations Canada • Small-Scale Containerized Compressed Air Service Contracts • • Biogas Upgrading Systems Compressed Air Dryers • Steam Methane Reforming Natural Gas Dryers • • Small-Scale Containerized Oxygen and Nitrogen Generators • • Hydrogen Generators Industrial Air & Gas Purification • Systems Filters, Elements, Accessories • 11
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