www.fluencecorp.com Targeting Global Leadership in Decentralized Water & Wastewater Treatment Solutions Fluence Corporation (ASX: FLC) Corporate Overview August 2019
Executive Summary • A leading water and wastewater treatment solutions provider focused exclusively on the decentralized US$M market – Over 7,000 installations in over 70 countries • Global water scarcity and contamination is real and growing, with large centralized solutions not always being viable • Our decentralized solutions are CapEx efficient and deploy rapidly – US$22B market by 2021 (1) (one of US$M the fastest growing segments) • 2018 Revenue of US$101.1M (+74% vs. 2017 (2) ) and Gross Profit US$34.5M (3) • Backlog at the end of June 2019 of US$278M • Targeting sustainably positive EBITDA by Q4 2019 (1) Source: Global Water Intelligence, Global Water Market 2017 Volume 1 (2) 2017 pro-forma (consolidation of 12 months of RWL water) 2 (3) Q4 and Full Year Audited Gross Profit include a $6.5M benefit of reversal of an onerous contract provision from prior years
Water Shortages: Widespread & Growing Water shortages affect 2.7B people now Global Population 2.4B people lack proper wastewater treatment now An additional 2.1B people need upgraded treatment Population growth from 7.4B in 2016 to 9.1B by 2050 60% increase in global food production by 2050 Manufacturing water demand will grow 400% by 2050 Experiencing Water Shortages Global water consumption to double by 2050 Sufficient Water Supply Results in 40% water deficit by 2030 Sources: WWF, Water Scarcity, 2014; US Geological Survey, 2015; UN World Water Development Report, 2017; Water for Food, UNCTAD, 2011. 3
Major Milestones and Growth Momentum Q2 2019 FY 2018 • Largest booking in Brazil for • Achieved organic $10M desalination project revenue growth of with a repeat customer 74% • First NIROBOX™ order in the Q3 2018 • >200% increase in • First MABR sale to US Gross Profit Hubei ITEST • Reduced G&A by • First NIROBOX™ 30% BOT signed in Q1 2018 Philippines • Received award for • First commercial Decentralized Aspiral™ sales in Water & US and Philippines Wastewater FY 2019E Company of the ✓ Targeting ~20% YoY Year Q3 2017 revenue growth of • First NIROBOX™ Q1 2019 Emefcy and Smart Products orders in Argentina • Record quarterly RWL Water ✓ Increasing backlog of and Philippines bookings of $223M merged to form projects with Fluence • Awarded €165M Recurring Revenue Q4 2018 Corporation landmark Ivory Coast ✓ Goal to achieve • Commencement of (ASX:FLC) contract sustainably positive San Quintin Project • Largest individual order EBITDA • Largest NIROBOX™ Q2 2018 of 40 Aspiral™ units in order ever from Egypt • San Quintin China (12 units) • Official launch of SUBRE project reaches • Announcement of Q4 2017 Financial Close and first commercial $50M Generate Opening of first • Aspiral™ orders secured Capital debt facility MABR product suite • Total backlog of $267M, manufacturing plant launch up 181% YoY 4 in Changzhou, China
Complete Suite of Water & Wastewater Treatment Solutions Water Wastewater Wastewater-to- Food & Beverage Desalination Reuse Treatment Treatment Energy Processing ✓ ✓ ✓ ✓ ✓ ✓ ✓ Custom ✓ ✓ ✓ ✓ ✓ ✓ Engineered Solutions 5
Focus on Decentralized Systems Urgent Need For Affordable, Fast-to-Deploy Solutions Centralized Decentralized The vs. Rationale ✓ 1/3 of time-to-complete and lower, just-in-time CAPEX 2/3 of CAPEX before the plant (piping, pumping) ✓ Capturing more value Expensive to maintain and upgrade ✓ Scalable and customized to fit current needs No flexibility and scalability ✓ Easy to upgrade and relocate Mainly for well developed urban areas • High margins Pre-engineered plug and play solutions • Fast delivery and installation • Scalability Why Fluence • High quality effluents Proprietary smart technologies Wins and modular approach • Lower energy and OPEX 6 • Low maintenance needs
Fluence Growth Areas Reporting Segment Products Smart Products Solutions Aspiral, SUBRE, NIROBOX BOOT Recurring Revenue and Complete range of O&M and Aftermarket Services Aftermarket offerings Custom-Engineered Solutions Waste-to-Energy, Large projects, EPC Water and wastewater treatment solutions for customers across the industrial, commercial and municipal sectors 7
Growth Strategy • Leading suite of Smart Products Solutions for underserved decentralized water and wastewater markets worldwide • Leverage global Custom Engineered Projects reputation on decentralized plant sales enabling more repeat orders, faster delivery, higher margin • Growing BOOT pipeline funded by non-dilutive debt finance increases recurring revenue • Target China’s wastewater treatment market with MABR -based Aspiral ™ Smart Packaged plants to drive rapid growth • Leverage partners to accelerate pipeline, bookings and revenue growth • Maintain healthy top-line growth • Increase total gross margin blend • Target sustainably positive EBITDA by Q4 2019 8
Smart Products Solutions Packaged MABR wastewater treatment Packaged potable water MABR wastewater treatment solutions solutions treatment solutions for existing or new plants 5,000-200,000 GPD raw municipal 130,000-400,000 GPD Seawater, Fresh 0.15-25 MGD raw municipal sewage sewage water, Brackish water Stricter regulations Water shortages Stricter regulations Market Decentralization, Energy efficiency Decentralization, Energy-efficiency Process intensification Drivers: Increased urbanization, New-build Increased urbanization, New-build Outdated infrastructure infrastructure infrastructure Energy efficiency Plants USVI, Stanford (Title 22 Plants globally including Egypt, South Ma’ayan Zvi, Israel Market validated), Oregon, Texas, Argentina, Africa, Philippines, Caribbean, Significant and growing pipeline Adoption: Ecuador, China, Philippines, Israel Mexico, South America Commercial launch Q1 2019 and first commercial contract in Jamaica 9
Smart Products Solutions: Accelerating Activity in China Experienced local Network of Established local Reference sites in sales teams strategic partners manufacturing multiple provinces First Aspiral ™ Repeat order Plant in through Jinzi Hunan Largest Exclusive Bulk order of 35 for the Local Province individual order First Aspiral™ Jinzi secures partnership Aspiral ™ units under Government via partner of 40 Aspiral ™ plant in Henan third contract agreement with exclusive partnership of Zhenfeng Hunan units from Province via in Guizhou ITEST in Hubei agreement with ITEST County Kaitian ITEST partner QSY Province Province in Hubei Province Sep Nov Mar May Jun Jul Oct Nov Dec Feb Mar 2017 2017 2018 2018 2018 2018 2018 2018 2018 2019 2019 First Framework First Aspiral™ Tripartite First sale via Sale of 6 Additional production agreement for 6 Plant in framework partner Hubei Aspiral™ units Aspiral™ plants of Aspiral™ Aspiral™ units via Beijing area agreement for ITEST. via partner in Hebei and modules in partner Jinzi via partner Aspiral™ in 3 Shipped, Zhongzi Huaze Zhejiang China Glory Land districts in delivered and in Jilin Province Provinces Yiyang City installed in 6 weeks 26 Partnerships covering 16 Provinces and 26 Installations 10
Recurring Revenue: Build Own Operate and Transfer (BOOT) Complete Water and Wastewater Solutions Recurring High Margin Revenue • Fluence’s Aspiral ™ and NIROBOX ™ products are ideal for BOOT projects → Footprint, energy efficiency, reliability, low maintenance and quality output → Using in-house proprietary technologies enhances margin • Uses Fluence’s equity to inject its own equipment • Ability to offer complete water/wastewater reuse solutions • BOOT agreements offer lucrative, recurring revenue for many years with higher valuations Multi-year Recurring Revenue Water Treatment Wastewater Treatment Capex 11
Recurring Revenue: BOOT Financing Facility in Place Equity • Combination of equity and debt: Partner – (Fluence) 70% non-recourse financing – 30% equity, and optional minority Equity Dividend Lender partners (finance Client Water Loan partner + – Fluence as EPC and O&M Contractor Project Fluence) Company Principal & Payments • Secured a US$50M non-recourse debt interest (SPV) facility from Generate Capital in 2018 Payments Construction – First drawdown of $2m in March 2019 Payments Services Operation EPC • Secured backlog of US$14.7 million of run- and (Fluence + Maintenance rate annual billings after construction of 3 contractors) (Fluence) projects is completed 12
Custom-Engineered Solutions: Solving Water and Wastewater Challenges Industrial Water Packaged Wastewater Wastewater-to-Energy Aeration Treatment Treatment Industrial Wastewater Food & Beverage EPC Projects Industrial Process Water Treatment Processing Bespoke solutions designed and built for customers worldwide 13
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