Transcript Investor Presentation

May 2008
OTCBB: TMEN
Forward Looking Statements
This presentation does not constitute an offer to sell or the solicitation
of an offer to buy any securities. It is presented to licensed brokerdealers and registered investment advisors for analysis purposes only.
Certain statements contained in this slide presentation are forward
looking statements that involve a variety of risks and uncertainties
including, but not limited to, our product development efforts, future
product demand and market acceptance, the effects of economic
conditions, the impact of competitive products and pricing and other
risks disclosed in our Securities and Exchange Commission filings.
ThermoEnergy Corporation is a diversified clean technologies
company engaged in the worldwide commercialization of
patented and/or proprietary municipal and industrial
wastewater treatment and power generation technologies.
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Water - The wastewater treatment technologies are consolidated
in our subsidiary, CASTion Corporation (CASTion), a developer
and manufacturer of innovative wastewater treatment and
recovery systems to industrial and municipal clients.
Clean Power Generation - The power generation technologies
are consolidated in our subsidiary, ThermoEnergy Power
Systems, LLC (TIPS). The economic and environmental matrix
of the Company's technologies represents a paradigm shift in
these key infrastructure industries.
Corporate Summary
Company
ThermoEnergy Corporation (OTCBB:TMEN)
Headquarters
Little Rock, Arkansas
Additional Locations
Worcester, MA / Jacksonville, FL, Baton
Rouge, LA / New York, NY
Share Price: $1.40
(5/13/08)
Fiscal Year End: 12/31
Market Cap: $58.1M
Cash Balance: $3.2M
(12/31/2007)
52 Week Range: $0.60-$1.95
Enterprise Value: $54.2M
Shares Outstanding: 41.5M
Insider Ownership: 44.4%
* Close of Market 5/09/08
Investment Highlights
Wastewater Treatment and Zero Air Emission Fossil Fuel Power Generation
Company Utilizing Patented & Disruptive Technologies
Wastewater Treatment Subsidiary – CASTion – Operates In 2 Markets:
Municipal and Industrial
 65 Large-Scale Industrial Systems Currently In Operation In:
 United States ▪ Mexico ▪ Japan ▪ Canada
 First Municipal System - $12.4M ARP Facility for New York City
 Plant Start-Up Target Date: February 2009
Advanced Power Plant Design Under Development
 Converts Fossil Fuels & Biomass Into Energy with Zero Air Emissions + CO2 Capture
 Development Team Includes: CANMET / MIT / RSE / UNR
 Currently Finalizing 3rd US Gov Grant Designed To Fast-Track Development
 MOU w/ Babcock Power To Commercialize Technology
 Expect To Have Large-Scale Prototype Plant in Operation by 2010
CASTion Water Group
Municipal Division:
 Carbon Reduction / Nutrient Removal / Renewable Energy Systems for POTW’s
 Key technology: Ammonia Recovery Process (“ARP”)
Industrial Division:
 Water Conservation/Reuse / Chemical Recovery / Water Purification
 Key technology: Zero Liquid Discharge (“ZLD”)
Municipal Market
Industrial Market
 16,000 POTW in US
 185,000+ Facilities US w/ NPDES Permits
 $8 Billion Overall Market
 $12.5 Billion Overall Mkt
 Ammonia $Billion+ Niche Play
 $5.5 Billion Direct Equipment Sale
 560 POTW’s Currently Affected
 Water Conservation Rapidly Growing Seg
 Fragmented Mkt Provides Excellent
Opportunity for Focused Market Strategy
 Direct Sls Potential: $600M
 D/B/O/O Potential: $1B - $2B in 3 Yrs.
Municipal: ARP Process Overview
Process Inputs:
Centrate ~ 1,000 ppm N
Caustic, Brine,
Flocculent, Power
Pretreatment
Solids Removal
Softening
Rough Capture
Pretreated
Centrate
Process Inputs:
Caustic
Acid
Power
Ammonia Capture:
Adsorption Capture
Regeneration
pH Adjustment
Process Outputs:
Spent Softening Brine
Solids Return
Ammonium Sulfate
Concentrated
Regeneration
Solution
7,000ppm
Process Outputs:
Treated Centrate
N <100 ppm
Compared to conventional biological reduction methods, ARP:
 Costs 80% less to build
 Costs 60% less to operate
 Requires less than 1/3 the space
 Reduces plant energy usage up to 10%
 Substantially reduces carbon emissions
 Provides for beneficial reuse of recovered ammonia
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Municipal Market Potential for ARP
Nitrogen/Ammonia Latest Regulatory Problem for Wastewater Plants
 Leading Cause of Dead Zones Worldwide (areas devoid of aquatic life)
 Currently being regulated in NY / PA / DE / VA / DE / MD / District of Columbia
 Similar reg’s pending in states of Illinois, Oregon, Washington, California and Florida
Revenue Model based on four options
 Design / Build / Own / Operate (D/B/O/O) – ‘privatization’
 Design / Build / Operate – 26th Ward project
 Direct Equipment Sales
 Direct License – specific application or territory (royalty)
Potential Revenue based on tipping fees from D/B/O/O model
 Based on current revenue projections using $4 lb. ammonia removed tipping fee
 Top 20 markets potential: $ 680 M annually
 Top 50 markets potential: $ 1.9 B annually
Projected global water/wastewater market 10 times US market
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ARP Near Term Market Potential
New York City project – 26th Ward WPCP Brooklyn
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First commercial project
$12.5m project (includes 1 yr of operation) – total project being financed by City
500,000 gpd centrate / recovering 1.2m lbs. of ammonia annually
Expect to convert project into long-term operating contract
 Based on $4 per lb of ammonia removed
 NYC generates total of 4.2 mgd from all eight dewatering plants
 Revenue potential for treating all 4.2m gpd of NYC centrate = $400 M / 20 yr. Contract
 40% EBITDA margin to TMEN
Additional opportunities being negotiated
 Washington Area Sewage Authority’s Blue Plains POTW (3 mgd centrate)
 Metropolitan Water Reclamation District of Greater Chicago (5 mgd centrate)
 Strategic partnership with larger companies well placed in Company’s target markets
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Industrial Market Overview
CASTion provides custom designed, turn-key wastewater treatment, chemical
recovery, water conservation & purification systems worldwide for broad range of
industrial applications including:
 Refining / pulp & paper / chemical processing / heavy manufacturing / micro electronics /
food processing / textile manufacturing / aircraft manufacturing / consumer products
Client base includes fortune 500 companies such as:
US industrial wastewater treatment market approaching $12.5 billion / year
 Key market players are GE / Siemans / US Filter (together representing 40% of the market)
 Remaining market is highly fragmented
CASTion Advantages
 Extensive IP portfolio
 Low cost technology provider
 Strategic partnerships with key industry players
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Energy Division
Developing advanced new power plant design known as ThermoEnergy
Integrated Power System (“TIPS”)
 2 US patents & 6 foreign patents issued / 31 foreign patents pending
Evolutionary design that delivers revolutionary performance
 Based on reliable and well understood oxy-fuel chemistry
 Combusts fossil fuels & biomass with zero air emissions
 Proprietary carbon capture technology
Phase 1: Finalizing 2-year crash development program
 Funded by 3 US government grants totaling $2.3m
Phase 2: Design / build / operate large-scale prototype plant
 MOU with Babcock Power Inc.
CANMET report shows installed cost slight premium to conventional coal plant
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TIPS Market Drivers
Government Regualtions
 Clean Air Act – mandated emission reduction
 Kyoto Protocol – Nations must diminish CO2
emissions, especially where 50% plus of energy is fossil
fuel generated
High Energy Prices
 Coal is abundant and cheap
National Security
 Promote energy independence
 Reduce imported energy
TIPS Case Study
Alternative Energy Study for DOW Chemical Plant, Freeport, Texas
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Primary energy source for Freeport Plant is natural gas
High natural gas costs ($6 mBtu in 10/04) effecting Plant’s profitability
“Non-Attainment” Status of Air Quality Prevented Use of Alternative Fuel Sources
Alternative Fuel Source Must Equal or Exceed Existing Emissions To Implement
DOW asked ThermoEnergy to Calculate Energy Savings Using TIPS
 TIPS’ Zero Air Emission Capability Allowed Use of Alternative Fuels
 The Study Matched the Plant’s Energy Matrix Requirements w/ Then Current Fuel
Pricing
 Resulting in the following:
Texas Lignite
E. Texas High-Sulfur Pet Coke
Annual Energy Savings: $54,000,000
Annual Energy Savings: $80,000,000
Management Team
Dennis C. Cossey – Chairman & Chief Executive Officer
• 38 Yrs. management experience in both public & private corporations, including IBM, Peter Kiewit & Sons
United Capital Management, American Fuel and Power
• Member of NY Academy of Science, American Chemical Society, National Safety Council
Shawn Hughes – President & COO CASTion Corporation
• 25 Yrs. experience in management & operations for manufacturing and service industries
including Compaq, NYNEX
Alex Fassbender, P.E. – EVP & Chief Technology Officer
• Registered Professional Chemical Engineer with BS & MBA Degrees
• Senior level scientist for Department of Energy National Laboratory System
• NASA, 23 yrs. Pacific Northwest National Laboratory, 4 R&D 100 Awards, 12 Patents, 20 Scientific Articles
Andrew T. Melton - EVP & Chief Financial Officer
• Certified Public Accountant, Certified Internal Auditor, MBA
• Extensive financial reporting and acquisition experience
• VP Merrill Lynch, SVP BancOklahoma, CFO Worthen Banking Group
David Delasanta - VP Sales & Marketing
• 35 Yrs. experience in Environmental Engineering, Construction & Capital Equipment Industries
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Marketing and operational experience including Shaw Group, IT, OHM, Metcalf & Eddy and ICF Kaiser
BS Physics, MA Engineering & MBA
Investment Conclusions
Highly visible markets with multiple addressable opportunities:
 Revenue potential in the hundreds of millions
Recent agreements established to accelerate development of TIPS
process:
 Babcock Power MOU to develop and implement TIPS technology in
future power markets
Highly visible contracts for CASTion deployment:
 New York City contract to retrofit ARP technology in Jamaica Bay
 Approval implementation notice expected June 2008
 Increasing pipeline for CASTion division for 2008
High gross margin businesses:
 Waste Water – 40% - 50%
Thermoenergy Corp.
Dennis Cossey, Chairman and CEO
124 West Capitol Avenue
Suite 880
Little Rock, AR 72201
Phone: 501-376-6477
[email protected]
Web Site: www.thermoenergy.com
Investor Relations Contacts:
Alliance Advisors, LLC
Mark McPartland - 910-221-1827
[email protected]
or Bryan Kobel - 212-398-3487
[email protected]