Water. Desalination + reuse
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10 Interview June 2018 Water. desalination + reuse ary 2017) through which Energy Recovery has expanded its offering, has been "nicely successful, which is a leading indicator of where we are headed," adds Gannon. The vision for the skidded solutions is for a fully pack- aged product that might include reverse osmosis (RO) membranes, energy recovery devices, booster pumps, and racks and manifolds. "Think about it as standardising the RO units and making it at fixed sizes: for example's sake, let's say 5,000, 10,000, maybe 20,000 cubes per day. We're looking at a lot of different options and talking with quite a number of different partners to work with us on that," Gannon says. "I believe that there is huge opportunity in the full skidded solutions side of things in seawater RO." While exact details of the strategy is still in develop - ment, there are some areas where acquisition appears unlikely: "Some things we probably wouldn't ever entertain buying those businesses because it's so outside of our core competency: piping, for example — there are a lot of people able to do that better than us." In addition to the seawater RO market, the company is eyeing opportunities in brackish water RO, and in other wastewater applications. "There is some really cool tech- nology out there that we would like to have or have the abil- ity to offer our customers. The executive leadership will be present across the water space in the coming years, meeting with current and potential customers and partners. We're looking at everything at this point." Wasted pressure market If that's the immediate plan, what of the longer-term? For the future, the focus continues to be on new product devel- opment through investments in research and development (R&D). "Long-term, we are aiming to establish or announce a new technology on a roughly 12-month cycle, all based on our pressure exchanger technology. We have this incredible technology, operating at 98 per cent efficiency, and we see an amazing amount of opportunity out there. These oppor - tunities relate to key pain points for customers and poten- tial customers, whether it's about recycling wasted pressure energy in water, or preserving pumps," says Gannon. One strategic focus is the pumping market, worth $53 billion globally in 2017. "There are a tremendous number of pumping assets around the world that are processing some type of hostile processing fluid, and pumps get destroyed, there's a huge amount of downtime and costs for repairs and maintenance, and huge inefficiencies in that. So that's a huge opportunity for a company like ours which has a very unique technology that no-one else has. There's an opportunity to develop that technology and meet a key pain point for companies out there," Gannon says. Similarly, the company is eyeing the wasted pressure energy market of $5.5 billion. "There are opportunities to recycle that potentially wasted pressure; refineries, power applications, food, oil and gas, there are a ton of different opportunities out there. This goes to where we allocate our R&D spend. What we look for to qualify a market are high rates of flow, high pressure differentials, high capital inten - sity, hostile processing fluid. Each one of those is weighted differently depending on the application." Potential sale Given that the company has such unique position in the desalination world, and so dynamic a set of opportuni- ties, don't the rumours of a potential sale add up? "If a $100-a-share bid comes in, and we're trading at $8, well yes, you take notice. But it hasn't happened yet. We are an independent entity and are structured as such with our shareholder base. We will do whatever is in the best inter - est of our shareholders. Me and our management team are focused on what we can control, which is the initiatives we take and the strategies that we pursue." Gannon adds, wrily: "But it's nice to be talked of, even if what people are saying is not exactly accurate." Gannon's bio includes advising City of Detroit on largest ever US municipal bankruptcy filing Chris Gannon, president and chief executive officer of Energy Recovery, brings substantial experience in leading organisations through rapid change. He has a background in finance and corporate disciplines including strategy, operations, and corporate development. He was previously a managing director at Conway MacKenzie, where he served as a restructuring adviser to the City of Detroit throughout its historic $18 billion Chapter 9 bankruptcy, the largest municipal bankruptcy filing in US history by debt. Gannon was instrumental in developing the City's Plan of Adjustment and played a leading role in crafting its $1.7 billion restructuring and reinvestment plan. After the bankruptcy, he was a key architect in restructuring the City's finance operations, as well as developing it's human capital scheme. Gannon has served in various executive management roles for performing and underperforming companies, led the private equity investment arm of Talon Group, and served as a finance operating partner to private equity funds through Caledonia Group. He began his career in investment banking with a focus on mergers and acquisitions and capital market transactions. Gannon earned an Master in Business Administration (MBA) from the University of Chicago Booth School of Business and a Bachelor of Science in Engineering (BSE) in Industrial and Operations Engineering from the University of Michigan College of Engineering. 2015 2016 2016 2017 Revenue $ 2017 2015 2015 2016 2017 70m 60m 50m 40m 30m 20m 10m 0 n Product revenue n License and development revenue n Total Energy Recovery full-year revenues Energy Recovery Q1 2018 revenues by segment n Water: $11,048 n Oil & Gas: $2,759