Fluence-Corporation-FLC-Q2-FY2023-Business-Update-31-July-2023-ASX

Fluence Corporation Quarterly Activities Report

Fluence Corporation Limited (ASX: FLC; the “Company”) presents its Quarterly Activities Report and accompanying
ASX Appendix 4C (the “Quarterly Cashflow Report”) for the quarter ended 30 June 2023 (“Q2 2023”). All financial
numbers contained herein are in US dollars and are unaudited.
Q2 2023 Summary
The Company is reporting the following results for Q2 2023:
• Q2 2023 revenues of $16.8M – Up 15% over Q1 2023, mainly driven by SPS Revenue. Down 39% from
Q2 2022 mainly due to the wind-down of the Ivory Coast Main Works.
• SPS revenues up 105% from Q1 2023 and 64% over Q2 2022, primarily due to revenue growth in our
Specialized Industrial Water business.
• Backlog currently at $52.8M, $46.6M of which is from SPS and Recurring Revenue.
• New orders in Recurring Revenue up 36% in Q2 2023 over Q2 2022. Orders in SPS up 35% in Q2 2023
over Q1 2023 but down 43% over Q2 2022 due to order delays. Orders expected to increase significantly
in H2 2023 vs. H1 2023.
• Fixed Costs savings of $3.8M in H1 2023 over H1 2022, representing a reduction of 28% and reflecting the
impact of implementing the restructuring announced in Q4 2022.
• Cash Balance of $18.1M plus $11.8M in short and long‐term deposits – Cash up $2.9M from Q1 2023
primarily due to the collection of Milestone 9 of the Ivory Coast project ($18.8M), which was received
in April 2023. The Company had Operating Cash Flow of $2.2M in Q2 2023.
• Reducing guidance to total revenue of $90-95M for FY 2023 (of which SPS plus Recurring Revenue is
$60-70M) and EBITDA of $2.5M – Still represents an increase in EBITDA of almost 10% over FY 2022.
Q2 2023 Commentary
The Company has virtually completed the formal restructuring and repositioning of the business announced in
Q4 2022. Other than a few key positions that are in the process of being filled, we are now fully operating and
reporting under the new organizational structure. Among the benefits the Company is seeing from this
realignment are: (1) a significant reduction of $3.8M (28%) in fixed costs in H1 2023 compared to H1 2022; and
(2) enhanced collaboration across all business units.
While H1 2023 suffered from lower revenue and slower bookings than expected, these delays can be attributed
to a number of external factors, which are detailed below. Nevertheless, the pipeline continues to grow due to
collaboration across business units and market growth in our core end markets, as evidenced by recent LOI’s
and LOA’s, verbal awards, and a pipeline that has more than doubled across the Company since December 31,
2022. Despite the slower than expected start, the Company still expects strong growth in order bookings this
year.
While H1 2023 revenues were lower than H1 2022 primarily due to the wind down of the Ivory Coast Main
Works, SPS revenue for Q2 2023 was up 105% over Q1 2023 due to growth across all business units, primarily 
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driven by our Specialized Industrial Water business. Another key reason for the reduction in revenue was due
to delays in China where certain projects have been awarded and are ready to proceed but will not move
forward until down payment is received. Customers, including a number of State-Owned Enterprises (“SOE’s”),
have been slow to release funds in the wake of COVID shutdowns. The remaining amounts result from order
delays in the Municipal and High-Strength Wastewater & Biogas business units. We expect improvement in
these orders throughout the balance of 2023.
Fluence has now completed the first phase of expanding its North American sales and support team, which
included hiring two new sales managers for its Municipal group, two new sales managers for its Specialized
Industrial group and five new technical team members. We are now seeing the benefits of these efforts as our
North American pipeline has grown by over 200% in 2023 with quality projects and YTD order bookings that are
double those of all of last year. The total North American Municipal pipeline was $12M at the beginning of 2023
and the new team has grown it to $38M in the first six months of this year. In just over three months, the new
sales team in North America for High Strength Wastewater & Biogas business unit has built a pipeline of $21M
and recently signed an LOI for our first anaerobic digester order in North America worth over $1M. Additionally,
we signed a service agreement with one of the largest meat processing companies in North America to advise
and scope out a large anaerobic digestion facility to create renewable natural gas in support of the company’s
sustainability goals. Fluence is in an excellent position to exclusively negotiate the delivery of this project for
this customer, which has dozens of facilities across North America with potential for similar projects. The HighStrength Wastewater & Biogas business in the rest of the world is also expecting to see significant growth in
bookings in H2 2023, with LOI’s and verbal awards of more than $5M already in hand.
Further, We are anticipating closure of several high probability Build-Own-Operate (“BOO”) projects in the last
half of 2023. The total contracted revenue for the three highest probability projects is almost $50M.

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