Investor Presentation 2014

Investor Presentation
2014
Energy Efficient • Market Driven
FORWARD LOOKING STATEMENTS
This presentation contains information that is “forward-looking” in that it describes events and conditions HPEV, Inc.
reasonably expects to occur in the future. Expectations for the future performance of HPEV, Inc. are dependent upon
a number of factors, and there can be no assurance that HPEV, Inc. will achieve the results as contemplated herein.
Certain statements contained in this release using the terms “will”, “could”, “may”, “expects to”, “potential”,
“planned”, “expected”, “estimates”, “schedule”, “anticipates”, and other terms denoting future possibilities, are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The accuracy
of these statements cannot be guaranteed as they are subject o a variety of risks, which are beyond HPEV, Inc.’s
ability to predict, or control and which may cause actual results to differ materially from the estimates contained
herein. Among these risks are those set forth in HPEV, Inc.’s Form 10-K and in reports subsequently filed with the
Securities and Exchange Commission, and in addition to the other risks and caveats included in this presentation. It
is important that each person reviewing this presentation understand the significant risks attendant to the
operations of HPEV, Inc.
Except as required by law, HPEV, Inc. disclaims any obligation to update
any forward-looking statement contained herein.
Energy Efficient • Market Driven
“This is an industry that has been scraping to save pennies for
years and HPEV is giving it $100 bills.”
Richard Schul – former Group Vice President of Commercial Industrial Motors,
Emerson Electric Corporation
“Honestly, I’m amazed with the results! This is a significant
innovation in the pump industry and the biggest improvement
in pumps in more than 50 years……. It’s a real game changer.”
John Ivins, President, ESSCO Pumps & Controls
“From a vehicle engine design standpoint, Mobile Generation
and the Ultimate Power Truck can significantly impact both
the truck and generator markets.”
Scott Van Dorn, Engineering Director, Navistar Corporation
Energy Efficient • Market Driven
COMPANY SNAPSHOT
Symbol:
Recent Price:
52-Week High/Low:
Common Shares Outstanding(1):
OTCQB: WARM
$ 1.14
$ 2.28 - $ 0.23
56.4 million
Options/Warrants(1)(2):
34 million
Market Capitalization:
$ 64 million
Source: Capital IQ, company filings
(1) As of 3/31/2014
(2) Options 8M, Warrants 26M, 150 Convertible Preferred Shares that convert to 7.5M common
Sector:
Year Founded / Public:
Headquarters:
Headcount:
Insider Ownership:
Auditor:
Fiscal Year End:
Industrial Engineering
2005 / 2011
Tampa, FL
8 full time – 45 contract
37.5%
Anton & Chia, LLP
December 31st
Energy Efficient • Market Driven
Who We are and what is THE PROBLEM
HPEV is a technology company that removes heat from rotating equipment better
than anything on the market.
HEAT IS THE WASTE BYPRODUCT OF MECHANICAL ENERGY
THE UGLY EVIDENCE OF INEFFICIENCY
Removing heat more efficiently allows manufacturers of motors & generators and
other rotating equipment to:
o
Lower costs to manufacture by as much as 30%  less “active material”
needed
o
Drive motors & generators to higher outputs of horsepower and electricity by
up to 40%  improved power density
Energy Efficient • Market Driven
HEAT PIPES
•
A heat pipe is a heat-transfer device that, at a basic level, is a conveyor belt for heat that moves it
from point A to point B
•
HPEV has designed and patented methods to use heat pipes that are unique and solve the problem
of heat
•
HPEV’s IP and unmatched engineering expertise, allows OEMs to implement HPEV’s designs into
their existing manufacturing systems and ensure manufacturability down the production line.
•
Manufacturing partner is Thermacore
Energy Efficient • Market Driven
THE SOLUTION
HPEV’s patented technology removes
heat better than the current cooling
methods: air cooling or liquid cooling
• HPEV’s technology transfers heat via proprietary heat pipe
arrays with unique capabilities.
• HPEV’s arrays and systems enable heat pipes to move heat
in ANY direction and require little or no maintenance.
o Can be added to almost any electric motor or
generator.
o Higher “power density” results in up to 30% lower
manufacturing costs.
o Independent third-party and manufacturer testing:
HPEV’s produces 25-40% greater “power density.”
Energy Efficient • Market Driven
INTELLECTUAL PROPERTY
•
While heat pipe technology has been around for over 100 years, HPEV controls a patent portfolio
that leverages a unique ability to increase power density and lower manufacturing costs in the
motor and generator industry as well as other industries.
•
Five U.S. utility patents have been issued.
•
More than 10 Patent Cooperation Treaty (PCT) patents are pending or in the application process.
•
Patent Attorney: Polster, Lieder, Woodruff & Lucchesi, L.C.
Energy Efficient • Market Driven
CURRENT APPLICATIONS being COMMERCIALIZED
Mobile Generation
•
Retrofit any Class 2-8
truck
•
“Ultimate Power Truck”
•
Eliminates the need for
expensive, tow-behind
mobile generators
Pumps
Motors & Generators
•
Electric Motors
•
Drypit Submersible Pumps
•
Generators
•
•
Improve Power Density
by 25-40%
All but Eliminates
Maintenance
•
•
Lower Cost of Production
by about 25%
More than Double Pump
Motor Horsepower
Energy Efficient • Market Driven
MOBILE GENERATION
Mobile Generation (MG) systems transform any Class 2-8 truck
into a mobile generator.
• Uses the truck’s engine, to deliver up to 200kW of electric power.
• Same output at 20% of the weight and half the cost.
• Electric equipment: compressors, welders, jack hammers and bucket
truck arms
• Emergency backup power and can be plugged right into the smart
grid.
• On board telematics (diagnostics) and integrated dashboard control
• Works with any type of engine or fuel type (natural gas, diesel, gas,
fuel cell, etc.).
• Upgrade existing work trucks or sold as a custom Ultimate Power
Truck. Does not affect truck warranties.
• The secret: HPEV’s patent-pending gearing system and thermal
technology  puts out more power from a smaller unit and draws
power from the truck.
Energy Efficient • Market Driven
MOBILE GENERATION - Markets
 Worldwide market in excess of $100 billion  10% of US market = $200M to HPEV
Disaster Response
Emergency power or can be used to energize a targeted portion of the smart grid to provide
power and comfort quickly
Developing Markets
• Unique challenges: regular power outages may hinder business operations. Off-grid power
generation allows key entities to function throughout a power outage.
• Many developing countries show impressive growth rates and economic prosperity. With
increased prosperity comes increased expectations for uninterrupted delivery of commodities
like electricity and water.
Utility Fleets
• Usually Class 2-6 trucks that either tow a genset to the jobsite or have one mounted in the truck
• 120kW and above is the target power output. We can go to 200kW with 400kW on horizon
• Temporary power during an outage and/or uninterrupted service to customers while performing
routine maintenance or grid repair
• No Idle Battery Power Option MG would be strong selling point for Utilities/ Construction, etc.
Energy Efficient • Market Driven
MOBILE GENERATION – Value Comparison
Tow-Behind Generators
• 25 to 30% of the weight
• 20 to 40+% lower cost
• Chassis mount under the vehicle
• Huge fuel savings (typical work truck $3K-$8K annual savings)
• No warranty issues
• Mobile power capabilities – up to 200kW.
Example: 200kW - HPEV 3,000 lbs vs. 10,000 lbs.
Power Grid – Emergency/Disaster Relief - Utility
•
•
•
Plug right into the smart grid to provide high usage/rolling blackout relief
Can re-energize an entire neighborhood with 1 truck
Power NOW vs. 4-6 years for a 1.5-2mW from wind turbine from GE, ABB or Siemens.
• Cost of $3-5M, 4-6 years, for site, regulatory, permits, insurance, land, etc.
• MG can do it MOBILE and IMMEDIATLEY at about 25% of the cost with 8 trucks
Energy Efficient • Market Driven
MOTORS & GENERATORS
•
$60 billion addressable market – commercializing NOW
•
The ONLY technology (resulting in more than 5% cost savings) introduced to the
motor/generator industry since the introduction of the frameless DC motor in the 1950s(1)
•
The best cooling available at the lowest cost
•
Can be added to almost any electric motor, generator, or motor driven pump
Benefits to
Manufacturer
• Existing production
lines
• higher output from
the same package
• Increased
standardization of
product line
• Scalable application
from 1 to 30,000hp
(1) CEO Tim Hassett’s father, Jack Hassett, invented the frameless DC motor
Benefits to End
User
• Better reliability
• Lower maintenance
costs
• Greater efficiency,
therefore lower
energy costs
• Lower purchase cost
(provided OEM
passes savings along
to the end user)
Energy Efficient • Market Driven
COST SAVING EXAMPLES
Lower manufacturing costs and higher horsepower output: Higher Margins
After: HPEV’s
technology eliminates
the need for the heat
exchanger. It lowers
costs and reduces the
size of the footprint
Before: Large hood
on top of the motor
is a heat exchanger
Electric Motor – Manufacturer Benefits Model
Air Cooled Motor
HPEV Improved Motor
Improvement
Output (Horsepower)
1,000hp
1,400hp
40%
Retail Price
$100,000
$165,000
65%
COGS
$50,000
$35,000
30%
Gross Profit
$50,000
$130,000
160%
Energy Efficient • Market Driven
ESSCO TESTING- “It’s a Real Game Changer”
ESSCO Pumps and Controls, an industry leader of custom pump solutions since 1955, completed
its final round of testing in November 2013 with stellar results
“…with HPEV’s technology, we now have a solution for a huge industry problem, solving one of its
Achilles’ heels. By removing heat in this way, we dramatically reduce maintenance costs and time
loss while improving pump output and flow as well. It’s a real game changer.” – John Ivins,
President of ESSCO
• $30 billion addressable market - commercializing NOW
• Testing measured the heat tolerance of the drive motor.
o Current dry-pit submersible pumps clog regularly and
have to be taken out of service often with extremely
high maintenance and repair costs.
o With HPEV’s the pump will no longer clog and
maintenance costs will all but be eliminated
• Results confirmed: more than 200% horsepower increase.
Energy Efficient • Market Driven
ESTIMATED MARKET SIZE for Motors & Generators & Pumps
Addressable markets estimated at over $90 billion, growing 3-5% annually;
management has relationships with nearly all the major industry players.
•
The addressable worldwide motor and generator markets are estimated to be ~$60 billion.
•
The “Big-8” control approximately 80-85% of the market
•
Management has relationships at all levels within the Big-8
•
We estimate the large industrial pump market in the United States to
be ~$30 billion annually.
•
Currently being commercialized by ESSCO
•
HPEV is working with other leading pump OEMs to expeditiously get
product to the market; manufacturers expect swift market adoption.
~$60b Addressable Market
Big-8: 80-85%
Energy Efficient • Market Driven
REVENUE MODEL
HPEV is an Intellectual Property and Engineering Company – Not a Manufacturer
License Fees
• Upfront license fee: 1-3 year term
• Expected motor/generator license fee $110 million depending on factors: exclusivity,
sales minimums, duration, and products
platforms
Royalties
• Royalties on revenue from sales of
underlying equipment = ~3% of gross sales
• Royalties from Thermacore
In some cases, HPEV will consider JVs with customers
and share the profit margin with zero cash outlay
Marketing Strategy
• Existing relationships, strategic alliances,
trade journals
• Commercialization phase with 2 and
design phase with 4 of the Big-8
• When one is using it, all will need to use it
to be competitive
Third-Party Validation
• HPEV has 3rd party validation reports from
multiple industry leading certification
firms – all with great results
• Three of the Big-8 have done internal
validation with great results
Energy Efficient • Market Driven
MANAGEMENT
Experienced management team with a history of bringing technology to market and driving growth
Timothy Hassett
CEO, Chairman & CoFounder
Mark Hodowanec
Co-Founder
Theodore Banzhaf
President
Quentin Ponder
Vice Chairman
30+ years experience managing and growing mid-sized manufacturing firms: GE, WaveCrest, Hawk Motors,
Rockwell Automation
•Turned around two divisions for Jack Welch at GE
•WaveCrest from $0 to $30M in revenues in 18 months (with Mark)
•Lemo from $32 to $75M in revenue and grew net income 22x in 4 years (with Mark)
•Mars Rover drive train co-designer
20+ years of engineering & operations expertise: more than 30 publications & numerous patents
•Led new product innovation at Reliance Electric
•Engineering Manager at Siemens Energy and Automation
•Led Emerson to API approval – after Emerson’s efforts had failed for 11 years
•Mars Rover drive train co-designer
20+ years experience in growing public companies in all facets of finance, growth strategies, and
management
• Expertise in maximization of shareholder value and maturing small companies into larger organizations
• SpatiaLight Technologies (NASDAQ:HDTV), CE Unterburg Towbin, Raymond James
50+ years experience in management: Baldor Electric Motors, Franklin Electric Motors, GE
• Noted in the book “World Class Manufacturing: The Next Decade” as one of the 5 best executives for
manufacturing improvement pathways in the modern industrial era
• Coined the term “Flex Flow Manufacturing” based on his revolutionary manufacturing management
techniques
Energy Efficient • Market Driven
Channel
Partner
Motors & Generators &
Pumps
MG
Customer Overview
• Disaster Response
• Emerging and Developing Markets
• Utility Fleets, Independent Contractors
•
•
•
•
•
•
•
•
•
•
•
ESSCO Pumps & Controls
WI Technologies
Emerson Corp. (NYSE: EMR)
Nidec Corp. (NYSE: NJ)
Flygt (Sub of Xylem – NYSE: XYL)
WEG Motors (Brazil)
GE Power Conversion (NYSE: GE)
Siemens (NYSE: SI)
Regal Beloit (NYSE: RBC)
ABB (NYSE: ABB)
TECO-Westinghouse Motor Company
• Thermacore – Leader in Heat Exchangers & Heat Pipes
• Fabricate HPEV technology and sell directly to the OEM
• HPEV’s “salesforce” to the 200+ motor/generator OEMs (non Big-8)
Energy Efficient • Market Driven
INVESTMENT CONSIDERATIONS
•
Three Legged Platform – Each could be a large stand-alone business
•
Patented, disruptive technology that applies to many verticals
•
•
Being commercialized NOW:
• In Mobile Generation
• By several of the Big-8 in motors & generators
• In submersible pumps
Future applications include: Bearings, Brakes/Calipers, Hybrids, Turbines, etc….
Anything that rotates
•
The immediate addressable market is approximately $90 billion for motors &
generators and pumps; a 3% royalty is an extraordinary earnings opportunity. Does
not include the wide open market for MG
•
Compelling technology: Improves power density (output) by up to 40% and reduces
manufacturing costs by up to 30%
•
Management team is experienced with bringing technologies to market and has
extensive relationships with industry leaders
•
Licensing/royalty revenue model to provide significant operating leverage
Energy Efficient • Market Driven
CONTACT INFORMATION
OTCQB: WARM
Thank You
for your interest