Fluence (FLC) Status Update summary

Executive Summary and Strategic Direction

• Emphasis on high-margin, technology-driven segments and recurring revenue, shifting away from low-margin construction and custom engineered projects, with disciplined cost management and a 25% reduction in SG&A and R&D since FY2022.

• Four global business units, each led by experienced managers, leverage cross-unit collaboration, global systems integration, and the 'OneFluence' approach to enhance efficiency and market reach.

• Recurring revenue is a key focus, with some units achieving 35%-40% from after-sales, services, and operations contracts, aiming for all units to reach similar levels.

• Strategic M&A is considered for targeted, accretive acquisitions to complement organic growth, prioritizing recurring revenue and service businesses.

• Targeting double-digit EBITDA margins within 2-3 years, driven by high-margin Smart Product Solutions and recurring revenue segments.

Business Unit Highlights and Growth Strategies

• Industrial Water & Reuse leverages South American expertise, expanding into Brazil and North America, focusing on food & beverage, power, lithium mining, and industrial reuse markets, with strong after-sales and service contracts.

• Industrial Wastewater & Biogas targets food and beverage, dairy, meat processing, and strict effluent regulation markets, expanding in the Americas and Europe, with a growing after-sales business and backlog.

• Municipal business is realigned for U.S. and Middle East growth, leveraging proprietary MABR technology, onshore manufacturing, and developer project financing, targeting municipal and private sector clients.

• Southeast Asia & China unit pivots commercial focus to Southeast Asia due to macroeconomic slowdown in China, leveraging China as a cost hub, with strong project wins in Taiwan, Vietnam, and South Korea, and a goal to reach EBITDA break-even by 2025.

• All units emphasize recurring revenue streams through O&M, rentals, and service contracts.

Market Opportunity and Competitive Positioning

• Global water and wastewater treatment market projected to reach $957B by 2032, with strong growth in municipal, industrial, and reuse segments.

• Proprietary MABR technology and modular solutions offer significant CAPEX and OPEX savings, with a large installed base worldwide and over 1,000 plants deployed.

• Strategic partnerships and local presence in key markets support regional penetration and cost competitiveness.

• Leading ESG impact through wastewater-to-energy and water reuse solutions.

• Market share in core regions is significant, with room for expansion, especially in Brazil and North America.