EXHIBIT 99.1
Management Presentation
October 2004
Safe Harbor Statement Under Private Securities Litigation
Reform Act of 1995
Forward-looking statements in this presentation involve risk and uncertainty.
These forward-looking statements are based on management’s current views
and assumptions and are neither promises nor guarantees but are subject to
risks, uncertainties and other factors that could cause actual results to differ
materially from management’s current expectations as described in such forward-
looking statements, including overall economic and business conditions;
competitive factors, such as acceptance of new products, pricing pressures and
competition from competitors larger that the Company; risks of nonpayment of
accounts receivable, including those from affiliated companies; risks associated
with foreign operations; technological and product development risks; availability
of manufacturing capacity; and other factors described in the Company’s filings
with the Securities and Exchange Commission, including its annual report on
Form 10-K for the year ended December 31, 2003. You should not place undue
reliance on the forward-looking statements in this presentation, and the Company
disavows any obligation to update or supplement those statements in the event
of any changes in the facts, circumstances, or expectations that underlie th
ose statements.
1
Introduction to Ionics
Core Business
Broad technology utilization
Deep applications/process expertise
Extensive plant operating experience
Comprehensive service offering
Core
Competencies
Water treatment equipment and services
2
New Management Team
Note:
Parenthesis “( )” indicate years of experience in the industry
Douglas Brown
President and CEO
(10)
Edward Cichon
VP, Special Projects
(23)
John Curtis
VP, Strategy and
Operations
(1)
Daniel Kuzmak
VP and CFO
(3)
Stephen Korn
VP and General Counsel
(15)
“Skip” Dickerson
VP, Water Systems
(32)
Michael Routh
VP, Instruments
(26)
Alan Crosby
VP, Consumer
(25)
3
Operations (48%)
Long-term outsourcing
Emergency services
Supplemental services
Service DI
Plant operation service
Sodium hypochlorite sales
Consumer (5%)
Home water purifications
systems
Point-of-use systems
Consumer financing
Products/Services
Instruments (7%)
TOC analyzers
Boron analyzers
Oil-on-water detection
systems
Equipment (40%)
Seawater desalination
Water and wastewater
treatment
Ultrapure water
Food processing
Sodium hypochlorite
production
Spares
2003 Revenue: $453mm
Pro forma including 2003 revenue from Ecolochem, Inc. and related entities.
4
Realigned and Efficient Operating Structure
Patent Portfolio
Ionics U.S. Patents and Applications by Type
1
Issued Patents
Applications
Membranes
21
1
Equipment
27
10
Instruments
20
3
Process/System
21
5
TOTAL
89
19
Note:
1
Excludes two US design patents having a scope not am
enable to the listed four categories
7
In addition to its U.S. patent portfolio, Ionics has over a dozen foreign patents and pending patent applications
Major Facilities Overview
Instruments
Boulder, CO
5
Equipment
Consumer
Bridgeville, PA
6
Watertown, MA
(headquarters)
1
Operations
15
Livermore, CA
13
Elkbridge, MD
2
22
21
25
4
6
3
19
9
14
12
23
7
17
5
20
11
1
24
18
15
13
26
10
8
16
Milan, Italy
18
Singapore
24
26
Taiwan
Kunshan, China
10
16
Manchester, UK
Bridgeville, PA
6
Canonsburg, PA
9
Bellevue, WA
3
Watertown, MA
(headquarters)
1
Watertown, MA
2
12
East Hartford, CT
4
Baytown, TX
7
Brisbane, Australia
11
Dallas, TX
Watertown, MA
(headquarters)
1
8
Canary Islands
25
St. Peters, MO
Singapore
24
23
San Jose, CA
22
Pico Rivera, CA
21
Phoenix, AZ
26
Taiwan
17
Miami, FL
20
Peterborough, UK
19
Norfolk, VA
14
Fontana, CA
Milan, Italy
18
16
Manchester, UK
8
Canary Islands
8
Operations Segment
Mobile
Long
-
term outsourcing of water treatment
services
Emergency and supplemental mobile water
treatment services
+
500 trailers
Plants
(BOO/BOOT)
Water supply for industrial and municipal
consumption
Operation of wholly-owned facilities
—
strong in-house technology and
proven track record
Outsourcing trends driving industrial and
municipal growth
150 facilities
Service DI
Regeneration of ion-exchange resin for
industrial customers—low capacity/high
quality
Cloromats
Production of sodium hypochlorite and
related chlor-alkali chemicals for industrial
and municipal applications
9
Leading supplier of desalinated water and mobile water treatment
Generated 48% of 2003 revenue
384
759
959
0
200
400
600
800
1,000
1,200
2004
2005
2007
10
(m3/day in ‘000s)
Ionics Production Capacity
Virtually 100% recurring revenue stream
High, stable margins
20–30% EBIT margins typical
Strong cash flow generation
IRR above 15% (After-tax cash-on-cash)
Price escalation leads to improving
financial performance over time
Attractive growth potential
Highlights of BOO Plant Operations
Ionics’ BOO projects are a significant source of recurring and high margin revenue
with attractive long-term growth prospects
Notes:
1 Excludes Ecolochem
2 Based on an average $1.8mm investment
3 Pending financing
4 Water sales to start in January 2005
11
Ownership
Number
Own / Operate
Ionics
Investment
($mm)
m
3
/day
(‘000s)
Recourse
Debt
($mm)
100%
77
-
Ionics
1
Own
138.6
2
182
—
70%
1 (Hamma
-
Algeria)
3
Own
30.0
200
—
51%
1 (Barbados)
Own
1.1
28
3.0
49%
1 (Magan
-
Israel)
Own
1.3
24
4.3
40%
1 (Desalcott
-
Trinidad)
Own
30.0
109
—
25%
1 (UDC
-
Kuwait)
4
Own
16.3
375
—
0%
18
Operate
—
41
—
Total
217.3
959
7.3
Overview of BOO Plant Operations
Algeria 1
Caribbean Group
Approximately 50 plants on ~25 islands
Aggregate throughput of 50,000 m3/day
Seawater RO (SWRO)
200,000 m3/day production
25 year guaranteed take-or-pay
supply agreement
price escalators built in
Long-term financing
January 2005 completion
8.0% interest rate
15-year term
$50+ mm annual revenue
$30+ mm EBITDA
20+ % projected after-tax cash-on-cash IRR
1 Hamma-Algeria project -- pending financing
12
Aggregated Income Statement
2
($mm)
Revenues
24.5
COGS
15.2
SG&A
3.7
EBIT
5.6
Margin (%)
22.8
EBITDA
10.0
Margin (%)
40.7
2
Based on 2004 estimates
Examples of BOO Plant Operations
Equipment Segment
Manufactures and sells water purification equipment
Large municipal customer base, with strong
microelectronics, power and petrochemical industrial
presence
Key contracts include Kuwait JV (reuse), City of
Minneapolis (surface water)
Leading positions in seawater desalination, wastewater
reuse, and Zero Liquid Discharge
Water scarcity, growing pressure for reuse and legislative
requirements in certain markets driving demand
Demand trends expected to increase as water needs
outpace GDP
Strategic initiatives to increase aftermarket sales (i.e.
spares)
Generated 40% of 2003 revenue
13
Instruments Segment
Designs and manufactures analytical instruments to
measure impurities in water
Recurring revenues are a strong growth component
more than 40% of revenue derived from
aftermarket requirements of 8,000 + unit
installed base
Strong patent position and superior contaminant
measurement capability differentiate
Ionics Instruments
Legal compliance (pharmaceutical, municipal) and
economic benefits (microelectronics, petrochemical)
drive instrument sales
Future focus on expansion in Asia, municipal, and
recurring revenue generation
Key customers include: Abbott, Vivendi, Novo
Nordisk, Pfizer, LA Metro Water District, Lilly, Beijing
Semiconductor, Intel, ST Microelectronics,
ExxonMobil
Generated 7% of 2003 revenue
14
Strategic Initiatives
2003
Initiatives
2004
Initiatives
Announced restructuring plan in September 2003
Initial organization structure simplification
$15mm of cost savings
Consolidated manufacturing and purchasing
Started portfolio management and divested certain non-core
businesses
Began Oracle implementation
Real estate restructuring/closures + operating cost associated with facilities
Rationalized medical benefits program
Continued organization structure simplification
Reduced pension costs
Integrated materials purchasing program
reduces COGS by $15+ mm1
1 Based on estimated aggregate percentage savings
16
Declining One-time Charges
25.0
10.8
4.5
1.4
1.5
1.4
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Q3 '03
Q4 '03
Q1 '04
Q2 '04
Q3 '04E
Q4 '04E
($mm)
* Includes items that impact EBIT.
17
Ionics Is An Attractive Opportunity
A recognized leader in water purification
technology
reputation
experience
Substantial skills/expertise
seawater
ultrapure water
plant operations
water services (mobile and fixed base)
Significant profitability improvement potential
cost reductions
increasing percentage of plant operations
Strong growth prospects
Ionics is one of the few remaining pure-play platforms in the water treatment industry
18