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Corporate Presentation

Marc Blanchet, CFO

July 2017

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Forward Looking Statement

• Certain statements in this presentation may constitute “forward-looking statements” that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of H2O Innovation, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this presentation. These forward-looking statements involve a number of risks and uncertainties. For details of these risks and uncertainties please refer to the Company’s Annual Information Form dated September 26, 2016 available on SEDAR (www.sedar.com). H2O Innovation rejects any obligation to revise or update the prospective disclosures contained in this presentation.

• Cautionary Note Regarding United States Securities Laws This presentation does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities of H20 Innovation have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, "U.S. persons," as such term is defined in Regulation S under the U.S. Securities Act, unless an exemption from such registration is available.

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Water Matters

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2.5 Billion People don’t have access to

adequate sanitation

780 Million People don’t have access to

Clean Water

$US532 Billion Forecasted US Municipal Water Infrastructure

CAPEX Spend over next 10 years.

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Continuous growth Close to our clients

Headquarters : Quebec City, QC

Manufacturing plants:

• Ham-Nord (QC) : 60,000 ft2

• Minneapolis (MN): 30,000 ft2

• Vista (CA) : 20,000 ft2

Engineering & sales offices:

• Burlington (ON)

• Calgary (AB)

• Bilbao (Spain)

O&M contracts (USA):

• 39 municipalities (Water & WW plants)

in 8 states

Franchise

• H2O Innovacion de Mexico

• 580 employees

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We Serve the Water Utility

O&M services

Software, Data Acquisition & Monitoring

Specialty chemicals

Maple Equipment

Components for Water Plants

(couplings, cartridge filter housings)

Engineering

Water

Utility

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UF, RO, MBR, IFAS,

Systems Assembly

Design – Manufacture – Customize – Operate – Maintain

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Highly Scalable Platform

+ 700 systems installed

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Our Business is Based on Three Pillars

We promote customer retention through every steps of our business offering

Projects and Engineering

Solutions

Specialty Products

Operation &

Maintenance

Flagship Differentiator Convergence

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1st Business Pillar Projects and Engineering Solutions

• 100% North America – industrial and municipal;

• Differentiator: open-source platforms for membrane (FiberFlexTM, flexMBRTM);

• Backlog of $56.7 M (as of March 31, 2017), up 34.7%:

• Current backlog of $58.9 M (as of June 13, 2017);

• Main challenge: volatility in project schedules;

• Rich pipeline:

• Exposed to many diversified opportunities;

• Growing momentum into municipal wastewater;

• Well positioned for Design-Build-Operate: opportunities emerging from O&M.

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https://en.wikipedia.org/wiki/File:Carollo_Engineers_logo_with_tagline.png

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Diversification of our Project Business

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Applications

Technologies

Water Reuse

Drinking

Wastewater

Process Water

2015 2016 2017

NF/RO

UF

MBR

MM

UF/RO

Bio-wheel

15%

15%

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1.0 $

20.0 $ 14.7 $

20.8 $

38.3 $ 38.8 $

- $

10,0 $

20,0 $

30,0 $

40,0 $

50,0 $

60,0 $

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 - 2017(LTM)

Backlog

Revenues

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Project Business Evolution

56.7 $

3-year moving avg.

3-year moving avg.

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Market Drivers for New Projects

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• Increased infrastructure spending

• PM Trudeau’s 10-year infrastructure plan of $120 billion

• Wastewater treatment

• 25% of the existing WWTPs will require replacement or rebuilt ($20 billion by 2040)

• Unconventional water resourcing

• Desalination (RO): 215% of growth, from $150 M in 2016 to $475 M in 2020

• Wastewater and Water Reuse (MBR & UF): 25% of increase, from $8 billion in 2016 to $10 billion in 2020

• Aging infrastructure

• EPA estimates to $660 billion the required investments for drinking water, wastewater and storm water infrastructures over the next 20 years

• President Trump’s $1 trillion infrastructure plan - financed through both public and private capital

Source : GWI, Annual Report 2017 and EPA

https://en.wikipedia.org/wiki/Flag_of_the_United_Stateshttps://en.wikipedia.org/wiki/Flag_of_Canada

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2nd Business Pillar Specialty Products

Chemicals

• Green antiscalants (phosphate-free and super-concentrated);

• Speciality membrane cleaners (liquid or powder);

• Filter aids and coagulants;

• Manufactured in-house in Vista, California;

Digital Solutions & Software

• SCADATM , IntelogxTM, Clearlogx® (patented technology);

Corrosion resistant equipment for desalintation

• Flexible couplings (plastics, stainless steel, Duplex and SuperDuplex);

• Development of a new product line : FRP cartridge filter housings.

Maple farming equipment

• Specialty products for maple production

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- $

5,0 $

10,0 $

15,0 $

20,0 $

25,0 $

30,0 $

2012 2013 2014 2015 2016 Q3 - 2017 (LTM)

2nd Business Pillar Specialty Products

Acquisition

Piedmont

Development SPMC Acquisition

Clearlogx

Patented High Brix

membrane process

FRP filter

housings Upgrade

Intelogx

PWT Rebranding

Up 113% over 5 years

$13.2 M

$28.1 M

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2nd Business Pillar Specialty Products

• Product business with multiple brands and sales channels ;

• Export in 40 countries through distributors and agents ;

• 30% North America & 70% worldwide ;

• Sales are recurrent in nature.

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3rd Business Pillar Operation & Maintenance (O&M)

• Acquisition of Utility Partners completed in July 2016 (Impact 100% of FY2017);

• Operation contracts with 38 municipal water and wastewater plants in 7 states (VT, NH,

MA, GA, MS, NM and CA);

• Backlog (signed contracts) of $60.4 M (as of March 31, 2017),

• Up $5.5 M from December 31, 2016;

• 7 contract renewals (since December 2016);

• 1 new contract (New Mexico).

• Integration completed;

• Opportunities (short and mid-term):

• Secure new O&M business in USA & Canada;

• Expand scope of work within existing projects;

• Maximize cross-selling opportunities (consumables, engineering, projects): MS, NH

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• Opportunities:

Only 8% of water & wastewater plants are operated by the private sector in North America

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2017 2018 2019 2020

Utility water $38.3 B $38.5 B $38.7 B $38.9 B

Utility

wastewater $39.1 B $41 B $43.1 B $45.3 B

Industrial $45.7 B $46.6 B $49 B $52.1 B

3rd Business Pillar Operation & Maintenance (O&M)

Operating Expenditure by Sector in North America

Source: GWI forecast 2017

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Business Model and Financial Performance

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Organic and Acquisition Growth Story

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2000

2009

to

2013

2014

2015 2016 2001

2002

to

2009

Foundation

of H2O

Innovation

Development of

Maple business

unit

Growth of the project

business (in USA since 2006)

Development of SP&S pillar

(PWT: 2009, Piedmont: 2013)

Launch of softwares &

acquisition of

Clearlogx®

Development

of O&M pillar

Average Growth of 32% (since 2006)

• Organic Growth of 18% /year

• External Growth of 31% /year

Process Equipment

O&M

Couplings

Softwares Consumables

Filter housings

Services

Engineering

New Water

Utility

Non-

recurrent

revenues

Recurrent

revenues

10-15%

4-8%

0.5-1% 2-5%

1-2% 0.5-2%

Typical Water

Spending on Utility

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Converting Projects to Recurrent Revenues

4/5 projects (80%)

Projects & Systems

Membranes &

Filters Softwares Services

Operation &

Maintenance Chemicals

Promote

customers' retention

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- $

10,0 $

20,0 $

30,0 $

40,0 $

50,0 $

60,0 $

70,0 $

80,0 $

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3-2017(LTM)

O&M

SP&S

Projects

Diversification: A Well Thought-out Strategy

Revenue Breakdown In CAD million $

Growth vehicle :

Gain predictability in our

business model;

Secure long-term relationship

with customers.

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19%

40%

41%

Q3 - FY2017 Revenues

Projects

SP&S

O&M

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Q3 – FY2017

Financial Improvement

Q3 results:

• 49.9 % increase of revenues largely

attributable to the acquisition of UP;

• New business mix: 81.4% of the revenues

are coming from O&M and SP&S

(recurrent in nature);

• Gross profit margin of 23.8% for the

quarter: expected with the acquisition &

integration of UP;

• SG&A : 22.6% down from 23.4% last year;

• Adjusted EBITDA impacted by:

• Lower volume of projects;

• Shift in product mix;

• Addition of Utility Partners results.

Three-month periods

ended March 31,

Last nine months

ended March 31,

2017 2016 2017 2016

Revenues $21.3 M $14.2 M $61.1 M $39.6 M

Projects $4.0 M $4.8 M $12.8 M $17.9 M

SP&S $8.6 M $9.4 M $22.3 M $21.7 M

O&M $8.7 M - $26.0 M -

Gross profit margin 23.8% 31.8% 23.5% 29.9%

SG&A $4.8 M $3.3 M $12.9 M $9.2 M

Net (loss) earnings ($1.3 M) $0.6 M ($3.5 M) $0.9 M

Cash flows from

operating activities ($1.1 M) ($0.3 M) ($1.7 M) ($0.4 M)

Adjusted EBITDA $0.4 M $1.2 M $1.9 M $2.7 M

Adjusted EBITDA over

Revenues (%) 1.9% 8.8% 3.0% 6.9%

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Financial Position 2017-Q3 Review

(in Canadian dollars,

except for ratios)

Nine-month

period ended

March 31, 2017

Period ended

June 30, 2016

Working capital $11.3 M $8.3 M

Working capital ratio 1.66 1.55

Net debt $14.4 M $6.3 M

Equity $45.9 M $26.6 M

Net debt to equity ratio 0.31 0.24

• Working capital ratio improved to 1.66;

• Receivables increased by $3.5 M since June 2016, coming

essentially from SP&S activities (maple & Piedmont);

• Inventories increased by $0.9 M to $5.3 M, to support maple equipment and specialty chemicals;

• Net debt increased by $8.1 M, following the acquisition of UP;

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(in Canadian dollars)

Three-month

period ended

March 31, 2017

Three-month

period ended

March 31, 2016

Cash flows from

operating activities

$(1.1 M) $(0.3 M)

• $0.64 M earn out paid for Clearlogx acquisition;

• CAPEX of $0.97 M ($0.56 M PPE & $0.4 M intangible)

• Total capital reimbursement of $0.63 M.

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• Project sales backlog: $58.9 M (as of June 13, 2017);

• Growing pipeline driven by large infrastructure investments.

• Expanding sales network with new distributors and agents;

• Sales (or customers) are recurrent by nature;

• Products innovation and acquisitions in SP&S group is driving growth: 113% over the last 5 years.

• Backlog of $60.4 M for operating and maintenance contracts (as of March 31, 2017);

• Multiple cross selling opportunities between the three pillars;

• O&M is fragmented, thus ideal for mergers & acquisitions.

Robust Business Model

Growth platform based on 3 distinct & complimentary pillars

• Record-high combined backlog of $117.1 M (projects and O&M) as of March 31, 2017 (+ $8.7 M in new project contracts as of June 13, 2017)

• 81.4% of the revenues are recurrent by nature (SP&S and O&M)

Projects Specialty Products O&M

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Investment Highlights TSX Venture: HEO / OTCQX: HEOFF

• End-to-End, fully integrated water treatment Company

• The need for water treatment solutions is becoming increasingly important

• A three pillar approach provides cross-selling and diversification

• History or organic growth boosted by acquisitions

• Q3FY17 = 49.9% YoY revenue growth driven by UP acquisition

• Record Backlog of $117.1 M

• Recurring revenue (over 80%) provides predictability

• Profitable

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Corporate Information TSX Venture : HEO / OTCQX : HEOFF

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Board of Directors :

Philippe Gervais, Chairman Principal, Navigator

Frédéric Dugré, President & CEO Mechanical Engineer, Founder

Richard Hoel, Director Lawyer, Founding partner of Winthrop & Weinstine

Stephen A Davis, Director Managing Partner, Ventry Industries LLC

Peter Dorrins, Director President & CEO, Junex

Élaine Phénix, Director & Chair of Audit Comm. Former VP Montreal Stock Exchange, financial consultant

Jean-Réal Poirier, Director Former VP Operations, Canam Group

Lisa Henthorne, Director CTO Water Standard, Former IDA Chairman

Pierre Côté, Director Former CTO, Zenon / GE

Shares outstanding : 40,144,214

2.5 million of options

Top management (Officers): 10%

Institutional: 50% (IQ: 18% / CDPQ: 15%)

Directors: 10%

Officers :

Frédéric Dugré, President & CEO

Marc Blanchet, CFO

Guillaume Clairet, COO

Management :

Greg Madden, V.P. - SP&S

Denis Guibert, V.P - Engineering & Projects

Rock Gaulin, V.P. - Manufacturing & Operations

Bill Douglass, V.P. - Utility Partners

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H2O Innovation Unique smart water player

Headquarters

330 rue St-Vallier Est, suite 340

Quebec City, QC

G1K 9C5 Canada

1-418-688-0170

info@h2oinnovation.com

www.h2oinnovation.com