Fuel Systems Solutions, Inc. (FSYS)

[Democritus_of_Abdera]

Catalysts for FSYS growth in North America...

In the Q&A of the May 5th Q1 2011 CC, Mark Sigal of Canaccord Genuity asked for a list of milestones that might be used to track progression of the North American Transportation business.

Matthew Beale listed the following:

1. new OEM models that support fleet CNG applications

2. emergence of an OEM bi-fuel application either for a van, pick up, or sedan

3. passage if the Natural Gas Act

Of the three listed, I believe that the 2nd is the most important for FSYS.

Relevant CC quotes are:

In Matthew Beale’s Prepared Remarks:

The outlook of the U.S. NGV market, and fleet market in particular, has never been stronger. The rising price of crude and mounting regulatory support are important factors. However product availability will also be a key driver as more OEM product becomes available across the spectrum of popular fleet configurations, vans, pick ups and certain sedan models, we believe that significant market segment measured in the tens of thousands of vehicles can emerge. The availability of OEM NGVs offered in bi-fuel format, an important growth catalyst we believe, has the ability to multiply the addressable market.

In the Q&A:

<Q Steven Milunovich – Bank of America Merrill Lynch>: Thank you very much. Could you comment on the NAT GAS Act in the U.S.? I don’t believe it has provisions for propane, but what’s your sense of the probability of that passing and do you get much benefit from it if it does?
<A – Matthew Beale>: ... Obviously, it would be very positive for our business in, I think at least near term. I mean ultimately with incentives, what they can do is steepen the penetration curve, which is important. But long term, the industry overall has to find a profitable business model. So it can provide some stimulus short-term, but long-term, all the parameters have to align to make for a win-win situation for customers as well as suppliers and all industry participants more along the lines of what’s happened internationally.

<Q Mark Sigal – Canaccord Genuity, Inc.>: Okay. And then just as a follow up, was mounting support for the Nat Gas Act, can you talk a bit about what milestones, we might look for to track the progression of the North American transportation business? Is it ramping volumes at GM? Is it the emergence of new OEM partnerships, perhaps a combination of both? Perhaps just some things that we can look forward there.
<A Matthew Beale>: Yeah, I think the key and this is one of the – I think regulatory Nat Gas Act, again we – I don’t, I’d like to avoid speculation in that regard. I think it could be very positive but the things that are somewhat within our control and I think ultimately most significant will be the availability of multiple models to support key fleets applications, vans, pickups, sedans. I mean remember right now, it’s simply a van program for GM. So I think as more products in different formats is available you clearly expand the addressable market. The key catalyst though in our mind and is something we mentioned in the prepared remarks will be the emergence of a car certified or rather an OEM bi-fuel application either for a van, potentially a pick up and potentially sedans. When you – for the time being the market is very much dominated almost entirely by dedicated systems to the extent that there is bi-fuel system available, you do exponentially increase the addressable market. And it stands the reason because you’re able to address fleets that don’t necessarily have proprietary infrastructure. So that – if I had to look for some catalyst those would be a couple of the ones I’d be looking to in addition clearly the volumes.