Fuel Systems Solutions, Inc. (FSYS)

[Democritus_of_Abdera]

MWM, you’re correct ... investors should not ignore FSYS’ industrial subdivisions, in particular the compressor lines (given the possibilty of increased interest in US CNG service stations).

Pietro Bersani (FSYS CFO) highlighted a few aspects of the industrial side in his recent presentation at the Needham Conference on Jan 12, 2012.

In particular,

1) FSYS’ industrial division accounted for approximately 27% of the Q3 2011 revenues.

2) FSYS’ auxiliary power units are generating strong margins.

3) FSYS' BRC & FuelMaker compressor business represents 5-7% of revenues. These compressors serve the three main categories of compressors:

a) large compressors for gas stations
b) mid-sized compressors for commercial fleets
c) small compressors for home use (i.e. the Phill)

Note that Mansfield Gas Equipment Systems is a US dealer for the BRC FuelMaker Compressors. (see: http://www.cngfuelsystems.com/ )

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The actual quotes from the presentation are:

In terms of the Industrial, it accounts, of course, for the difference. I mean, for approximately 27% of our revenues for the Q3 of 2011. It is composed basically by both the mobile and the stationary engine, so mobile equipment and stationary engine.

We are very satisfied about the performance of our Industrial business, in particular, due to the excellent performance of the auxiliary power units, which are providing with a very good margin and very interesting developments.

In terms of Infrastructure and Refueling, what we are talking about right now, I told you Transportation and Industrial is the two core business, which is fine. Then there is the Infrastructure and Refueling. It has – I mean, it’s related to the compressors. Compressors are a key, expensive and big, I would say, component of the system, allowing gas stations to refuel vehicles because we’re – which are stopping by in order to make a refuel.

There are three main categories. The big ones, which are, that one that I just said, the gas station you need in order to make it possible for thecng gas to get refueled. There are the mid-sized compressors, which are those ones used by the large commercial fleet, for example. Think about the AT&T, think about the FedEx, the UPS, stuff like that when the more you have a large commercial fleet, the more you need a private gas station in order to make it possible for your commercial fleet to get refueled and to send out your couriers, your vans and pickups. And the third, the last category belong to the Infrastructure and Refueling business, does relate to the small compressor.

When I say small compressors, and by the way, a little bit later, we can see – we can get more detail in this respect, we mean, the private compressors that every private consumers may purchase, attached to the wall ..., so that by just overnight stop basically, it is possible for the car to get refueled off of CNG, meaning, compressed natural gas.

This is a visual example <i.e. he is referring to a slide showing a BRC gas station[\i]>, I would say, of our Infrastructure and Refueling Products business. Just to avoid any misunderstanding, this is still not such a big business for us, but it’s very, very interesting. We are talking about approximately 5% to 7% 2011 figures percentage of the business – of total revenues, I mean. But it’s going to be very interesting in light of the consideration that we made. So that this picture you have, a typically big gas station where we do provide in terms of the big compressor. Then we have the mid-sized compressor, those one that I said to you, the large commercial fleets, for example, do use for their – for gassing their cars, their fleet refueled.

And finally, the small one, which is a compressor station that each of us may buy, as long as the building where we live or townhouse, it depends, has a gas pipeline entering the building, of course. By the way, the time you need in order to gas your car 100% refueled is absolutely faster than electricity. I mean, if you’re driving and you need a certain number of hours, it depends, of course, on the car or vehicles we are talking about, a lot of consideration. But on average, the time you need to get your tank refueled of compressed natural gas is definitely extremely fast, for sure, overnight.