Landi Renzo

Investor Presentation • Mar 20, 2019

Landi Renzo Group Presentation STAR Conference 2019

Milan, March 20th 2019

Landi Renzo Group designs, produces and distributes at worldwide level highly advanced integrated solutions, from gas distribution infrastructures to alternative fuel systems

LPG: Liquid Petroleum Gas; CNG: Compressed Natural Gas; LNG: Liquid Natural Gas; RNG: Renewable Natural Gas

In a world that demands sustainable development, LRG is at the forefront with concrete solutions to create a cleaner environment today and in the future

• Unique expertise in modifying powertrains and vehicles lay-out (Passenger cars, LCV and HDs) to make it running on gas (CNG, LNG, LPG, Biomethane)
• Full system integration of gas components into the system
• Development and production of CNG / LNG / LPG components for passenger cars and Medium & Heavy Duty vehicles

Automotive Infrastructure

• Gas treatment (reinjection, gas flare, …) during all upstream process phases, including gas transportation along pipelines
• Bio-methane production from biogas at biomass plant, and grid reinjection
• Refueling stations full infrastructure

Gas, in its different forms, brings consistent advantage over conventional fossil fuels

LRG is a global provider of highly engineered clean fuel solutions for Heavy Duty and Passenger Car

• Landi Renzo has a consolidated expertise on the integrated development of clean fuel solutions:
• o Know-how of complete fuel system layout for different technologies and applications (Passenger cars, Bus & Heavy Duty, Off-road vehicles)
• o Deep understanding of engine control strategy and system, to optimize the performance-toconsumption ratio
• o Constant upgrade to lead clean automotive evolution and full compliance to the most stringent emission regulations
• Landi Renzo Group is entering the Hydrogen - Fuel Cell segment with integrated systems and components, collaborating with leading companies in the segment

Safe-CEC produces and sells CNG compression's applications for CNG and RNG, starting to enter into LNG

High flow rate CNG stations for trailers. Solution based on heavy duty compressors, high efficiency and performances. Driven by EM or GE.

Mechanical or hydraulic compressors are suitable for daughter stations to meet the customer needs.

Turn-key equipment for trailer installations that doesn't need external power supply.

Application for RNG

Raw gas booster for biogas boosting integrated in the upgrading plant able to manage very low pressure.

Special materials suitable for wet and corrosive gas applications.

Grid injection Compression system able to work with all different biogas upgrading plant in term of technologies and performances. Heavy duty compressors suitable for 24/7 applications.

RNG stations for trailers refilling and public or private fleets. Solution based on heavy duty compressors for the highest performances and efficiency. Driven by electric motor with variable speed.

World Passenger Vehicles sales are steadily growing, expected to reach 108M by 2024, with more than 1,3bn circulating cars in 2024 with diesel declining

• Many European OEMs are seeing gas-mobility a reliable "bridge" towards EVs but also are funding a consistent part of their next year sales on alternative fuels (mainly LPG but also CNG). Until now LPG has played a leading role in gas-mobility for passenger cars and it is foreseen it will continue in the next 5 years
• In other parts of the world, like India, Russia, Rest of Asia, LatAm & Mexico, passenger car gas-mobility is considered even more as one of the main fuel for future mobility, also supported by incentives and investment on the infrastructure
• Vehicles in use keep constantly growing, offering a large market potential for After Market sales

The automotive industry is facing a transformational time with different challenges and opportunities for suppliers

Environmental protection awareness

• Tighter Emission limits requires expensive systems, even for OEMs
• Declining sales of diesel vehicles forcing OEMs to find quick, efficient and costcompetitive solutions

New technologies are transforming the automotive sector

• Regulations are pushing technology towards alternative powertrain configurations (BEV, Hybrid, CNG-LNG, Hydrogen/fuel cell), requiring dedicated infrastructure developments
• Buying decision will be affected by different factors based on geographical area (US, Europe, China and RoW), consumer segments (mass, premium) and habits, with a specific attention to TCO

Transformation of the automotive value chain

• Upcoming Automotive Industry "disruption" will fundamentally change the Industry requiring the need to rethink overall strategy
• OEMs will need to sustain historical higher level of investment in R&D, with Suppliers success factors will be the capacity to innovate and add value to OEMs, while implementing a lower operating cost base

Gas-mobility will play a key role in this changing scenario, representing a real & "ready-to-use" in all vehicles segments

		Main Evidences	• Gas-mobility (CNG / LNG / LPG / RNG) represents for Passenger Cars and Heavy Duty segments a the key technological solution for the very next future of automotive evolution, with long-term perspectives, along with other alternative fuel technologies (Hybrids, BEVs, FCEVs, …). • Gas-mobility represents for OEMs a ready-to-use solution, with no specific need of high level of R&D investments • Gas–mobility helps (i) OEMs, to immediate average emission reduction (ii) users, thanks the most favourable TCO, compared to existing technologies
	Gas
	Mobility as a "ready	Critical Success Factors	1. End User Acceptance - Passenger Cars and Heavy Duty End Users are valuing the TCO (efficiency) the first criteria for choosing G-Mobility
	to-use" solution		2. OEMs Offering - Nowadays OEMs are offering a large set of models both in Passenger Cars and Heavy Duty segments: every day we assist to new gas-powered heavy duty powertrains and cars launches
			3. Oil Price - Oil price plays an important role for maximizing End Users purchasing propensity towards Alternative Fuel vehicles: current forecast projects oil price stable
			4. Gas Distribution Infrastructure - availability / evolution is the fundamental element enabling G-Mobility affirmation both in Passenger Cars and Heavy Duty segments CNG / LNG networks present important evolution plan in most of worldwide regions

Alternative Fuelled (LPG & CNG) Passenger Cars sales are still a niche, expected to grow in the next years

• Currently estimated in 1-1-,5% of total new sales, to reach up to 5%, and even more depending on the development of infrastructure in specific markets (eg. India)
• Almost all main OEMs have CNG / LPG cars in the catalogue, with strong growth in emerging market
• Current OEMs CNG / LPG programs cover 2022 – 2025 horizon: next years' demand is expected to grow having OEMs leveraging Alternative Fuels Cars offering as important part of their own offering
Strategic Approach:
• Europe: mature market but with potential growth, consolidate LPG leadership; follow closely work with other stakeholders to boost CNG evolution and evaluating also hybrid-gas solution as a potential evolution
• LatAm, India, Russia and MEA, achieve leadership position through organic growth; while also consolidating JV in India
• Estimated market size of 2,1 – 2,3 million conversions / years, it will benefit from the ageing of the car fleet in use and from infrastructure development, with LR market share estimated in 25%
• Very profitable business, a "cash cow" for alternative fuel solutions providers with low costs of evolution but entry barriers represented by technology and dealers/workshops networks (more than 300 and 4000 for LRG)
• Stable business in terms of volume having, in the mid term (5 years), areas with decreases compensated by areas with high increase
• Increasing competition at global level
Strategic approach
• Consolidate position in Europe, while growing organically in LatAm, India and MEA
• Innovate to offer new products (eg. sensoring, AM hybrid system, …)

Heavy Duty is the only alternative fuel to diesel with expected strong increase in the next years, due to emission and TCO

	• CNG/LNG solutions are the unique way to reduce emissions and reduce transportation cost
	• Further emission reduction will be fostered by the growth of RNG
Heavy Duty	• Almost all the OEMs have already developed ready-to-use dedicated monofuel gas-powered engine, for both on-road and off-road application
Segment Overview	• An increasing number of Bus and Refuse Collectors fleets worldwide will run on gas, with other public transportation vehicles
	• Only for commercial vehicles "last mile" transportation battery electrical engines are a potential solution
	• In the Heavy Duty segment, Gas represents the unique solution
	• Gas engine gives advantage:
Advantage	o to vehicle owners in terms of TCO
s of gas	o to OEM in terms of emission reduction
for the Heavy Duty	• Gas network is the most complete among Alternative Fuels with LNG and CNG networks under development in many countries, with development of Biomethane and bio-LNG to strengthen the use of GAS to reduce emission (CO , NOx and GHC) 2
Segment	• Probable development of Hybridization, in combination with gas-powered engines, with LR potentially active in this market niche

• Starting from 2030 Hydrogen is seen as another alternative to diesel, much more than BEVs

Natural Gas Heavy Duty market rapidly growing, with strong potential for Landi Renzo

Heavy-Duty fuel system integration: create value offering tailormade system technology for HD vehicles powered by natural gas

After Market is the historical segment for Alternative Fuel vehicles embracing both LPG and CNG solutions

	Distributors & Workshops	• Workshops buys (directly or through Distributors) solutions / components for converting cars already on the road (retrofit) • LRG serves more than 300 distributors and 4000 workshops (direct and indirect relationship) in more than 75 countries
Current Aftermarket Channels	«0 km» Conversion & Dual Fuel	• OEMs and / or Dealers are the usual clients • High growing market worldwide, with LRG recognized as market leader with complete product offering • Expertise to set up a LRG-managed workshop, and to train Customer's workforce
	Fleets Conversion	• LRG also works alongside fleets owners (e.g.: taxi, express couriers, …) for optimizing TCO in transportation segments where efficiency is key • LRG has signed an agreement with Uber Brazil to manage turn key conversions of Uber taxi fleet, under development in other countries
Future view	• •	Aftermarket network offers tremendous opportunities to enter in new services/new product (AM hybrid systems, sensoring, service for BEVs) For future development LRG is currently working with start-ups, incubators, idea generators in order to define proper products and business models
		13

FY 2018 summary – automotive sector

8,3

Net Sales summary

M€; %

Working Capital remains stable as planned, in line with very-best practices in the Automotive sector

M€, % on rolling revenues 12M

FY '18 NFP walk: ordinary activities generated a postive cash flow of 4,2M€, after having invested 8,3M€ mainly on R&D

Main events and market drivers with Gas-mobility to strengthen its importance in the years to come

Worldwide increasing focus on climate change, with high investments in different areas and growing attention to Biomethane/RNG. Gas-mobility is the ready-to-use solution to reduce emission worldwide and improve users TCO, with high expected growth on HDs

LPG and CNG as a solution for European OEMs to respect CAFE and as main solution for the mobility of the future in India, LatAm and Russia with growing interest by fleets to convert to gas with "UBER model" as a reference

HDs gas powertrain to increase its share on total sales, with LRG to strengthen its cooperation with some of the main players in the industry, complete product range and starting new SOP

LRG to strengthen the collaboration with top market players for the development of dedicated systems and components for Hydrogen mobility

Continue investments on the infrastructure both for CNG, LNG and Biomethane production and distribution, with SAFE&CEC engaged as market leader on main projects worldwide

We aspire to bring clean mobility towards the future, making it closer every day

Power to Innovate

• Be the technology leader by strengthening our Power to Innovate in the new mobility scenario
• Be a trusted partner for OEMs worldwide by developing gas-powered and hydrogen solutions, exploiting deep knowledge on system integration and components development

• Develop our network of 4.000 workshops worldwide to be the leading point of reference for Clean Mobility AM, enlarging our offering to include other service and technologies

• Maintain a strong focus on efficiency and continuous improvement in everything we do as a company standard

• Strengthen our current financial situation to reduce average cost of funds, and improve capital optimization having a shareholder friendly approach
• Be a reference point for local communities wherever we operate, foster a group culture of meritocracy, engage and develop talents starting from our internal people

Accelerate growth and value creation

• Develop a new strategic plan within H1 2019 focusing on growth acceleration
• Explore potential for inorganic growth opportunities, to expand in new areas and/or accelerate go-to-market
• Accelerate the relaunch of the Infrastructure Business, exploring opportunities to boost its shareholder value also through organic and inorganic growth

2019 Outlook: Adj. Ebitda improves compared to 2018 and strategic plan, with SAFE&CEC reaching 8M€ Adj. Ebitda

• 2019 revenue outlook is expected to confirm 2018 performance, with turnover higher than strategic plan guidelines

• 2019 Adj. Ebitda outlook is expected to achieve ~ 27M€, thanks to full benefit of cost reduction implementation and further efficiency initiatives

• 2019 revenue outlook is expected to increase by 14% vs. 2018 results

• 2019 Adj. Ebitda is expected to double, also taking advantage from 2018 saving actions
• Value of SAFE&CEC participation to strongly increase compared to current book value

APPENDIX

21

Landi Renzo - Company profile (18/03/2019)

BOARD OF DIRECTORS

TOP MANAGERS INVESTOR RELATIONS

Investor Relations Contacts:

Paolo Cilloni Tel: +39 0522 9433 E-mail: ir@landi.it www.landirenzogroup.com

SHAREHOLDING SHARE INFORMATION

N. of shares outstanding: 112.500.000 Price as of 18/03/2019 € 1.306 Capitalization: € 146.9 mln FTSE Italia STAR

STOCK VS MARKET

CONSOLIDATED P&L

(thousands of Euro)
INCOME STATEMENT	31/12/2018	31/12/2017
Revenues (goods and services)	188,079	206,294
Other revenue and income	1,482	4,222
Cost of raw materials, consumables and goods and change in inventories	-93,092	-100,527
Costs for services and use of third party assets	-44,100	-57,307
Personnel expenses	-28,150	-43,181
Accruals, impairment losses and other operating expenses	-2,707	-4,802
Gross Operating Profit	21,512	4,699
Amortization, depreciation and impairment losses	-10,243	-16,189
Net Operating Profit	11,269	-11,490
Financial income	138	91
Financial expenses	-4,058	-4,396
Gains (losses) on exchange rate	-1,573	-1,873
Gains (losses) on equity investments	0	21,134
Gains (losses) on joint venture accounted for using the equity method	-1,591	8
Profit (Loss) before tax	4,185	3,474
Current and deferred taxes	348	228
Profit (loss) of the period for the Group and minority interests, including:	4,533	3,702
Minority interests	-138	-437
Profit (Loss) of the period for the Group	4,671	4,139
Basic earnings (loss) per share (calculated on 112,500,000 shares)	0.0415	0.0368
Diluted earnings (loss) per share	0.0415	0.0368

CONSOLIDATED BALANCE SHEET

(thousands of Euro)
ASSETS	31/12/2018	31/12/2017
Non-current assets
Property, plant and equipment	12,745	14,583
Development expenditure	6,932	5,401
Goodw ill	30,094	30,094
Other intangible assets w ith finite useful lives	14,039	15,769
Investments accounted for using the equity method	22,292	24,301
Other non-current financial assets	352	428
Other non-current assets	3,991	4,560
Deferred tax assets	10,538	8,016
Total non-current assets	100,983	103,152
Current assets
Trade receivables	35,131	29,118
Inventories	38,895	36,562
Other receivables and current assets	8,016	7,529
Cash and cash equivalents	15,075	17,779
Total current assets	97,117	90,988
TOTAL ASSETS	198,100	194,140

CONSOLIDATED BALANCE SHEET

(thousands of Euro)
EQUITY AND LIABILITIES	31/12/2018	31/12/2017
Group shareholders' equity
Share capital	11,250	11,250
Other reserves	43,931	41,983
Profit (loss) of the period	4,671	4,139
Total equity attributable to the shareholders of the parent	59,852	57,372
Minority interests	-276	-669
TOTAL EQUITY	59,576	56,703
Non-current liabilities
Non-current bank loans	23,055	26,906
Other non-current financial liabilities	24,427	29,308
Provisions for risks and charges	5,443	11,891
Defined benefit plans	1,646	2,446
Deferred tax liabilities	339	423
Total non-current liabilities	54,910	70,974
Current liabilities
Bank overdrafts and short-term loans	16,203	7,741
Other current financial liabilities	4,262	2,792
Trade payables	55,166	47,829
Tax liabilities	2,385	3,003
Other current liabilities	5,598	5,098
Total current liabilities	83,614	66,463
TOTAL EQUITY AND LIABILITIES	198,100	194,140

Disclaimer

This document has been prepared by Landi Renzo S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available. This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forwardlooking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.

The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward looking statements. Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations