Landi Renzo

M&A Activity • Nov 27, 2017

SAFE – Clean Energy Compression merger Investor presentation

Milan, November 2017

Executive summary

	• Landi Renzo Group and Clean Energy Fuels (CLNE – NASDAC) are considering to merge their wholly owned subsidiaries SAFE and Clean Energy Compression into a new company
	• Closing is planned within the end of the year, even if could be possible a «postponement» to January 2018
Deal	• On Safe side the deal accelerates turnover growth and international development, with few overlapping in terms of market coverage and product portfolio
	• The deal will create the second largest player world-wide in the natural gas compression market, with significant opportunities for further market expansion
NewCo	• Fully integration is expected to be completed by 3Q 2018, with very few overlapping in terms of sales coverage
Strategy and	• NewCo will have a market leading position in Europe and America and will benefit from cross selling of products and potential market growth in the next years
Expected Results	• Thanks to «immediate» expected synergy effect (from ~2,6M€ in 2018 to more than 7M€ and in 2020) NewCo will be able to create higher value for shareholders starting from 2018 (expected adj. EBITDA: 4,9M€ in 2018, 16M€ in 2020), with dividends distribution along the years
	• Landi Renzo Group will benefit from a «non monetary» capital gain of 18-20M€ at closing
LRG Value	• With deal completion LRG will deconsolidate ~ 4M€ net debt, reducing its NFP to expected ~56M€
Creation	• Based on LRG assumptions, the book value of NewCo on LRG Assets will be significantly higher than the book value of SAFE stand alone, starting from 2018

1 The presentation has not been prepared or approved by Clean Energy

SAFE

SAFE is a wholly owned subsidiary of Landi Renzo Group, operating in the market of Natural Gas compression and distribution…

Landi Renzo Group
	Automotive sector	Gas Distribution and
OEM	After Market	Compressed Natural Gas Sector	Sound Sector
• Full LPG systems • LPG, CNG and LNG components	• Full CNG and LPG conversion kits • Components and systems for CNG and LPG conversion • DDF technology for M&HD	• Equipment for CNG/RNG distribution stations and infrastructure • Acquired by Landi Renzo Group in 2012 • Estimated ~13-14% group revenues in 2017, with EBITDA equal to 0 and net debt around 4 M€	• Professional loudspeakers • B&C Speakers formalized a binding offer for the acquisition of 100% share capital Non-core (under dismissal)
		Scope of the deal

…focused on the European market, with performance worsening since 2015

SAFE General information

Founded in 1975

Acquired by Landi Renzo Group in 2012 Located in San Giovanni Persiceto (ITA) Installed compressor base: 3 500 Employees: 73 (8 sales people) Subsidiaries: Singapore

CNG components, from pipeline to tank • Compressors: large size range 22-400 kW • Reducing metering systems • Gas treatment systems CNG Components for bio-methane plants • Compression, storage & distribution Components for Oil & Gas E&P activities • High-power compression system Renewable NG (RNG) Gas recovery

Financials: Revenues (M€), EBITDA%

Addressed markets & products Geographical sales coverage (Rev. 2016) 45 markets covered

CNG market is expected to grow at 6%, through a set of supporting factors

Increasing environmental concerns	• Increasing environmental concerns put pressure on the search and utilization of alternative sources of energy • CO emissions still growing (0.6% p.a. '15-'35): generating lower CO vs. coal and 2 2 oil, NG helps reaching the challenging regulatory targets, "0" particulate
Favorable regulation	• Policies aimed at shifting to lower-carbon fuels (e.g. DAFI 2014/94/UE, "China VI" emissions standards, EPA and NHTSA Standards) • CO2 emissions targets in LD vehicles (e.g. European EC443/2009, U.S. EPA 2016 standards)
One of the Best in-class AFV technology	• Mature technology and main bridge to electrification toward 2030 for passenger cars worldwide • CNG and RNG are becoming more and more viable solutions for Medium & Heavy Duty • Infrastructures for this application need to be developed (e.g. along highways)	Picture
Material projects by large players	• Three types of operators pushing the market growth: 1. Several projects for infrastructure development (SNAM, Total, GRDF, ) 2. Investments on M&HD CNG vehicles by truck Manufacturers (Chevrolet, GMC, IVECO, FCA, VW, …) 3. Development of CNG fleets by truck users (FedEx, UPS, Auchan, …)

Strong market	• Globally, more than 8.000 new CNG stations are expected to be installed worldwide in the 2017-2022 period (6% CAGR, from 26K to 34K stations)
growth expected	• The two main markets in 2017 are Europe and APAC (mainly China), and these countries will lead the market growth in the next 5 years

RNG and Biogas market currently concentrated in Europe, with growth opportunities in US

1	Environmental concern & objectives	• Increasing environmental concerns put pressure on the search and utilization of alternative sources of energy • During Cop21 was signed the first universal agreement on climate change	Biogas and RNG plants in Europe CAGR (units) +6,1% 25,1% 574 459 367 282 232 187
2	Circular economy & waste re-use	• RNG and Biogas allow the exploitation of organic residuals, reducing costs of waste thus increasing efficiency	18.245 5,7% 17.388 17.376 16.817 14.661 13.812 2012 2013 2014 2015 2016 2017 Biomethane plants Biogas plants
3	Regulation & Incentives for biomethane production	• Government policies (i.e. renewable energy policy, COP 21, GHG mitigation) facilitate the adoption of RNG and Biogas introducing economic incentives	1. Strong RNG market growth driven by 1 policies and incentives supporting waste re-use 2. Potential switch from Biogas to 2 Biomethane production: large market
4	Energy deficit management	• Countries aim at reducing their vulnerability to one single energetic source • RNG is the only renewable energy that can be planned and stored, thanks to a wide infrastructure all over the territory	base 3 3. Strong opportunities in exporting this technology into new markets currently with limited penetration (e.g. USA, China)

Landi Renzo Strategic plan identified three growth pillars for SAFE: strategic partnerships is a key enabler to achieve company goals

1 CNG Compressors & Packages

• Become market leader, exploiting brand reputation
• Standardize product components & processes
• Diversify and expand product offering: (1) tailor made turnkey solutions (2) ready-made products (3) dispensing equipment

2 RNG Components & System

• Explore partnership opportunities with upgrading specialists
• Proactively approach market opportunities becoming a key reference player
• Upon request, offer complete solutions from upgrade to compression and dispensing

3 Gas Recovery

Non core market segment

• Tactical approach to the market, serving Medium sized EPC and Small and medium Oil companies with already existing product portfolio & system
• Limit commercial investments

Expand after sales & spare part offering

geographic) and effectiveness

A partnership with Clean Energy Compression (CEC) would help SAFE to accelerate growth & achieve international expansion

Main SAFE Partnership Needs

• Turnover Growth and Market Coverage A partner able to accelerate turnover growth and SAFE international development, with few overlapping in terms of market coverage and product portfolio
• Strategic Value A partner able to:
• o Support SAFE in finding scale economies
• o Provide experience in product standardization and reinforce the "international and continuous improvement culture"
• o Add value to SAFE capabilities to offer turn-key solutions
• o Having the know how to expand in potential markets SAFE product portfolio for RNG

CEC contribution to partnership

• Focused market approach
• o Single supplier of CNG fuelling systems
• o Geographical focus on America
• Product standardization
• o Production efficiency (production time, limited part numbers)
• o Low maintenance required

CEC is focused on CNG sales on the American market, after recent years of losses in 2017 is completing a successful industrial turnaround

Founded in 1984 Owned by Clean Energy Fuels, listed in the Nasdaq Located in Chilliwack, BC, Canada Employees: 180 at Total Compressors installed: 1 800 Subsidiaries: Peru, Colombia and China

• Compressor: CleanCNG 2.0 (100 – 300HP) – Electric or Gas Drive

• Clean PRS 300, 500, 2000

• CNG Dispensers (LATAM)

• CNG Storage (LATAM)

CEC General information Financials: Revenues (M\$), EBITDA%

Addressed markets Geographical sales coverage (Rev. 2016) 10+ markets

CNG

8 Source: CE Compression Information The presentation has not been prepared or approved by Clean Energy

Several fundamental rationales underneath the merger of SAFE and CEC, that will create the second player worldwide

Strong market fundamentals	Partnership allows to better exploit CNG market growth (that is driven by several • external factors)
CNG leading global position	NewCo would become the second market player with a global footprint • Strong complementarity in geographical footprint of the two entities •
Complementary business models	CEC and SAFE show the right fit: • - SAFE can benefit from CEC product and process standardization - CEC can benefit from new product application (RNG) and engineering knowhow
Profitability gain through cost synergies	Merge allows quick-win synergies not achievable on the stand-alone basis with a • tangible impact on profitability
Reduced risk of execution	Broader geographical coverage and integrated product portfolio decrease the • risk of market volatility: higher chances to achieve industrial plan targets on sales growth and profitability gain
Value creation	NewCo shows higher cash flow generation compared to SAFE stand alone •

NewCo's Mission highlights the will to become the global leader

Our Mission

Lead the market through value added innovative products and solutions, contributing to the success of our customers with our quality and services

Ensure the zero defect quality of our products by establishing in our people the culture of continuous improvement and implement the world class manufacturing as a standard

Encourage and foster a culture of trust, ethics, team-working, respect, integrity, and work with determination to achieve excellent results for our partners

From day one, the NewCo will be the second player in the NG compression market, with a multi-continent coverage

NewCo strategy is based on quickly achieving market leadership position that will lead to a value increase for both shareholders

		5-year plan
2018	2019	2020	2021	2022
1 Quick-win actions Deploy NewCo	full potential	2	Consolidation phase Create long-term value
• Achieve full integration of SAFE and CEC: NewCo potential, exploiting all synergies to increase competitiveness • on core CNG segment, and expand existing market share in key markets (Americas and Europe)	operating at its full capacity and Consolidate market positioning: focus effort	• Reinforce leadership market positioning: leverage on acquired efficiency and market presence to gain market share and become the first player in the market • Explore further consolidation: smaller players might not be able to operate stand-alone in a more competitive market (opportunities for M&A) • Assess best strategy to maximize value for shareholder: explore new plans to increase the value of the NewCo – and thus the value for the
• Expand in RNG growing market: strengthen commercial network on RNG growing market segment		shareholders
• Operational improvement: components standardization and review key ODT	achieve product operations processes to reduce direct cost and
• After sales: leverage on large installed compressor base to implement international based after sales service

The integration activates several levers of value creation both in Sales and in Operations

	CNG global leader	• Become Leader in America (North, Central and South) and Europe • Get ready to expand in Middle East, Africa and Asia
Sales &	Commercial strategy integration	• Merge the sales team across the regions and coordinate activities
Products	Product Portfolio management	• Integrate product offering • Define a sales strategy, identifying along the power range what to push where
	RNG opportunity export	• Industrialize and push into new markets the RNG offering
	Optimized Supply Chain	• Centralize sourcing strategy • Integrated procurement model and volumes
	Product Standardization	• Review the design process to standardize product, reduce supply chain cost / warehouse and reduce the assembling time for manufacturing
Operation	Operation Lean Management	• Review the manufacturing process and the integrated manufacturing organization to increase productivity and reduce production cost
	Competitive Advantage sharing	• Cross-supply semi-assembled components internally produced by both parties • Share manufacturing know-how and best practices

NewCo Revenues growth with a CAGR of 16,6% 2018-2022, taking advantage from to expected market growth and cross selling

• Revenues growth driven by:

• o CNG Equipment package market growth and increased market penetration both in current markets (U.S. and Europe) and in new geographies, exploiting joint capability to offer CNG complete systems and leveraging on strong brand reputation and proven experience in product standardization
• o Service and Spare parts recovery, driven by the new strategy, proactively leveraging on existing installed infrastructure and new expected installations
• o RNG segment growing opportunities and increased market penetration
• Revenues of the NewCo take into account potential overlaps of the two stand-alone companies

Several synergies to address, with a target 7M€ in 2020 and 9M€ in 2022

				steady state (2020, M€)
v. e R	New markets	CNG application	RNG Sales	~3%
			Economies of scale on purchases
			Low Cost Countries supply
		Price - Integrated procurement	Make or buy
	Materials		Product Standardization	~59%
			Intercompany parts supply
S G		Warehouse &	Warehouse reduction
O C		Logistics	Logistics distance optimization
			Product standardization - Engineering
	Personnel	Hours per compressor	Product standardization - Assembling
			Lean manufacturing - Assembling	~14%
		Unit cost per hour	Production flattening
		HC reduction	Engineering team
			Efficiency convergence
	Personnel	HC reduction	Economies of scale	~11%
A & G S			Sales Footprint review – ext. agents
	External	Cost	Economies of scale / cost review	~13%
	costs	reduction	IT integration

Synergies

From 7 M€ in '20 to 9 M€ in '22

• CEC RNG sales in America (1- 20 ratio with CNG sales)

Highlights

• COGS Material: lower cost on shared suppliers, integration path on separate suppliers and components
• COGS Personnel: decreasing #hours for compressor assembly due to product standardization and process industrialization / lean (-20%); decreasing unit cost through production distribution along the year
• SG&A Personnel: efficiency gained over support function integration (-19)
• SG&A external cost: external agents review , integration of IT structure, cost review & rationalization

15 The presentation has not been prepared or approved by Clean Energy

NewCo ownership structure will be 51% (LRG) - 49%(CE) with a Management team with strong expertise on similar deals

NewCo economics and financial targets

Source: LRG internal analysis

Due to SAFE deconsolidation, a capital gain (ca. 18-20M€ expected) will be recognized to LRG and 4M€ of debt will be deconsolidated

18 or approved by Clean Energy

The merger is a key step in Landi Renzo Group forward-looking strategy

			5 year plan						Mid-long term
	2017	2018	2019	2020	2021		2022	2023	2024	2025
	Operational excellence
s s e n si u B			Gas solutions as an affordable bridge to electrification and the only real solution for M&HD
e v oti m	Forward looking: rethink our future in a transformational & disruptive world
o ut A	 Develop multi-disciplinary skills to navigate the "new era of automotive"  An opportunity to be a center of excellence to investigate new AFV technologies, such as LNG-battery series solutions, Hydrogen and off-road applications
							To enlarge technology capabilities to all alternative fuels developments
C E	Deploy NewCo	and build The Market Leader	Full Potential	creation	Explore better scenario for value
C E- F A S			•		increase the value of the NewCo –			and thus the value for the shareholders	Assess best strategy to maximize value for shareholder: explore new plans to
									The presentation has not been prepared or approved by Clean Energy		19

This presentation has been prepared by Landi Renzo S.p.A. for information purposes only and for use in presentations of the Group's results and strategies.

This presentation contains forward-looking statements regarding future events and the future results of Landi Renzo S.p.A. that are based on current expectations, estimates, forecasts, and projections about the industries in which Landi Renzo operates and the beliefs and assumptions of the management of Landi Renzo. Words such as 'expects', 'anticipates', 'targets', 'goals', 'projects', 'intends', 'plans', 'believes', 'seeks', 'estimates', variations of such words, and similar expressions are intended to identify such forward-looking statements. These forwardlooking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future.

Therefore, Landi Renzo's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, political, economic and regulatory developments in Italy and internationally. Any forward-looking statements made by or on behalf of Landi Renzo speak only as of the date they are made.

Any reference to past performance of the Landi Renzo shall not be taken as an indication of future performance.

This document does not constitute an offer or invitation to purchase or subscribe for any shares, for any other financial instruments and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

The presentation has not been prepared or approved by Clean Energy