Landi Renzo

Investor Presentation • Sep 14, 2017

Strategic Plan 2018-2022 Investor presentation

Landi Renzo Group highlights

History	Evolution	HQ	Product leadership
Founded in 1954	Grew organically and through M&A	Headquarter in Reggio Emilia	Among the world leaders in CNG and LPG fuel systems
Global presence	People	Offices	Listing
Wide-spread presence worldwide both in OEM and	More than 760 employees worldwide	14 branch offices in 12 countries	Stock exchange listing in 2007 (MTA Star segment)

Landi Renzo Group structure

The future is not only electric: CNG/LPG vehicles will keep an important role, especially in emerging markets

The overall growth of reference markets will sustain Landi Renzo Group across all business lines

Landi Renzo Group's Mission is a concrete journey to make few and very important concepts real

Lead the market by inspiration with the most innovative technology solutions that provide maximum benefit to our customers and to the environment

Ensure the success of our customers by offering high quality and top performing solutions (and being always able to anticipate and listen their needs)

Encourage and foster a culture of team-working, respect and integrity and work with determination to achieve excellent results always focusing on continuous improvement

Partner with our Stakeholders and promote a culture of trust and collaboration to achieve top performance results and create shared value

At the beginning of 2017 LRG has undertaken a structured turnaround and re-launch project, which will be completed by mid 2018

2016 Q4	Q1	2017 Q2	Q3
Gear change	Pave the way for evolution	First initiatives	Strategic plan definition
• Dec. 2016: – Mr. Cristiano Musi appointed CEO Elect	• Jan. 2017 – Launch of turnaround program with a top tier consulting company • Mar. 2017 – Renegotiation of debt successfully completed – Overachieved sales budget by 13%	• Apr. 2017: – Mr. Cristiano Musi appointed CEO – Preliminary agreement with AVL for the sale of part of LR Technical Center and R&D cooperation • Apr-Jun 2017 – Focus on the automotive M&HD business opportunities in Asia – H1 turnover shows 15,9% growth over 2016 and positive adj. EBITDA	• Jul-Sep. 2016: – Definition of 2018 – 2022 strategic plan: Identify best competitive o positioning Outline actions to o sustain revenues performance in the Automotive and Gas distribution business – Sales trends in line with budget expectations

The long term vision is translated into an actionable strategic plan

Long Term Mission and Vision

• Landi Renzo Group 2018 2022 Strategic Plan sets the Company's goals in the next 5 • To be a leader in growing segments _ CNG Passenger Cars and especially Mid & Heavy Duty Vehicles _ leveraging current leadership in LPG systems for both OEM and AM markets • AFV global market new demand trends and changed conditions shape Landi Renzo Group • Position SAFE as a worldwide leader in the covered market segment, also linked to growth
• 2018 2022 long term mission and vision for the coming years
• of SAFE potential market world-wide

Landi Renzo Strategic

• years:
• o Focus on core business activities, new market opportunities (growing geographies and segments) and Product Innovation Group
• o Resume value creation for its shareholders and employees
• o Attract new highly skilled resources to foster innovation and build long-term competitive advantage Plan

Growing at a CAGR of 7% to 266MEur revenues, LRG plan to capture the opportunities offered by the market, expanding into new segments

Revenue growth, change in product mix and operational improvement will lead to an Adjusted EBITDA of 50MEur by 2022

Following the EBITDA improvement, Landi Renzo Group will turn cash

The strategic plan centers on business development, using dismission of non-core assets to finance growth

The 2018 –		2022 Strategic Plan development is funded on 3 pillars
AUTOMOTIVE	SAFE	OPERATIONAL EXCELLENCE
M&HD: new products PC: market share consolidation	Full exploitation of infrastructure, RNG and Gas recovery demand	Operations optimization and R&D effectiveness
Become a leader in M&HD and Off-road segments Consolidate global leadership in PC LPG (OEM) and CNG/LPG (AM) Grow PC CNG offering to OEMs Increase market share in AM growing emerging markets	• Become the global leader in CNG Compressors & Packages exploiting existing market demand	• Purchasing costs reduction • Manufacturing cost reduction • Functions centralization and cost optimization: • "Continuous improvement" approach to drive efficiency

Defend current position, invest in product development and grow into new segments

Automotive
	new segments	Defend current position, invest in product development and grow into
	PC	• Use LPG positioning and market share to finance CNG development
OEM	(LPG, CNG and H2)	• Leverage high growth markets demand to become a global leader in CNG	7% 211
	M&HD	• Leveraging EU6 discontinuity and high growth markets demand to become a global leader in M&HD	164
	(CNG & LNG)	• Invest to become a globally recognized integrated solutions provider
	AM	• Increase market share in Emerging Markets with LPG/CNG conversion	2018F 2022F Automotive revenues
		• Promote Dual Fuel solutions (for M&HD) to maximize presence and success rate in global tenders

Increase market share through a focused commercial strategy and product optimization

SAFE
product optimization	Increase market share through a focused commercial strategy and
1 CNG Compressors & Packages	• Become market leader with market share up to 7%, 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	14% 32	55
3 Gas Recovery	• Tactical approach to the market, serving Medium sized EPC and Small and medium Oil companies • Limit commercial investments • Already existing broad product portfolio & system	2018F SAFE revenues	2022F
	Expand after sales & spare part offering and leveraging the installed

Expand after sales & spare part offering and leveraging the installed compressor base

Operational excellence targets 13MEur savings per annum

Operational Excellence Operational costs	Operational excellence targets 13MEur savings per annum • Improve purchasing strategies for both services and commodities • Start up a technical cost reduction workstream aimed at reducing component complexity	Savings 6MEur
Footprint optimization	• • Rationalize expenses • Consolidate Italian operations by focusing on high value added products • Partial transfer of Lovato production to Poland • Shutdown of plants in Romania and Pakistan	3-4MEur
SG&A and group integration	• Simplify group structure by reducing the number of legal entities • Creation of a Group Head Office based in Reggio Emilia • Functions centralization and cost optimization: Purchasing, Finance & Admin, Quality, Logistics	3-4MEur
R&D	• Reposition portfolio and the open new markets • R&D competencies and ideas better integrated at group • Increase resource allocation efficiency	Not quantifiable

Disinvestment Strategies are finalized to make LRG focus on core businesses and finance turnaround and product Innovation

Non-core assets disposal
	Disinvestment Strategies are finalized to make LRG focus on core businesses and finance turnaround and product Innovation
Disinvestment Overall Strategies	• LRG today owns companies in "non core" and "non functional" businesses • Release resources to accelerate Turnaround and Product Innovation processes making LRG financial position sustainable along the journey

2018 – 2022 Strategic Plan expected solid economical and financial results ensure value creation for all our stakeholders

Landi Renzo Group economics and financial targets

Financials
	Landi Renzo Group economics and financial targets
		2018F	2022F
	• Group turnover growing with a CAGR of 8% over the five year plan period	€196M	€266M
Turnover	• Automotive Sector growth (CAGR: 6%) driven by expansion into new segment (M&HD) and markets	€164M	€211M
	• SAFE revenues (CAGR: 14%) leveraging on market penetration	€32M	€55M
Adjusted EBIDTA(1)	• LRG Adj. EBIDTA growing from 14% to 19% over revenues	€27M	€50M
	• Positive starting from 2018 (still negative in 2017)	€10M	€35M
EBT	• EBT growing up to 13% over revenues at the end of the plan
Cash Flow	• Cumulated free cash flow totalling €84M over the plan period, to repay LRG debt and finance growth, including sale of non-core asset		Cum. FCF 84M

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.