Fuel Systems Solutions Inc. Q2 2009 Earnings Call Transcript
Fuel Systems Solutions Inc. Q2 2009 Earnings Call TranscriptAugust 07, 2009 | about: FSYS
August 07, 2009 | about: FSYS
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Next I'll provide an update on our transportation business which continues to be our strongest business. In Europe the demand for alternative fuel vehicles continues to be solid supported by attractive fuel price differentials, government incentives and a favorable regulatory environment. We are capturing the opportunities to supply the market with our broad offering of quality bi-fuel solutions through our key OEM relationships and expanded DOEM installation capacity.
In the second quarter, our DOEM business completed 37,000 installations, exceeding our first quarter 2009 rate of 30,000. We would like to remind you of our seasonality. Regarding DOEM conversions, we typically have greater volumes in the first half of the year due to the European summer and December holidays in the second half of the year.
Currently we are on track to exceed 120,000 conversions in 2009 up from nearly 58,000 in 2008. In the U.S. we are making progress executing our fleet strategy. To ensure breadth and longevity to serve the automotive market, we are building our EPA certification portfolio.
This quarter we earned six certifications for several Chevrolet and GM-branded vehicles including passenger cars, light duty class pickups, cargo vans and SUVs commonly used for fleet vehicles. In addition, we continue to work with industry advocacy organizations such as [NGDAmerica] and the Propane Education and Research Council that promote the use of natural gas and liquid propane gas vehicles in America........
n the U.S. automotive business we've begun to build out our distribution channels. In June we signed an agreement with CleanFUEL USA, an established player in the LPG alternative fuel vehicle market. CleanFUEL will distribute fuel systems EPA certified bi-fuel kits for conversion of light duty GM and Ford vehicles through its authorized installation network.
Regarding our Argentine subsidiary, DS, we are substantially completed with the integration and are now focused on improving efficiencies and allocating production across our manufacturing platform. In addition, we are updating our marketing strategy for our recent acquisitions including Teleflex Power Systems which adds brands to our BRC, [Dobaly] and Tomasetto Achille portfolio.
Lastly we are adapting our existing CNG refueling production to incorporate the assets and technology we acquired from FuelMaker. By blending our manufacturing expertise with the new product capabilities we can offer a complete range of refueling products for commercial, small to medium fleets and consumers in existing and developing markets. We believe that this expanded capability will be an asset as we roll out our North American automotive strategy............
John Quealy – Canaccord Adams
And then secondly, in the North American business with the new acquisitions and the platform broadening out, can you give us how you and the rest of the management is looking at tangible growth in the North American market? Is it primarily driven by legislation, infrastructure and then end market? How should we calibrate progress on the development of an alternative fuel marketplace and how Fuel System plays in that in North America?
Matthew Beale
Yes I think it's – as kind of an emerging market, if you will, there's two possible paths. One is the path that obviously we're pursuing, which is pursuing opportunities where we can and that's mainly in EPA states, states that have some measure of refueling infrastructure in place, states that have fleets that already are focused and accepting of alternative fuels, fleets that are in states where there's mandates that require a certain percentage of penetration of alternative fuel.
So that is a market and it's a market that requires work on the certification front. We've completed a lot of that this year with certifications we've put in place for the primary fleet vehicles. So that's a market. It's a market and it will develop. We would expect it to begin to contribute visible revenues if you will in 2010.
Regulatory changes are what could really make this market become significant very quickly. All eyes obviously are on this Nat Gas Act and what it could mean. The current language as we understand it with the specific reference to buy fuel technology is extremely significant, putting it on an even keel as dedicated system.
That type of legislation could change, we think, very significantly this marketplace. It's useless to have incentives, John, if you don't a have regulatory environment that supports the technology for which those incentives are available. So we think that's obviously very exciting but even without that, there is a market, an exciting and interesting market which we're pursuing. |
