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 • Fully integration is expected to be completed by 3Q 2018 , with very few overlapping in terms of sales coverage NewCo Strategy • NewCo will have a market leading position in Europe and America and will benefit from cross selling and of products and potential market growth in the next years Expected • Thanks to «immediate» expected synergy effect (from ~2,6M € in 2018 to more than 7M € and in 2020) Results 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 • With deal completion LRG will deconsolidate ~ 4M € net debt , reducing its NFP to expected ~56M € LRG Value 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 The presentation has not been prepared 1 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 Gas Distribution and Automotive sector Compressed Natural Sound Sector OEM After Market Gas Sector • • • • Full LPG systems Full CNG and LPG Equipment for CNG/RNG Professional loudspeakers conversion kits distribution stations and • • LPG, CNG and LNG B&C Speakers formalized infrastructure • components Components and systems a binding offer for the • for CNG and LPG Acquired by Landi Renzo acquisition of 100% share conversion Group in 2012 capital • • DDF technology for M&HD Estimated ~13-14% group revenues in 2017, with Non-core EBITDA equal to 0 and net (under dismissal) debt around 4 M € Scope of the deal The presentation has not been prepared 2 or approved by Clean Energy
SAFE business and performance …focused on the European market, with performance worsening since 2015 Financials: Revenues (M € ), EBITDA% SAFE General information 34,6 Founded in 1975 29,5 26,3 Acquired by Landi Renzo Group in 2012 22,2 13,2% Located in San Giovanni Persiceto (ITA) 7,4% 6,6% Installed compressor base: 3 500 Employees: 73 (8 sales people) -7,2% Subsidiaries: Singapore 2013 2014 2015 2016 Geographical sales coverage (Rev. 2016) Addressed markets & products 45 markets covered CNG components, from pipeline to tank 46,2% • Compressors: large size range 22-400 kW CNG • Reducing metering systems • Gas treatment systems 16,9% 14,0% Renewable Components for bio-methane plants 10,5% 8,3% NG (RNG) 3,9% • Compression, storage & distribution Gas Components for Oil & Gas E&P activities Europa Russia ME&Afr LatAm Asia Pac North recovery • High-power compression system Am. The presentation has not been prepared Source: LRG-CE internal analysis and assessment 3 or approved by Clean Energy
Reference market - CNG CNG market is expected to grow at 6%, through a set of supporting factors • Increasing environmental concerns put pressure on the search and utilization of Increasing alternative sources of energy environmental • CO 2 emissions still growing (0.6% p.a. ‘15 - ’35): generating lower CO 2 vs. coal and concerns oil, NG helps reaching the challenging regulatory targets, “0” particulate • Policies aimed at shifting to lower-carbon fuels (e.g. DAFI 2014/94/UE, “China VI” Favorable emissions standards, EPA and NHTSA Standards) • CO2 emissions targets in LD vehicles (e.g. European EC443/2009, U.S. EPA regulation 2016 standards) • Mature technology and main bridge to electrification toward 2030 for passenger One of the Best- cars worldwide • CNG and RNG are becoming more and more viable solutions for Medium & in-class AFV Picture Heavy Duty technology • Infrastructures for this application need to be developed (e.g. along highways) • Three types of operators pushing the market growth: 1. Several projects for infrastructure development (SNAM, Total, GRDF, ...) Material projects 2. Investments on M&HD CNG vehicles by truck Manufacturers (Chevrolet, by large players GMC, IVECO, FCA, VW, …) Development of CNG fleets by truck users (FedEx, UPS, Auchan , …) 3. • 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) Strong market 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 The presentation has not been prepared Source: IEA, Navigant, The future of Natural gas (IAI); BP Energy Outlook 4 or approved by Clean Energy
Market analysis RNG and Biogas market currently concentrated in Europe, with growth opportunities in US 1 • Increasing environmental concerns put Biogas and RNG plants in Europe CAGR (units) Environmental pressure on the search and utilization of +6,1% alternative sources of energy concern & 25,1% 574 459 367 282 • During Cop21 was signed the first objectives 232 187 universal agreement on climate change 18.245 5,7% 17.388 17.376 16.817 2 14.661 13.812 Circular • RNG and Biogas allow the exploitation economy & of organic residuals, reducing costs of 2012 2013 2014 2015 2016 2017 waste thus increasing efficiency waste re-use Biomethane plants Biogas plants 3 1. Strong RNG market growth driven by Regulation & 1 • Government policies (i.e. renewable policies and incentives supporting waste Incentives for energy policy, COP 21, GHG mitigation) re-use biomethane facilitate the adoption of RNG and Biogas introducing economic incentives production 2 2. Potential switch from Biogas to Biomethane production: large market 4 • Countries aim at reducing their base vulnerability to one single energetic Energy 3 source 3. Strong opportunities in exporting this deficit • RNG is the only renewable energy that technology into new markets currently management can be planned and stored, thanks to a with limited penetration (e.g. USA, China) wide infrastructure all over the territory Source: EBA The presentation has not been prepared 5 or approved by Clean Energy
SAFE - Strategy and Pillars 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 Turnover Continuous • Standardize product components & processes Growth Improvement • 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 Strategic • Proactively approach market opportunities becoming a key Partnerships reference player • Upon request, offer complete solutions from upgrade to compression and dispensing • Leverage , as much as possible, partnership opportunities to Non core market segment maximise SAFE and Partner’s respective excellences through : 3 Gas Recovery o Reinforcement / extension of value chain • o Enlargement of Product Portfolio Tactical approach to the market, serving Medium sized EPC and Small and medium Oil companies with already existing o Acceleration of go-to-market speed product portfolio & system o Optimization of Sales organization coverage (mainly • Limit commercial investments geographic) and effectiveness Expand after sales & spare part offering The presentation has not been prepared 6 or approved by Clean Energy
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