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Fuel Systems Solutions' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Our new organizational structure provide key advantages, improving attention and response to the customers feedback, encouraging innovation and R&D coordination, managing operation more efficiently and driving cost efficiencies across the organization.

Today, we reported second quarter revenues of over $109 million, reflected an increase of our automotive volume, particularly DOEM volumes in Italy. This higher delayed OEM activities particularly benefited our gross margin of 27%.

During the quarter, despite of continued near-term investment in technologies in order to continue to execute our long-term growth strategies, our operating margin is slightly improved due to revenue shift towards delayed OEM.

Now I turn the call over to Tim Standke for an update of both division business. Tim?

Tim Standke

Thank you, Mariano. Good morning, everyone. I will start with the automotive division, which consists of the companies OEM passenger and light duty commercial transportation, automotive aftermarket, transportation infrastructure operations as well as the U.S. automotive unit, which was formerly a part of the IMPCO division.

Automotive posted second quarter 2012 revenues of $78.3 million, a decrease of 6%. In constant currency, the automotive revenue increased 4.2%. Operating margins improved to 7% versus 5% in Q2 2012, due to a shift in revenue mix for delayed OEM revenue to last year.

In Europe, delayed OEM volumes increased 66% to an average of 3300 units per month and had a positive impact on our profitability. This is particularly true in Italy. Chevrolet volumes were strongest with Nissan, Mitsubishi, Hyundai, Kia, Ssangyong and Ford all contributed. The price differential between alternative and traditional fuels continues to drive demand and offer an attractive payback in this region.

As a result, OEMs are expanding the number of CNG and LPG vehicles they offer. Our competitive positioning in this region remains very strong. We are unique in offering a complete systems that generate significantly higher revenue per vehicles then selling much larger volumes of components to OEMs.

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