Fuel Systems Solutions: Q4 and Year End 2008 Results

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Fuel Systems Solutions, Inc. reported results for its fourth quarter and year ended December 31, 2008.

Corporate Highlights

* Achieved record revenues and profitability - Full Year 2008 compared to 2007:

* Revenue increased to $382.7 million, up 44.2% from $265.3 million.

* Gross profit reached $108.6 million, or 28.4% of revenue, compared to $64.1 million, or 24.2% of revenue.

* Operating income grew to $46.1 million, or 12.0% of revenues, compared to $19.3 million, or 7.3% of revenues.

* Net income was $23.3 million, which included a $3.9 million non-cash goodwill impairment charge, an increase from $5.9 million.

* Earnings per share were $1.48 per diluted share, up from $0.38 per diluted share.

* Accomplished goals to broaden its capabilities, expand operations and optimize production:

* Launched U.S. Automotive Alternative Fuels Division in February 2009.

* Acquired Distribuidora Shopping S.A. (DS) in Buenos Aires in January 2009, reinforcing the natural gas vehicle product line, diversifying global manufacturing capacity and expanding the distribution footprint.

* Increased capacity to meet demand to approximately 800,000 conversions annually.

* Expanded delayed original equipment manufacturing (DOEM) conversion capacity to more than 100,000 vehicles, up from 17,000 at the beginning of the year.

* Invested in the company's next generation of fuel injection industrial fuel systems to be fitted on engines certified to comply with the new 2010 emissions standards.

* Eliminated certain intercompany debt obligations and solidified liquidity position:

* Repaid $10.8 million in principal and unpaid interest to retire intercompany MTM loan.

* Secured access to liquidity through the establishment of two credit facilities; IMPCO U.S. credit line for $13.0 million and MTM Italy credit line for ?15.0 million, or approximately $20.0 million.

"2008 was a transformational year," said Mariano Costamagna, Fuel System Solutions' CEO. "We achieved critical mass and demonstrated the strength of our business model. Fuel Systems Solutions posted record revenues and, more notably in the current economic context, record profitability. Our earnings capacity and our ability to deliver our engineering and manufacturing capabilities across a variety of end-user markets distinguish Fuel Systems in the alternative energy sector."

Fourth Quarter Financial Results

Revenue for the 2008 fourth quarter was $84.3 million, up 5.7% from revenue of $79.7 million in the fourth quarter of 2007. The increase in revenues was primarily due to strong performance in the transportation business. Gross profit for the 2008 fourth quarter reached $21.9 million and represented 26.0% of revenue, compared to $20.2 million, or 25.3% of revenue, in the fourth quarter of 2007, reflecting the change in the product mix. Cost of sales for the 2008 fourth quarter reflects a $2.1 million increase in the provision for excess and obsolete inventory. Net income for the fourth quarter of 2008 was $641,000, compared to $4.8 million for the fourth quarter of 2007. Net income for the fourth quarter of 2008 included a $1.1 million increase in the provision for the loan receivable from the company's unconsolidated WMTM joint venture, a $1.0 million in foreign currency exchange loss, a $900,000 increase in provision for accounts receivable, and $800,000 in costs related to the acquisition of DS. Earnings per share for the fourth quarter of 2008 were $0.04 per diluted share, compared to $0.31 per diluted share in the fourth quarter of 2007.

Full Year 2008 Financial Results

For the year ended December 31, 2008, total revenues were $382.7 million, compared to $265.3 million for 2007. Net income for the year was $23.3 million, which included the aforementioned $5.9 million of additional provisions and expenses recorded in the fourth quarter, and $3.9 million non-cash goodwill impairment charge recorded in the second quarter, compared to $5.9 million in 2007. 2008 earnings per share were $1.48 per diluted share, compared to $0.38 per diluted share in 2007.

Company Outlook

"We are proud of our 2008 success and excited about our 2009 plans," said Matthew Beale, President of Fuel Systems Solutions. "In 2009, our management team believes that Fuel Systems Solutions will reach a variety of milestones as we continue to invest in our infrastructure to capitalize on highly favorable medium-term market drivers and execute our growth strategy. In 2009, we intend to:

* Launch new technology solutions that maintain our position at the leading edge of regulatory change;

* Evaluate strategic acquisition opportunities; and

* Leverage our greater capacity.

Growth often lags the investments which drive it, so we expect near-term profitability to be impacted by the initiatives we are implementing and the global economic slowdown. As much as our 2008 results validate our investments made in prior years, we expect our 2009 projects to contribute to sustaining our growth trajectory in future periods."

Based on the current market outlook, the company expects 2009 revenue to be between $330.0 million and $360.0 million. The revenue guidance assumes a stronger U.S. Dollar that is estimated to negatively impact 2009 annual revenue by approximately 12.0%. During 2008, the average U.S. Dollar to Euro exchange rate was approximately 1.50, while the exchange rate assumption used in the 2009 revenue estimates is 1.30. Management expects the gross and operating margins to be impacted from the planned investment in the business. As such, the company is targeting 2009 gross margin between 25.0% and 27.0% and 2009 operating margin to be between 10.0% and 12.0%.

"We remain excited about our business and believe we are optimally positioned as a leader in our market verticals," said Beale. "In 2008, we demonstrated Fuel Systems Solutions' ability to grow and profitably deliver alternative fuel solutions to our customers. We look forward to the continued implementation and execution of our growth strategy in 2009."

Conference Call

The company will host a conference call on March 6 at 10:00 a.m. Pacific Time / 1:00 p.m. Eastern Time to discuss its fourth quarter 2008 financial results. To listen to the call live, please dial 877-356-8063 at least 10 minutes before the start of the conference. International participants may dial 706-679-2544. The pass code for the conference call will be 85950335. The call is also being webcast and can be accessed from the "Investor Relations" section of the company's website at www.fuelsystemssolutions.com. A telephone replay will be available until midnight ET on March 20 by dialing 800-642-1687 or 706-645-9291 and entering pass code 85950335#. A replay will also be available at the web address above for 90 days.

Forward-Looking Statements

This press release contains forward-looking statements under the heading "Company Outlook" that involve risks and uncertainties, including, without limitation, expressed or implied statements concerning the Company's intention to launch new technology solutions, evaluate strategic acquisition opportunities and leverage its greater capacity and the Company's ability to achieve 2009 revenue between $330 million and $360 million with gross profit margin between 25 percent and 27 percent and operating margin between 10 percent and 12 percent. Such statements are only predictions, and the Company's actual results may differ materially. Factors that may cause the Company's results to differ include, but are not limited to, risks that original equipment automobile manufacturers do not adopt the Company's fuel systems as expected, that expected sales not based on long-term contracts will materialize, that changes in emissions regulations will not significantly impact demand for the Company's products, that a global economic downturn may reduce customers' demand for our products, that reduction in oil prices will reduce the demand for our products and that currency fluctuations will reduce our revenue or financial condition. Readers also should consider the risk factors set forth in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, those contained in the "Risk Factors" section of the Company's Annual Report on Form 10-K, for the year ended December 31, 2007 and for the Company's Quarterly Report on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2008. The Company does not undertake to update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.

About Fuel Systems Solutions

Fuel Systems Solutions, Inc. (Nasdaq:FSYS), a U.S.-based company, through its U.S. and foreign subsidiaries, delivers alternative fuel solutions for transportation and industrial applications that reduce emissions, displace petroleum and generate savings, which is extremely relevant today. The Company is comprised of two subsidiaries, industrial under IMPCO Technologies and transportation under BRC. IMPCO designs, manufactures, markets and supplies advanced products and systems to enable internal combustion engines to run on clean burning gaseous fuels such as natural gas, propane and biogas. IMPCO is a leader in the heavy duty, industrial, power generation and stationary engines sectors. Headquartered in Santa Ana, California, IMPCO has offices throughout Asia, Europe and North America. BRC, through its subsidiaries, produces a complete range of systems for converting vehicles to gaseous fuel to meet market requirements. BRC is a leader in the light duty and automobile alternative fuel sectors and has established alliances with several major automobile manufacturers for OEM projects. Headquartered in Cherasco, Italy, BRC has offices throughout Asia, Europe, Australia and South America. Additional information is available at www.fuelsystemssolutions.com.


                     FUEL SYSTEMS SOLUTIONS, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data)

                               Three Months Ended
                                  December 31,         Year Ended
                                  (unaudited)         December 31,
                              ------------------- -------------------
                                 2008      2007      2008      2007
                              --------- --------- --------- ---------
 Revenue                      $  84,274 $  79,711 $ 382,697 $ 265,331
 Cost of revenue                 62,399    59,550   274,060   201,200
                              --------- --------- --------- ---------
   Gross profit                  21,875    20,161   108,637    64,131
 Operating expenses:
   Research and development
    expense                       2,833     1,852    11,069     7,946
   Selling, general and
    administrative expense       14,638     9,208    47,198    36,657
   Amortization of intangible
    assets                           82        81       364       249
   Goodwill impairment loss          --        --     3,907        --
                              --------- --------- --------- ---------
     Total operating expenses    17,553    11,141    62,538    44,852
                              --------- --------- --------- ---------
 Operating income                 4,322     9,020    46,099    19,279
 Other expense, net              (1,071)     (285)   (1,865)   (1,848)
 Interest expense, net              (71)     (268)     (514)     (963)
                              --------- --------- --------- ---------
 Income before income taxes,
  equity share in income of
  unconsolidated affiliates
  and extraordinary gain          3,180     8,467    43,720    16,468
 Equity share in income of
  unconsolidated affiliates         435        32       454       416
 Income tax expense              (2,974)   (3,305)  (20,161)   (9,159)
                              --------- --------- --------- ---------
 Income before minority
  interests and extraordinary
  gain                              641     5,194    24,013     7,725
 Minority interests in income
  of consolidated subsidiaries       --      (365)     (914)   (1,842)
                              --------- --------- --------- ---------
 Income before extraordinary
  gain                              641     4,829    23,099     5,883
 Extraordinary gain                  --        --       243        --
                              --------- --------- --------- ---------
 Net income                   $     641 $   4,829 $  23,342 $   5,883
                              ========= ========= ========= =========

 Basic earnings per share:
   Income before extraordinary
    gain                      $    0.04 $    0.31 $    1.47 $    0.38
                              ========= ========= ========= =========
   Extraordinary gain         $      -- $      -- $    0.02 $      --
                              ========= ========= ========= =========
   Net Income                 $    0.04 $    0.31 $    1.49 $    0.38
                              ========= ========= ========= =========

 Diluted earnings per share:
   Income before extraordinary
    gain                      $    0.04 $    0.31 $    1.46 $    0.38
                              ========= ========= ========= =========
   Extraordinary gain         $      -- $      -- $    0.02 $      --
                              ========= ========= ========= =========
   Net Income                 $    0.04 $    0.31 $    1.48 $    0.38
                              ========= ========= ========= =========

 Number of shares used in per
  share calculation:
   Basic                         15,746    15,491    15,649    15,410
                              ========= ========= ========= =========
   Diluted                       15,835    15,661    15,789    15,614
                              ========= ========= ========= =========


                     FUEL SYSTEMS SOLUTIONS, INC.
                      CONSOLIDATED BALANCE SHEETS
            (In thousands, except share and per share data)

                                             December 31, December 31,
                                                 2008         2007
                                              ---------    ---------
 ASSETS
 Current assets:
   Cash and cash equivalents                  $  26,477    $  26,797
   Accounts receivable less allowance for
    doubtful accounts of $3,293 and $2,399 at
    December 31, 2008 and 2007, respectively     70,009       51,876
   Inventories:
      Raw materials and parts                    38,110       33,890
      Work-in-process                             1,700        2,247
      Finished goods                             51,068       31,197
      Inventory on consignment with
       unconsolidated affiliates                  1,732        2,991
                                              ---------    ---------
        Total inventories                        92,610       70,325
   Deferred tax assets                            5,734        2,248
   Other current assets                           5,749        3,820
   Related party receivables                         69           44
                                              ---------    ---------
      Total current assets                      200,648      155,110
                                              ---------    ---------

 Equipment and leasehold improvements:
   Dies, molds and patterns                       3,889        5,725
   Machinery and equipment                       25,996       25,049
   Office furnishings and equipment              11,198        8,601
   Automobiles and trucks                         2,235        2,047
   Leasehold improvements                         8,098        4,769
                                              ---------    ---------
                                                 51,416       46,191
   Less accumulated depreciation and
    amortization                                 23,744       21,151
                                              ---------    ---------
      Net equipment and leasehold improvements   27,672       25,040
                                              ---------    ---------
 Goodwill                                        41,295       46,486
 Deferred tax assets, net                           174          184
 Intangible assets, net                          10,021       13,059
 Investment in unconsolidated affiliates          3,334        2,310
 Non-current related party receivable                --        3,450
 Other assets                                     4,183        1,731
                                              ---------    ---------
         Total Assets                         $ 287,327    $ 247,370
                                              =========    =========


                     FUEL SYSTEMS SOLUTIONS, INC.
                      CONSOLIDATED BALANCE SHEETS
            (In thousands, except share and per share data)

                                             December 31, December 31,
                                                 2008         2007
                                              ---------    ---------
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                           $  65,224    $  49,402
   Accrued expenses                              34,212       19,666
   Current revolving lines of credit              2,413        3,307
   Current portion of term loans and other
    loans                                         4,470        4,791
   Current portion of capital leases                192          428
   Deferred tax liabilities                         112          117
   Related party payables                        11,263        6,833
                                              ---------    ---------
      Total current liabilities                 117,886       84,544
 Term loans                                       4,689        9,449
 Capital leases                                     238          431
 Other liabilities                                6,256        5,860
 Minority interest                                    2        6,601
 Deferred tax liabilities                         4,301        5,432
                                              ---------    ---------
      Total liabilities                         133,372      112,317
                                              ---------    ---------
 Stockholders' equity:
   Preferred stock, $0.001 par value,
    authorized 1,000,000 shares; none issued
    and outstanding at December 31, 2008 and
    2007, respectively                               --           --
   Common stock, $0.001 par value, authorized
    200,000,000 shares; 15,801,745 issued and
    15,749,783 outstanding at December 31,
    2008; and 15,512,798 issued and 15,499,115
    outstanding at December 31, 2007                 16           15
   Additional paid-in capital                   220,270      216,483
   Shares held in treasury, 51,962 shares at
    December 31, 2008 and 13,683 shares at
    December 31, 2007                            (1,399)        (432)
   Accumulated deficit                          (79,354)    (102,696)
   Accumulated other comprehensive income        14,422       21,683
                                              ---------    ---------
      Total stockholders' equity                153,955      135,053
                                              ---------    ---------
      Total Liabilities and Stockholders'
       Equity                                 $ 287,327    $ 247,370
                                              =========    =========

                     FUEL SYSTEMS SOLUTIONS, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)

                                                    Year Ended
                                                    December 31,
                                              ----------------------
 Cash flows from operating activities:           2008         2007
                                              ---------    ---------
 Net income                                   $  23,342    $   5,883
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Amortization of intangibles arising from
    acquisitions                                  2,784        2,259
   Depreciation and other amortization            6,502        4,961
   Provision for doubtful accounts                1,268         (124)
   Provision for inventory reserve                5,366          625
   Goodwill impairment loss                       3,907           --
   Minority interests in income of
    consolidated affiliates                         914        1,842
   Extraordinary gain                              (243)          --
   Provision for loan to unconsolidated
    affiliate                                     1,650          583
   Equity share in income of unconsolidated
    affiliates                                     (454)        (416)
   Compensation expense related to stock
    option and restricted stock grants              419          436
   Unrealized loss on foreign exchange
    transactions                                    396        1,923
   Loss on disposal of assets                       341           29
   Dividends from unconsolidated affiliates         228           --
 Changes in assets and liabilities
   Increase in deferred income taxes             (4,475)      (2,219)
   Increase in accounts receivable              (21,906)      (2,906)
   Increase in inventories                      (29,841)      (3,747)
   (Increase) decrease in other current assets   (2,290)         170
   (Increase) decrease in other assets             (441)         439
   Increase in accounts payable                  17,371       16,047
   (Decrease) increase in accrued expenses       16,300       (2,431)
   (Decrease) increase in long-term
     liabilities                                    618       (1,166)
   Payables to related party - net                4,625        4,380
                                              ---------    ---------
 Net cash provided by operating activities       26,381       26,568
                                              ---------    ---------
 Cash flows from investing activities:
   Purchase of equipment and leasehold
    improvements                                (10,675)      (5,974)
   Payments for purchase of Zavoli, net of
    cash acquired of $399                            --       (8,136)
   Down payment for purchase of Distribuidora
    Shopping and Tomasetto Achille               (2,000)          --
   Purchases of minority interest in
    consolidated subsidiaries                    (6,311)          --
   Purchase of intangible assets                   (193)          --
   Proceed from sale of assets                      129           16
                                              ---------    ---------
 Net cash used in investing activities          (19,050)     (14,094)
                                              ---------    ---------
 Cash flows from financing activities:
   Decrease in revolving lines of credit, net      (847)      (5,944)
   Payments on term and other loans              (4,567)      (2,815)
   Proceeds from term loans                          --        6,738
   Payments of capital lease obligations           (505)        (415)
   (Purchase of)/proceeds from the sale of
     common shares held in trust, net              (100)          91
   Dividend paid to minority interests in
    consolidated subsidiaries                      (900)        (822)
   Proceeds from exercise of stock options and
    warrants                                      2,403        3,683
                                              ---------    ---------
 Net cash (used in) provided by financing
  activities                                     (4,516)         516
                                              ---------    ---------
 Effect of exchange rate changes on cash         (3,135)       2,261
 Net increase (decrease) in cash and cash
  equivalents                                      (320)      15,251
 Cash and cash equivalents at beginning of
  period                                         26,797       11,546
                                              ---------    ---------
 Cash and cash equivalents at end of period   $  26,477    $  26,797
                                              =========    =========
 Supplemental disclosure of cash flow
  information:
   Non-cash investing and financing
    activities:
     Acquisition of equipment under capital
      lease                                   $      80    $     216
     Issuance of 5,321 shares and 4,980 shares
      of restricted stock in 2008 and
        2007, respectively                    $      99    $      89

CONTACT: Fuel Systems Solutions, Inc.
Bill Larkin, CFO (714) 656-1320
Lippert / Heilshorn & Associates

Investor Relations Contacts:
Kirsten Chapman
Cathy Mattison
cmattison@lhai.com (415) 433-3777

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