Westport Fuel Systems Reports First Quarter 2024 Financial Results

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PR Newswire

VANCOUVER, BC, May 8, 2024

VANCOUVER, BC, May 8, 2024 /PRNewswire/ - Westport Fuel Systems Inc. ("Westport") (TSX: WPRT) (Nasdaq: WPRT) reported financial results for the first quarter ended March 31, 2024, and provided an update on operations. All figures are in U.S. dollars unless otherwise stated.

"In my first 100 days, I have worked to determine what needs to be done, identified areas for improvement and begun implementing our three strategic pillars to: harness the potential of our HPDI joint venture to drive success, enhance operational excellence, and focus on Westport's ability to shape the world's hydrogen-powered future. Our success will be determined over the near-, medium- and long-term, respectively. True change will take time.

Despite revenue temporarily falling short of our expectations in the first quarter, we've initiated cost-saving measures and have demonstrated a marked improvement in our cash from operations. Recognizing the significant tasks that lie ahead, we remain steadfastly dedicated to our priorities for 2024.

Through strategic headcount reductions across the organization, we are aggressively streamlining our workforce to bolster operational agility. Our cost reduction measures also focus on initiating changes to our production lines to optimize manufacturing cost reductions and increase efficiency. These actions are not only enhancing our overall efficiency but also fostering a culture of accountability and collaboration.

In our pursuit of profitability, cost cutting is not merely a priority—it is an imperative. We recognize that sustainable growth hinges on our ability to tightly manage expenses. Therefore, while we are committed to driving top-line growth and operational efficiencies, our foremost focus remains on reducing costs at every opportunity.

Finally, the EU's recent regulatory updates regarding Zero Emission Vehicles (ZEV) places Westport's technologies for heavy-duty vehicles in a leadership position, enabling our OEM customers to meet these strengthened decarbonization targets. We believe this opens avenues to incentivize and fund hydrogen transportation solutions, particularly those that are compatible with the ZEV threshold of 3gCO2/ton-km, like our H2 HPDI fuel system solution.

ARIVA.DE Börsen-Geflüster

Kurse

Westport Fuel Systems

5,97 $

-0,67%

As we navigate these transformative times, Westport's actions reflect a strong commitment to driving operational excellence, leveraging our partnerships, and fostering innovation, all to position the company for sustainable growth in a continuously evolving landscape."

Dan Sceli, Chief Executive Officer

Q1 2024 Highlights

Revenues decreased 6% to $77.6 million compared to the same period in 2023, primarily driven by decreased sales volumes in our DOEM, fuel storage, light-duty OEM, and heavy-duty OEM businesses. This was partially offset by increased sales volume in electronics products and increased IAM sales to the North American, Western Europe and South American markets.
Net loss of $13.6 million for the quarter compared to net loss of $10.6 million for the same quarter last year. The increase in net loss was driven by the decrease in gross margin as a result of lower sales volumes impacting the absorption of fixed costs and the impact of inflation on materials costs, higher research and development expenditures and an increase in foreign exchange loss.
Adjusted EBITDA^[1] of negative $6.6 million compared to negative $4.5 million for the same period in 2023.
Cash and cash equivalents were $43.9 million at the end of the first quarter. Cash provided by operating activities during the quarter was $0.1 million. Investing activities included the purchase of capital assets of $4.9 million. Financing activities were attributed to net debt repayments of $5.8 million in the quarter.

[1] Adjusted earnings before interest, taxes and depreciation is a non-GAAP measure. Please refer to NON-GAAP FINANCIAL MEASURES in Westport's Management Discussion and Analysis for the reconciliation.

CONSOLIDATED RESULTS
($ in millions, except per share amounts)			Over / (Under) %
($ in millions, except per share amounts)	1Q24	1Q23	Over / (Under) %
Revenues	$ 77.6	$ 82.2	(6) %
Gross Margin⁽²⁾	$ 11.7	$ 13.3	(12) %
Gross Margin %	15 %	16 %
Income from Investments Accounted for by the Equity Method⁽¹⁾	$ —	$ 0.1	(76) %
Net Loss	$ (13.6)	$ (10.6)	(28) %
Net Loss per Share	$ (0.79)	$ (0.62)	(27) %
EBITDA⁽²⁾	$ (9.2)	$ (6.3)	(46) %
Adjusted EBITDA⁽²⁾	$ (6.6)	$ (4.5)	(47) %

⁽¹⁾	This includes income from our Minda Westport Technologies Limited joint venture.
⁽²⁾	EBIT, EBITDA, Adjusted EBITDA, and Gross Margin are non-GAAP measures. Please refer to NON-GAAP FINANCIAL MEASURES for the reconciliation.

Segment Information

Original Equipment Manufacturer ("OEM")

Revenue for the three months ended March 31, 2024 was $49.3 million compared with $56.3 million for the three months ended March 31, 2023. OEM revenue decreased by $7.0 million in the first quarter of 2024 compared to the prior year period and was primarily driven by decrease in sales in our DOEM, fuel storage, and light-duty OEM businesses. Sales volume from heavy-duty OEM decreased in the first quarter compared to the prior year period, partially offset by higher engineering service revenues and higher sales volumes in the electronics business.

Gross margin decreased by $3.6 million to $4.5 million, or 9% of revenue, compared to $8.1 million, or 14% of revenue for the same period in the prior year. The decrease in gross margin was driven primarily by the decrease in sales volumes in DOEM, fuel storage, and light-duty and heavy-duty OEM businesses.

Despite these challenges, our confidence in the outlook for our OEM segment remains unwavering. The trajectory towards low to zero-emission transportation, including the recently announced strengthened decarbonization targets and ZEV threshold in the European Union, is indisputably our future. Westport's clean mobility solutions are engineered for a diverse set of zero-emission vehicles with hydrogen fuel systems and components for both internal combustion engines (ICE) and fuel cell (FC) applications enabling our customers to meet long-term decarbonization targets. The escalating utilization of biomethane today and the imminent integration of hydrogen tomorrow are catalysts accelerating the energy transition in heavy-duty transport.

Westport and our Chinese OEM partner continue to collaborate and advise on an HPDI powered version of their engine platforms. The parties are currently discussing this work and the obligations of each party going forward.

Moreover, our light-duty OEM business continues to strengthen its market position. The addition of the Euro 6 and Euro 7 business with our global OEM customer further solidifies our foothold and bolsters our market share in this segment.

Independent Aftermarket

Revenue for the three months ended March 31, 2024, was $28.3 million, compared with $25.9 million for the three months ended March 31, 2023. The increase in revenue compared to the prior year period was primarily driven by increased sales to North America, Western Europe and South America. This was partially offset by lower sales volumes in Africa and Eastern Europe.

Gross margin for the quarter increased by $2.0 million to $7.2 million, or 25% of revenue, compared to $5.2 million, or 20% of revenue for the three months ended March 31, 2023. The increase in gross margin was primarily driven by higher sales volumes and improvement in sales mix to higher profit markets.

The potential to expand our market share in existing markets and venture into emerging markets with our LPG solutions stands as a pivotal catalyst for growth. Favorable LPG pricing dynamics are fueling a promising uptrend in demand for our offerings. Ultimately, the imperative for emissions reduction hinges on widespread adoption, and affordability will be the chief driver of such adoption. Westport continues to address and serve markets that can't afford expensive electric vehicles but are still looking for cleaner solutions. It is in these markets that Westport excels, positioning us to not only succeed but also to capture a larger slice of the market.

SEGMENT RESULTS	Three months ended March 31, 2024
	Revenue	Operating income (loss)	Depreciation & amortization	Equity income
OEM	$ 49.3	$ (8.3)	$ 2.4	$ —
IAM	28.3	2.0	0.6	—
Corporate	—	(6.2)	0.2	—
Total Consolidated	$ 77.6	$ (12.5)	$ 3.2	$ —

SEGMENT RESULTS

Three months ended March 31, 2023

Revenue

Operating
income (loss)

Depreciation
& amortization

Equity income

OEM

$ 56.3

$ (6.0)

$ 2.3

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