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VANCOUVER, BC, May 9, 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 US dollars unless otherwise indicated.
"In my first 100 days, I worked to determine what needs to be done, identified areas for improvement, and began to implement our three strategic pillars to: leverage the potential of our HPDI joint venture to drive success, improve operational excellence, and focus in Westport's ability to shape the future of the hydrogen-powered world will be determined in the short, medium and long term, respectively. True change will take time.
Although revenue temporarily fell short of our expectations in the first quarter, we have initiated cost-saving measures and demonstrated marked improvement in our cash from operations. Recognizing the important tasks ahead, we remain firmly dedicated to our 2024 priorities.
Through strategic workforce reductions across the organization, we are aggressively rationalizing 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 not only improve our overall efficiency but also foster a culture of accountability and collaboration.
In our quest for profitability, cost reduction is not simply a priority: it is an imperative. We recognize that sustainable growth depends on our ability to strictly manage expenses. Therefore, while we are committed to driving top-line growth and operational efficiency, our primary focus remains on reducing costs at every opportunity.
Finally, recent EU regulatory updates regarding Zero Emission Vehicles (ZEV) place Westport heavy vehicle technologies in a leading 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 3 gCO2/ton-km, such as our H2 HPDI fuel system solution.
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 an ever-evolving landscape.”
Dan Sceli, CEO
Highlights for the first quarter of 2024
Information by segment
Original Equipment Manufacturer ("OEM")
Revenue for the three months ended March 31, 2024 was $49.3 million compared to $56.3 million for the three months ended March 31, 2023. OEM revenue decreased by 7.3 million. 0 million in the first quarter of 2024 compared to the prior year period and were primarily driven by decreased sales in our DOEM, fuel storage and light vehicle OEM businesses. Heavy-duty OEM sales volume decreased in the first quarter compared to the prior-year period, partially offset by higher engineering services revenue and higher sales volumes in the electronics business.
Gross margin decreased $3.6 million to $4.5 million, or 9% of revenue, compared to $8.1 million, or 14% of revenue, in the same period last year. The decrease in gross margin was primarily due to decreases in sales volumes in the DOEM, fuel storage, and light-duty and heavy-duty OEM businesses.
Despite these challenges, our confidence in the prospects of our OEM segment remains unwavering. The journey towards low- or zero-emission transport, including the recently announced strengthened decarbonization targets and the ZEV threshold in the European Union, is unquestionably our future. Westport's clean mobility solutions are designed for a diverse set of zero-emission vehicles with hydrogen fuel systems and components for internal combustion engine (ICE) and fuel cell (FC) applications, enabling our customers meet long-term decarbonization goals. The growing use of biomethane today and the imminent integration of hydrogen tomorrow are catalysts that accelerate the energy transition in heavy 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 each party's obligations going forward.
Additionally, our light vehicle OEM business continues to strengthen its market position. The addition of Euro 6 and Euro 7 business with our global OEM customer further solidifies our position and strengthens our market share in this segment.
Independent spare parts market
Revenue for the three months ended March 31, 2024 was $28.3 million, compared to $25.9 million for the three months ended March 31, 2023. The increase in revenue compared to The prior year period was primarily due to 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. March 2023. The increase in gross margin was mainly due to higher sales volumes and improvement of the sales mix towards higher profitability markets.
The potential to expand our market share in existing markets and venture into emerging markets with our LPG solutions is a critical catalyst for growth. Favorable LPG price dynamics are driving a promising upward trend in demand for our offerings. Ultimately, the imperative to reduce emissions depends on widespread adoption, and affordability will be the primary driver of such adoption. Westport continues to serve and serve markets that cannot afford expensive electric vehicles but are still looking for cleaner solutions. It is in these markets where Westport excels, positioning us to not only succeed but also capture a larger portion of the market.
First Quarter 2024 Conference Call
Westport has scheduled a conference call for May 9, 2024 at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) to discuss these results. To access the conference call by telephone, dial 1-888-390-0546 or 1-416-764-8688. A live webcast of the conference call can be accessed through Westport's website at https://investors.wfsinc.com/.
To access the replay of the conference call, dial 1-888-390-0541 (toll-free in Canada and the US) or 1-416-764-8677 using access code 945554
2024 Annual General Meeting
Westport will host its Annual General Meeting of shareholders (the "Meeting") virtually on Thursday, June 13, 2024 at 10:00 a.m. Pacific Time. To expedite the virtual meeting process, Westport encourages shareholders to vote in advance of the Meeting using the voting instructions form or proxy form that will be emailed or mailed along with the Meeting materials midway through. of May. Further instructions on how to vote and access the meeting will be included in the Management Information Circular under "Section 1: Voting". Once received, please review these materials carefully.
Registered shareholders and duly designated representatives may attend the meeting online at https://meetnow.global/MSM4VF4 to participate, vote or submit questions during the live webcast of the meeting.
Financial Statements and Management Discussion and Analysis
To view Westport's financials for the first quarter ended March 31, 2024, visit https://investors.wfsinc.com/financials/...
About Westport Fuel Systems
At Westport Fuel Systems, we drive innovation to power a cleaner tomorrow. We are a leading provider of advanced components and delivery systems for clean, low-carbon fuels, such as natural gas, renewable natural gas, propane and hydrogen, to the global automotive industry. Our technology delivers the performance and fuel efficiency required for transportation applications and environmental benefits that address climate change and urban air quality challenges. Headquartered in Vancouver, Canada, with operations in Europe, Asia, North America and South America, we serve our customers in more than 70 countries with leading global transportation brands. At Westport Fuel Systems, we think about the future. For more information, visit www.wfsinc.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding future strategic initiatives and future growth, the future of our development programs (including those related to HPDI and Hydrogen), our expectations for 2024 and beyond, including demand for our products, and the future success of our commercial and technological strategies. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties and are based on both management's views and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different. of any future results, levels of activities, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and assumptions include those related to our revenue growth, operating results, industry and products, the general economy, conditions and access to the capital and debt markets, solvency, government policies and regulations, technological innovations, fluctuations in the exchange rate. rates, operating expenses, continued expense reduction, ability to successfully commercialize new products, the performance of our joint ventures, the availability and price of natural gas and hydrogen, new environmental regulations, the acceptance and shift to natural gas and hydrogen, fuel emissions standards, the development of competitive technologies, our ability to adequately develop and implement our technology, the actions and determinations of our joint venture and development partners, the effects and duration of the Russia-Ukraine conflict , supply chain disruptions, as well as other risk factors and assumptions that may affect our actual results, performance or achievements or financial position discussed in our most recent Annual Information Form and other filings with securities regulators. Readers should not place undue reliance on such forward-looking statements, which speak only as of the date on which they are made. We disclaim any obligation to publicly update or revise any such statements to reflect any changes in our expectations or in events, conditions or circumstances on which such statements may be based, or which may affect the likelihood that actual results will differ from those set forth in these forward-looking statements except as required by National Instrument 51-102.
GAAP and non-GAAP financial measures
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These U.S. GAAP financial statements include non-cash charges and other charges and benefits that may be unusual or infrequent in nature or that we believe may make comparisons with our past or future performance difficult. In addition to conventional measures prepared in accordance with U.S. GAAP, Westport and certain investors use EBITDA and Adjusted EBITDA as an indicator of our ability to generate liquidity by producing operating cash flow to fund working capital needs, pay debt obligations and finance capital expenditures. Management also uses these non-GAAP measures in its review and evaluation of Westport's financial performance. EBITDA is also frequently used by investors and analysts for valuation purposes, whereby EBITDA is multiplied by a factor or "EBITDA multiple" that is based on an observed or inferred relationship between EBITDA and market values to determine the approximate total enterprise value of a company. We believe that these non-GAAP financial measures also provide additional information to investors and securities analysts as complementary information to our U.S. GAAP results and as a basis for comparing our financial performance period over period and comparing our financial performance with that of others. companies. We believe these non-GAAP financial measures facilitate comparisons of our core operating results from period to period and with other companies by, in the case of EBITDA, eliminating the effects of our capital structure (net interest income on cash deposits, interest expenses on outstanding debt and lines of credit), asset base (depreciation and amortization) and tax consequences. Adjusted EBITDA provides this same measure of Westports' EBITDA from continuing operations and removes such effects from our capital structure, asset base and tax consequences, but also excludes any unrealized foreign exchange gains or losses, share-based compensation charges and other one-time impairments and costs that are not expected to recur to provide greater insight into the cash flow produced from our operating business, uninfluenced by extraneous events.
EBITDA and Adjusted EBITDA are intended to provide additional information to investors and analysts and do not have any standardized definition under U.S. GAAP, and should not be considered in isolation or as a substitute for performance measures prepared in accordance with U.S. GAAP. GAAP. EBITDA and Adjusted EBITDA exclude the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and are therefore not necessarily indicative of operating income. or cash flow from operations as determined in accordance with US GAAP. Other companies may calculate EBITDA and adjusted EBITDA differently.
Investor Relations, Westport Fuel Systems, T: 1 604-718-2046
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