VANCOUVER, BC, Aug. 9, 2023 /PRNewswire/ -- Westport Fuel Systems Inc. ("Westport") (TSX: WPRT) (Nasdaq: WPRT), a leading provider of advanced alternative fuel systems and components to the global industry of transport, has presented the financial results for the second quarter, ended June 30, 2023, and has provided updated information on its operations. All figures are in US dollars, unless otherwise indicated.
HIGHLIGHTS OF THE SECOND QUARTER 2023
"The first half of our fiscal year 2023 has delivered strong results relative to the operating and economic environments around the world and our industry. Despite lower anticipated HPDI sales volumes, a significant decline as a result of a model change and new product launch expected in Q3, posted record revenue and improved gross margins in Q2 Revenue of $85 million, an improvement of 6% over last year , were supported by growth in our core businesses, particularly in backlog OEMs, electronics and fuel storage, as well as increased sales from our stand-alone aftermarket business.
Most recently, the announcement of our joint venture with Volvo marks a true turning point for Westport and a validation of our proprietary technology. This joint venture brings a global audience to our HPDI fuel system and recognition as a key ingredient in the roadmap to reduce carbon emissions for off-highway and long-haul applications. Feedback from OEMs to date has been overwhelmingly positive, as the industry recognizes that partnerships will be key to the successful decarbonization of the long-haul and off-road transportation sectors.
As for the second half of fiscal 2023, Westport continues to focus on earnings and results improvements. As a reminder, the end of 2023 will mark the start of our production and sale of LPG fuel systems to our global OEM customer, a relationship that continues to grow with the recent announcement of our extended Euro 7 scope. The price advantage of LPG vs. gasoline and the reduction of costs to access a transport with less carbon emissions are boosting the demand. Growth in key markets to meet the growing demand for affordable, low-emission transportation solutions is a key goal for Westport.
Our company's diversified business model is positioned to continue to perform well in the second half of 2023 by combining our sustainable core businesses with our fastest growing opportunities as we pursue the goal of creating solutions for all of us to live in one world with less carbon emissions."
David M. Johnson, CEO
Second Quarter 2023 Operations
Revenue for the three months ended June 30, 2023 increased 6% to $85.0 million compared to $80.0 million in the prior year quarter, primarily driven by increased sales volumes. sales in the delayed OEM, electronics and fuel storage businesses and additional revenue from the IAM business generated by the Eastern European and South American markets. All of this was offset by lower sales to Indian customers in the light vehicle OEM business and lower sales volumes in the hydrogen and heavy vehicle OEM businesses.
It posted a net loss of $13.2 million for the three months ended June 30, 2023, compared to a net loss of $11.6 million in the same quarter of the prior year. The net loss for the current period included a one-time expense of $2.9 million related to the extinguishment of Cartesian's royalty payable.
Westport generated negative Adjusted EBITDA of $4.0 million during the second quarter of 2023, compared to negative Adjusted EBITDA of $4.3 million in the same period of 2022.
Information by segment
Revenues for the three and six months ended June 30, 2023 were $52.4 million and $108.7 million, respectively, compared to $54.3 million and $106.1 million for the three and six months ended on June 30, 2022. OEM Business Segment revenue decreased by $1.9 million compared to the second quarter of 2022 and increased by $2.6 million compared to the six months ended June 30 2022. The decline in revenue for the three months ended June 30, 2023 was primarily due to lower sales volumes and sales mix in the Heavy Vehicle OEM business, lower sales to customers of the India in the light vehicle OEM business and lower sales volumes to hydrogen customers. This decrease has been partially offset by the increase in sales volumes of the OEM, fuel storage and delayed electronics businesses, compared to the same quarter of the previous year.
In the second quarter, gross margin2 increased by $3.7 million to $8.4 million, or 16% of revenue, from $4.7 million, or 9% of revenue , for the three months ended June 30, 2022. The increase in gross margin is primarily due to increased sales volumes in our fuel storage and delayed OEM businesses, as well as increased gross margin in the fuel storage business. Heavy OEMs due to higher spare parts sales, higher unit prices in HPDI system sales, and higher revenue from engineering services. This was partially offset by rising production input costs due to global supply chain challenges and inflation in logistics, utilities, labor and other costs, which we have only been able to pass through partially to our OEM customers.
Year-to-date, gross margin fell $6.8 million to $16.5 million, or 15% of revenue, from $9.7 million, or 9 % of revenue, for the six months ended June 30, 2022.
We remain confident in the prospects of our OEM segment. Our light-duty OEM business continues to gain market share with the recently announced additional Euro 7 business, our delayed OEM business is delivering significantly higher volumes, our hydrogen business has multiple growth projects underway, and the announced HPDI joint venture with Volvo, combined with Volvo's launch of a new natural gas HPDI-equipped engine, positions Westport's HPDI fuel system for growth.
Independent aftermarket segment
Revenues for the three and six months ended June 30, 2023 were $32.6 and $58.6 million, respectively, compared to $25.7 and $50.4 million for the three and six months ended on June 30, 2022. IAM Business Segment revenues increased by $6.9 million and $8.2 million, compared to the three and six months ended June 30, 2022. The revenue increase was due to mainly to the increase in sales volumes to Africa, Eastern Europe and South America.
In the second quarter, gross margin increased by $0.2 million to $6.0 million, or 18% of revenue, compared to $5.8 million, or 23% of revenue. revenue, for the three months ended June 30, 2022. The increase in gross margin is related to higher sales in South America. For the six months ended June 30, 2023, gross margin increased by $0.5 million to $11.2 million, or 19% of revenue, compared to $10.7 million , or 21% of revenue, for the six months ended June 30, 2022.
FINANCIAL STATEMENTS AND MANAGEMENT DISCUSSION AND ANALYSIS
To view Westport's financials for the second quarter ended June 30, 2023, visit https://investors.wfsinc.com/financials/...
CONFERENCE CALL AND LIVE WEBCAST
Westport has scheduled a conference call for Wednesday, August 9, 2023 at 7:00 am Pacific Time (10:00 am Eastern Time) to discuss these results. To access the conference by phone, dial 1-888-390-0546 (Canada and US toll free) or 416-764-8688. A live broadcast of the conference call can be accessed via the Westport website at https://investors.wfsinc.com/
REPLAY OF THE CONFERENCE AND WEBCAST
To access the conference replay, dial 1-888-390-0541 (toll-free in Canada and the United States) or 1-416-764-8677 using the access code 290775
About Westport Fuel Systems
At Westport Fuel Systems, we drive innovation for a cleaner tomorrow. We are a leading supplier of advanced fuel delivery systems and components for clean, low-carbon fuels such as natural gas, renewable natural gas, propane and hydrogen to the global transportation industry. Our technology offers the performance and fuel efficiency required by transportation applications, as well as the environmental benefits to address climate change and urban air quality challenges. Headquartered in Vancouver, Canada, with operations in Europe, Asia, North and South America, we serve our customers in more than 70 countries with leading brands in the global transportation industry. At Westport Fuel Systems, we think ahead. For more information, visit www.wfsinc.com.
This press release contains forward-looking statements, including those regarding revenue expectations and use of cash, future strategic initiatives and future growth, future of our development programs (including those related to HPDI and hydrogen), current challenges of the supply chain, demand for our products, future success of our business and technology strategies, potential partner and customer intentions, performance and competitiveness of Westport Fuel Systems products and product coverage expansion, future market opportunities, speed of adoption of natural gas for transportation and terms and timing of future agreements, as well as Westport Fuel Systems management's response to any of the above factors. These statements are not promises or guarantees, but involve known and unknown risks and uncertainties and are based both on management's opinions and on assumptions that may cause our actual results, activity levels, performance or achievements to differ materially from any results. future level of activity, performance or achievement 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 capital and debt markets, ongoing supply chain challenges, supply, solvency, government policies and regulations, technological innovations, exchange rate fluctuations, operating expenses, continued cost reduction, ability to successfully market new products, performance of our joint ventures, availability and price of natural gas, global government stimulus packages and new environmental regulations, the acceptance and switch to natural gas vehicles, the relaxation or exemption of fuel emission standards, the inability of fleets to access capital or government financing to purchase natural gas vehicles, the development of competing technologies, our ability to properly develop and implement our technology, the actions and determinations of our joint venture and development partners, ongoing supply chain challenges, 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 they were made. We disclaim any obligation to publicly update or revise such statements to reflect any changes in our expectations or in the events, conditions or circumstances on which such statements are 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. The contents of any website, RSS feed or Twitter account referenced in this press release are not incorporated herein by reference.
GAAP and NON-GAAP FINANCIAL MEASURES
Management reviews the operating progress of its business units and investment programs in successive periods through the analysis of net income, EBITDA and Adjusted EBITDA. The Company defines EBITDA as net profit or loss from continuing operations before taxes for interest expense (net), depreciation and amortization. Westport Fuel Systems defines adjusted EBITDA as EBITDA from continuing operations, excluding stock-based compensation expense, unrealized foreign exchange gains or losses, and other non-cash adjustments. Management uses Adjusted EBITDA as a long-term indicator of operating performance, as it is closely related to the ability of business units to generate sustained cash flow and such information may not be suitable for other purposes. Adjusted EBITDA includes the company's share of revenue from joint ventures.
The terms EBITDA and adjusted EBITDA are not defined in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") and are not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. Financial Statements. GAAP. EBITDA and adjusted EBITDA have limitations as an analytical tool, and when evaluating a company's operating performance, investors should not consider EBITDA and adjusted EBITDA in isolation, or as a substitute for net loss or other consolidated data for the year. statement of operations prepared in accordance with U.S. GAAP. Among other things, EBITDA and Adjusted EBITDA do not reflect the Company's actual cash expenditures. Other companies may calculate similar measures differently than Westport Fuel Systems, limiting their usefulness as comparative tools. The company compensates for these limitations based primarily on its U.S. results. GAAP and using EBITDA and adjusted EBITDA as supplementary information.
WESTPORT FUEL SYSTEMS INC. Condensed Consolidated Interim Balance Sheets (Unaudited) (Expressed in thousands of US dollars, except share amounts) June 30, 2023 and December 31, 2022
WESTPORT FUEL SYSTEMS INC. Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (Expressed in thousands of United States Dollars, except share and per share amounts) Three and Six Months Ended June 30, 2023 and 2022
WESTPORT FUEL SYSTEMS INC. Condensed Interim Consolidated Statements of Cash Flows (Unaudited)(Expressed in thousands of US dollars)Three and Six Months Ended June 30, 2023 and 2022
Investor Relations, Westport Fuel Systems, T: 1 604-718-2046
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