Westport Fuel Systems Inc. (“
Westport Fuel
Systems”) (TSX:WPRT / Nasdaq:WPRT) reported financial
results for the first quarter ended March 31, 2019 and provided an
update on operations. All figures are in U.S. dollars unless
otherwise stated.
"Our Q1 2019 results are another validation of our strategy and
reflect improved performance across all of our businesses," said
David M. Johnson, Chief Executive Officer of Westport Fuel Systems.
“Strong revenue gains versus both Q4 2018 and Q1 a year ago drove a
positive adjusted EBITDA of $7.3 million compared to $0.2 million
in Q4 2018 and negative $3.4 million a year ago. Our diversity of
commercially available products applicable to the full range of
transportation applications and available in markets around the
world are the key to our improving results. Favourable
macro-economic factors and stricter emissions regulations are
driving OEM and consumer demand for our market-ready
alternative fuel technologies."
Key Accomplishments
- Driven by strong growth in Westport HPDI 2.0™ sales and
continued strength in the independent aftermarket business,
Transportation revenue was up 15% over Q1 2018 and 21% over Q4
2018.
- Strong CWI performance with net income to the Company of $8.6
million in Q1 2019 compared to $5.7 million in Q4 2018 and $1.5
million in Q1 2018. In Q1 2018, CWI recorded low unit sales due to
pre-buy activities in the fourth quarter of 2017 in advance of the
2018 on-board diagnostic compliant engines.
- Q1 2019 Adjusted EBITDA positive $7.3 million compared with
negative $3.4 million in Q1 2018, an $10.7 million improvement in
quarterly operating results.
Q1 2019 FINANCIAL HIGHLIGHTS
CONTINUING OPERATIONS |
|
($ in millions, except per share amounts) |
Three Months Ended March 31, |
Change Better /(Worse) |
2019 |
2018 |
Consolidated Revenues |
$ |
73.2 |
|
$ |
63.8 |
|
15 |
% |
Consolidated Gross Margin |
17.2 |
|
14.6 |
|
18 |
% |
Consolidated Gross Margin % |
23 |
% |
23 |
% |
— |
|
Consolidated Operating Expenses |
25.9 |
|
25.7 |
|
(1 |
)% |
Research & Development Expenses (1) |
6.8 |
|
8.6 |
|
21 |
% |
Income from Unconsolidated Joint Ventures |
8.7 |
|
1.5 |
|
489 |
% |
Net Loss from Continuing Operations |
$ |
(3.0 |
) |
$ |
(12.6 |
) |
76 |
% |
Net Loss per Share from Continuing Operations |
$ |
(0.02 |
) |
$ |
(0.10 |
) |
80 |
% |
Adjusted EBITDA (2) |
$ |
7.3 |
|
$ |
(3.4 |
) |
315 |
% |
(1) Research & development expenses are included in
consolidated operating expenses.
(2) Adjusted EBITDA is a non-GAAP measure. Please refer to GAAP
and NON-GAAP FINANCIAL MEASURES for the reconciliation.
- Consolidated revenues for the quarter ended March 31, 2019
increased by $9.4 million to $73.2 million, or 15% over the same
period last year. Despite the 7% decrease in the average Euro
exchange rate, revenue increased by $0.9 million in the IAM
business and $8.5 million in the OEM business. The OEM business
increase was primarily driven by HPDI 2.0™ product revenue,
which was commercially launched in 2018.
- Consolidated gross margin for the quarter ended March 31, 2019
increased by $2.6 million to $17.2 million, or 18% over the same
period last year. The increase in gross margin is due to
higher revenue. Our gross margin percentage was consistent with the
prior year quarter.
- Consolidated operating expenses for the quarter ended March 31,
2019 increased by $0.2 million to $25.9 million, or 1%. Excluding
the increase in SEC investigation related legal fees, operating
expenses would have decreased by $0.9 million.
- Income from the unconsolidated joint ventures for the quarter
ended March 31, 2019 increased by $7.2 million over the same period
last year. This improvement is primarily due to the fact that Q1
2018 sales were negatively impacted by pre-buy activities in Q4
2017 in advance of the Cummins Westport 2018 on-board diagnostics
("OBD") compliant engines and vehicle readiness
activities required by OEMs to integrate the new OBD compliant
engines in early 2018.
CUMMINS WESTPORT INC. HIGHLIGHTS
CUMMINS WESTPORT HIGHLIGHTS |
|
|
|
|
Three Months EndedMarch 31, |
Change Better /(Worse) |
($ in millions, except unit amounts) |
2019 |
2018 |
Units |
1,991 |
|
891 |
|
123 |
% |
Revenue |
$ |
92.3 |
|
$ |
52.2 |
|
77 |
% |
Gross
Margin |
27.8 |
|
13.2 |
|
111 |
% |
Gross
Margin % |
30 |
% |
25 |
% |
— |
|
Operating
Expenses |
8.1 |
|
10.2 |
|
21 |
% |
Segment Operating Income |
$ |
19.7 |
|
$ |
3.0 |
|
557 |
% |
Westport Fuel Systems 50% Interest |
8.6 |
|
1.5 |
|
473 |
% |
- CWI revenue for the quarter ended March 31, 2019 increased by
$40.1 million to $92.3 million, or 77% over the same period last
year.
- CWI launched its new line of OBD-compliant, ultra-low NOx
engines starting on January 1 2018 and there was a pre-buy of the
prior generation engines in Q4 2017 which resulted in lower sales
in Q1 2018. So, the 77% year over year growth in Q1 2019
results from some timing factors. A more representative
comparison is that CWI revenue for the 12 months ended March 31,
2019 was $360 million compared to $299 million in the 12 months
ended March 31, 2018, which is 20% growth on an annualized
basis.
- CWI gross margin for the quarter ended March 31, 2019 increased
by $14.6 million to $27.8 million, or 30% of revenue from $13.2
million or 25% of revenue in the prior year quarter, primarily due
to increased revenues in the current quarter and the lower revenues
in CWI's Q1 2018, as previously explained.
- CWI operating income for the quarter ended March 31, 2019
increased by $16.7 million to $19.7 million, or 557% over the same
period last year. Westport Fuel Systems' share of CWI's equity
interest for the quarter ended March 31, 2019 increased by $7.1
million to $8.6 million from $1.5 million in same period last year.
This reduction is primarily due to increased revenue and gross
margins and from the lower operating expenses driven by a reduction
in research and development expenses.
GAAP and NON-GAAP FINANCIAL MEASURES
Management reviews the operational progress of its business
units and investment programs over successive periods through the
analysis of net income, EBITDA and Adjusted EBITDA. The Company
defines EBITDA as net income or loss from continuing operations
before income taxes adjusted for interest expense (net),
depreciation and amortization. Westport Fuel Systems defines
Adjusted EBITDA as EBITDA from continuing operations excluding
expenses for stock-based compensation, unrealized foreign exchange
gain or loss, and non-cash and other adjustments. Management uses
Adjusted EBITDA as a long-term indicator of operational performance
since it ties closely to the business units’ ability to generate
sustained cash flow and such information may not be appropriate for
other purposes. Adjusted EBITDA includes the company's share
of income from joint ventures.
The term Adjusted EBITDA is not defined under U.S. generally
accepted accounting principles ("U.S. GAAP") and
is not a measure of operating income, operating performance or
liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA
has limitations as an analytical tool, and when assessing the
company's operating performance, investors should not consider
Adjusted EBITDA in isolation, or as a substitute for net loss or
other consolidated statement of operations data prepared in
accordance with U.S. GAAP. Among other things, Adjusted EBITDA does
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 by relying primarily on
its U.S. GAAP results and using Adjusted EBITDA as supplemental
information.
GAAP & NON-GAAP FINANCIAL MEASURES FROM CONTINUING
OPERATIONS |
|
|
($ in millions) |
31-Mar-18 |
30-Jun-18 |
30-Sep-18 |
31-Dec-18 |
31-Mar-19 |
Three months ended |
Net loss from continuing operations |
$ |
(12.6 |
) |
$ |
(5.7 |
) |
$ |
(12.1 |
) |
$ |
(10.4 |
) |
$ |
(3.0 |
) |
|
|
|
|
|
|
Income tax expense |
0.9 |
|
0.1 |
|
2.6 |
|
(1.5 |
) |
1.1 |
|
Interest Expense, net |
2.1 |
|
1.7 |
|
2.3 |
|
2.6 |
|
1.8 |
|
Depreciation and amortization |
4.2 |
|
4.1 |
|
4.2 |
|
4.0 |
|
4.3 |
|
EBITDA |
(5.4 |
) |
0.2 |
|
(3.0 |
) |
(5.3 |
) |
4.2 |
|
|
|
|
|
|
|
Stock based compensation |
0.3 |
|
1.4 |
|
0.6 |
|
0.7 |
|
0.4 |
|
Unrealized foreign exchange (gain) loss |
— |
|
5.2 |
|
2.2 |
|
1.6 |
|
0.1 |
|
Restructuring, termination and other exit costs |
0.6 |
|
0.2 |
|
— |
|
— |
|
0.8 |
|
Asset impairment |
— |
|
— |
|
— |
|
0.6 |
|
— |
|
Legal costs associated with SEC investigation |
0.9 |
|
2.5 |
|
3.5 |
|
3.1 |
|
1.8 |
|
Other |
0.2 |
|
(0.9 |
) |
1.0 |
|
(0.5 |
) |
— |
|
Adjusted EBITDA |
$ |
(3.4 |
) |
$ |
8.6 |
|
$ |
4.3 |
|
$ |
0.2 |
|
$ |
7.3 |
|
Key Priorities
Our key strategic priorities for 2019 are:
- Sustain growth of our light-duty and medium-duty business
through both the aftermarket and OEM channels.
- Ensure the successful commercial launch of Westport HPDI 2.0™
in China to drive volume growth that enables further cost
reductions and margin improvement.
- Secure additional OEM customers for Westport HPDI 2.0™ in key
market geographies.
- Continued focus on cost reduction to better align with revenues
and to improve cash flow.
FINANCIAL STATEMENTS & MANAGEMENT'S DISCUSSION AND
ANALYSIS
To view Westport Fuel Systems full financials for the first
quarter ended March 31, 2019, please visit
www.wfsinc.com/investors/financials.
CONFERENCE CALL PRESENTATION
The company is providing a conference call presentation as a
guide to its financial information in a quick reference format and
it should be read in conjunction with Westport Fuel Systems full
financials for the first quarter ended March 31, 2019.
LIVE CONFERENCE CALL & WEBCAST
Westport Fuel Systems has scheduled a conference call for today,
May 9, 2019 at 4:30 pm Eastern Time to discuss these results.
The public is invited to listen to the conference call in real time
by telephone or webcast. To access the conference call by
telephone, please dial: 1-800-319-4610 (Canada & USA toll-free)
or 604-638-5340. The live webcast of the conference call can be
accessed through the Westport Fuel Systems website at
http://www.wfsinc.com/investors/financials.
REPLAY CONFERENCE CALL & WEBCAST
To access the conference call replay, please dial 1-800-319-6413
(Canada & USA toll-free) or 604-638-9010 using the pass code
3212. The replay will be available until May 16, 2019. Shortly
after the conference call, the webcast will be archived on the
Westport Fuel Systems website and replay will be available in
streaming audio and a downloadable MP3 file.
About Westport Fuel Systems
At Westport Fuel Systems, we are driving innovation to power a
cleaner tomorrow. We are inventors, engineers, manufacturers and
suppliers of advanced clean fuel systems and components that can
change the way the world moves. Our technology delivers
performance, fuel efficiency and environmental benefits to address
the challenges of global climate change and urban air quality.
Headquartered in Vancouver, Canada, we serve our customers in more
than 70 countries with leading global transportation brands. At
Westport Fuel Systems, we think ahead. For more information, visit
www.wfsinc.com.
Cautionary Note Regarding Forward Looking
Statements
This press release contains forward-looking statements,
including statements regarding the future growth of Westport
Fuel System's business, commercial launch of Westport HPDI 2.0™ in
China, future volume growth and cost reductions and additions of
new OEM customers along with statements regarding revenue, adjusted
EBITDA and cash usage expectations, continued research and
development investment, the demand for our products, cash and
capital requirements as well as Westport Fuel Systems management's
response to any of the aforementioned factors. These statements are
neither promises nor guarantees but involve known and unknown risks
and uncertainties and are based on both the views of management and
assumptions that may cause our actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activities, performance or achievements
expressed in 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 of and access to the capital and debt
markets, solvency, governmental policies and regulation, technology
innovations, fluctuations in foreign exchange rates, operating
expenses, continued reduction in research and development expenses,
CWI performance, our ability to secure new customers, the
availability and price of natural gas, global government stimulus
packages, the acceptance of and shift to natural gas vehicles, the
inability of fleets to access capital or government funding to
purchase natural gas vehicles, the development of competing
technologies, our ability to adequately develop and deploy our
technology, the actions and determinations of our joint venture and
development partners, 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 any 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 change in our expectations or in events, conditions or
circumstances on which any such statements may be based, or that
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 by reference herein.
Contact Information
Shawn SeversonInvestor RelationsWestport Fuel
SystemsT: +1 604-718-2046invest@wfsinc.com
Westport Fuel Systems (NASDAQ:WPRT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Westport Fuel Systems (NASDAQ:WPRT)
Historical Stock Chart
From Apr 2023 to Apr 2024