"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.
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."
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 / | ||
1Q24 | 1Q23 | ||
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 |
(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
Gross margin decreased by
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
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
Independent Aftermarket
Revenue for the three months ended
Gross margin for the quarter increased by
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 | ||||||
Revenue | Operating | Depreciation | 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 | ||||||
Revenue | Operating | Depreciation | Equity income | ||||
OEM | $ 56.3 | $ (6.0) | $ 2.3 | $ 0.1 | |||
IAM | 25.9 | — | 0.6 | — | |||
Corporate | — | (3.4) | 0.1 | — | |||
Total Consolidated | $ 82.2 | $ (9.4) | $ 3.0 | $ 0.1 |
Q1 2024 Conference Call
Westport has scheduled a conference call on
To access the conference call replay, please dial 1-888-390-0541 (
2024 Annual General Meeting
Westport will host its Annual General Meeting of shareholders (the "Meeting") virtually on
Registered Shareholders and duly appointed proxyholders can attend the meeting online at https://meetnow.global/MSM4VF4 to participate, vote, or submit questions during the meeting's live webcast.
Financial Statements and Management's Discussion and Analysis
To view Westport financials for the first quarter ended
About
At
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements, including statements regarding future strategic initiatives and future growth, future of our development programs (including those relating to HPDI and Hydrogen), our expectations for 2024 and beyond, including the demand for our products, and the future success of our business and technology strategies. 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 expenses, 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 of and shift to natural gas and hydrogen vehicles,fuel emission standards, 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, the effects and duration of the
GAAP and Non-GAAP Financial Measures
Our financial statements are prepared in accordance with
EBITDA and Adjusted EBITDA are intended to provide additional information to investors and analysts and do not have any standardized definition under
Gross margin and Gross margin as percentage of Revenue | |||||||||
(expressed in millions of | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | ||||
Three months ended | |||||||||
Revenue | $ 82.2 | $ 85.0 | $ 77.4 | $ 87.2 | $ 77.6 | ||||
Less: Cost of revenue | 68.9 | 70.6 | 64.2 | 79.2 | 65.9 | ||||
Gross margin | 13.3 | 14.4 | 13.2 | 8.0 | 11.7 | ||||
Gross margin % | 16.2 % | 16.9 % | 17.1 % | 9.2 % | 15.1 % |
EBITDA and Adjusted EBITDA | ||||||||||
(expressed in millions of | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | |||||
Three months ended | ||||||||||
Loss before income taxes | $ (9.7) | $ (13.0) | $ (12.0) | $ (14.0) | $ (12.9) | |||||
Interest expense (income), net | 0.4 | (0.1) | 0.2 | (0.2) | 0.5 | |||||
Depreciation and amortization | 3.0 | 3.0 | 3.2 | 3.3 | 3.2 | |||||
EBITDA | (6.3) | (10.1) | (8.6) | (10.9) | (9.2) | |||||
Stock based compensation | 0.7 | 0.8 | (0.3) | 1.4 | 0.3 | |||||
Unrealized foreign exchange (gain) loss | 1.1 | 2.4 | 1.4 | (0.9) | 1.8 | |||||
Loss on extinguishment of royalty payable | — | 2.9 | — | — | — | |||||
Severance costs | — | — | 4.5 | — | 0.5 | |||||
Impairment of long-term investments | — | — | — | 0.4 | — | |||||
Adjusted EBITDA | $ (4.5) | $ (4.0) | $ (3.0) | $ (10.0) | $ (6.6) |
| ||||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents (including restricted cash) | $ 43,902 | $ 54,853 | ||
Accounts receivable | 87,629 | 88,077 | ||
Inventories | 58,060 | 67,530 | ||
Prepaid expenses | 6,624 | 6,323 | ||
Assets held for sale | 48,468 | — | ||
Total current assets | 244,683 | 216,783 | ||
Long-term investments | 5,043 | 4,792 | ||
Property, plant and equipment | 37,108 | 69,489 | ||
Operating lease right-of-use assets | 21,701 | 22,877 | ||
Intangible assets | 6,379 | 6,822 | ||
Deferred income tax assets | 11,094 | 11,554 | ||
2,994 | 3,066 | |||
Other long-term assets | 9,765 | 20,365 | ||
Total assets | $ 338,767 | $ 355,748 | ||
Liabilities and shareholders' equity | ||||
Current liabilities: | ||||
Accounts payable and accrued liabilities | $ 99,038 | $ 95,374 | ||
Current portion of operating lease liabilities | 2,590 | 3,307 | ||
Short-term debt | 8,614 | 15,156 | ||
Current portion of long-term debt | 14,462 | 14,108 | ||
Current portion of warranty liability | 4,434 | 6,892 | ||
Liabilities held for sale | 4,078 | — | ||
Total current liabilities | 133,216 | 134,837 | ||
Long-term operating lease liabilities | 18,914 | 19,300 | ||
Long-term debt | 30,355 | 30,957 | ||
Warranty liability | 1,285 | 1,614 | ||
Deferred income tax liabilities | 3,332 | 3,477 | ||
Other long-term liabilities | 4,964 | 5,115 | ||
Total liabilities | 192,066 | 195,300 | ||
Shareholders' equity: | ||||
Share capital: | ||||
Unlimited common and preferred shares, no par value | ||||
17,223,154 (2023 - 17,174,502) common shares issued and outstanding | 1,245,408 | 1,244,539 | ||
Other equity instruments | 9,134 | 9,672 | ||
Additional paid in capital | 11,516 | 11,516 | ||
Accumulated deficit | (1,088,082) | (1,074,434) | ||
Accumulated other comprehensive loss | (31,275) | (30,845) | ||
Total shareholders' equity | 146,701 | 160,448 | ||
Total liabilities and shareholders' equity | $ 338,767 | $ 355,748 |
| |||||
Three months ended March | |||||
2024 | 2023 | ||||
Revenue | $ 77,574 | $ 82,240 | |||
Cost of revenue and expenses: | |||||
Cost of revenue | 65,851 | 68,879 | |||
Research and development | 7,693 | 7,263 | |||
General and administrative | 10,353 | 9,768 | |||
Sales and marketing | 3,287 | 3,649 | |||
Foreign exchange loss | 1,820 | 1,076 | |||
Depreciation and amortization | 1,043 | 1,037 | |||
90,047 | 91,672 | ||||
Loss from operations | (12,473) | (9,432) | |||
Income from investments accounted for by the equity method | 31 | 129 | |||
Gain on sale of investment | — | — | |||
Interest on long-term debt and accretion on royalty payable | (812) | (847) | |||
Interest and other income, net of bank charges | 341 | 466 | |||
Loss before income taxes | (12,913) | (9,684) | |||
Income tax expense | 735 | 944 | |||
Net loss for the period | (13,648) | (10,628) | |||
Other comprehensive income (loss): | |||||
Cumulative translation adjustment | (430) | 1,970 | |||
Comprehensive loss | $ (14,078) | $ (8,658) | |||
Loss per share: | |||||
Net loss per share - basic and diluted | $ (0.79) | (0.62) | |||
Weighted average common shares outstanding: | |||||
Basic and diluted | 17,220,540 | 17,168,578 | |||
Diluted | 17,220,540 | 17,168,578 |
| ||||
Three months ended March | ||||
2024 | 2023 | |||
Operating activities: | ||||
Net loss for the period | $ (13,648) | $ (10,628) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 3,247 | 3,027 | ||
Stock-based compensation expense | 331 | 633 | ||
Unrealized foreign exchange loss | 1,820 | 1,076 | ||
Deferred income tax | (40) | (148) | ||
Income from investments accounted for by the equity method | (31) | (129) | ||
Interest on long-term debt and accretion on royalty payable | 22 | 105 | ||
Change in inventory write-downs | 413 | 586 | ||
Change in bad debt expense | (121) | 84 | ||
Other | (248) | — | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 12,526 | (1,041) | ||
Inventories | (7,434) | (591) | ||
Prepaid expenses | (400) | (1,684) | ||
Accounts payable and accrued liabilities | 4,725 | 763 | ||
Warranty liability | (1,020) | (1,382) | ||
Net cash provided by (used in) operating activities | 142 | (9,329) | ||
Investing activities: | ||||
Purchase of property, plant and equipment | (4,893) | (3,007) | ||
Proceeds on sale of assets | 135 | 98 | ||
Net cash used in investing activities | (4,758) | (2,909) | ||
Financing activities: | ||||
Repayments of operating lines of credit and long-term facilities | (17,689) | (10,994) | ||
Drawings on operating lines of credit and long-term facilities | 11,848 | 8,251 | ||
Net cash used in financing activities | (5,841) | (2,743) | ||
Effect of foreign exchange on cash and cash equivalents | (494) | 760 | ||
Net decrease in cash and cash equivalents | (10,951) | (14,221) | ||
Cash and cash equivalents, beginning of period (including restricted cash) | 54,853 | 86,184 | ||
Cash and cash equivalents, end of period (including restricted cash) | $ 43,902 | $ 71,963 |
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