Westport Fuel Systems Inc (WPRT)

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Westport Fuel Systems Reports First Quarter 2021 Financial Results.

source
https://investors.wfsinc.com/news/news-details/2021/Westport-Fuel-Systems-Reports-First-Quarter-2021-Financial-Results/default.aspx

May, 06, 2021

Westport Fuel Systems Inc. (“WFS”) (TSX:WPRT / Nasdaq:WPRT) today reported financial results for the first quarter ended March 31, 2021 and provided an update on operations. All figures are in U.S. dollars unless otherwise stated.

FIRST QUARTER 2021 HIGHLIGHTS
- Revenues of $76.4 million, up 14% compared to the same period in 2020 due to increased sales volumes in WFS' light-duty and heavy-duty Original Equipment Manufacturing ("OEM") businesses

- Net loss of $3.1 million and net loss per share of $0.02 were impacted by supply chain-related production issues at WFS' initial High Pressure Direct Injection ("HPDI")™ launch partner, one-time severance costs and an unrealized foreign exchange loss

- Adjusted earnings before interest, taxes, depreciation and amortization of $2.7 million

- At-the-Market equity offering raised gross proceeds of $13.2 million in 1Q21, for a cumulative total of $27.6 million; cash and cash equivalents were $59.7 million at the end of the quarter

- Announced co-investment agreement with injector manufacturing partner to expand manufacturing capacity for HPDI 2.0 Injectors

- Amended agreement terms with Weichai Westport for the supply of at least 25,000 HPDI Systems in China through December 31, 2024

- Advanced hydrogen-fueled internal combustion engine development work, with successful initial testing results and announced a research program with bus and truck manufacturer Scania for additional testing and ongoing development of a hydrogen fueled engine with HPDI 2.0.

“2021 launched with solid first quarter revenue growth in our OEM business compared to the same period last year, despite the ongoing challenges brought on by COVID-19. Societal demand and regulatory tailwinds continue to support the urgent need for a range of clean, cost-effective, carbon-reducing transportation solutions that we deliver. Fleets have continued to gain confidence that our HPDI 2.0 solutions outperform, with demonstrated operational cost savings, reduced carbon emissions, and our products are taking on an increasing role in large fleets.

We are well-positioned to deliver on the increasing demand and growth for our HPDI 2.0 solutions forecasted in Europe, China and North America. The development of our hydrogen HPDI solutions will offer OEMs lower industrialization costs and near zero-carbon solutions. Fleet operators will gain a fast pathway to cost savings without sacrificing performance, on a technology platform that has a proven track record and longevity. The solutions we offer can take our customers all the way to zero carbon fuels and do so affordably.

We have set targets to grow our business to $1 billion in annual revenue by mid-decade at industry standard margins, with a large market to serve, global partners, an impressive portfolio of products and patents, and an exceptional team dedicated to delivering clean solutions that are enabling the energy transition around the globe.”
David M. Johnson, Chief Executive Officer

Revenues in 1Q21 increased year-over-year by 14% to $76.4 million compared to 1Q20, reflecting the benefit of increased OEM sales volumes in WFS' light-duty and heavy-duty businesses. Revenues in U.S. dollar terms benefited from a 9% increase in the average Euro versus U.S. dollar exchange rate period over period.

WFS reported a net loss of $3.1 million, or $0.02 per share, for 1Q21 compared to a net loss of $15.3 million, or $0.11 per share, for the same period in 2020. The improvement primarily resulted from higher gross margins in the current period due to the significant impact of a $10.0 million charge, excluding $7.7 million in insurance recoveries recorded in 2Q20, taken for a field service campaign in the comparative period in 2020, a decrease in unrealized foreign exchange losses due mostly to the strengthening of the Canadian dollar versus the U.S. dollar, and higher earnings from CWI, partially offset by increased operating expenses, including one-time severance expenses, and lower margins from the heavy-duty OEM business.

WFS generated $2.7 million adjusted EBITDA during 1Q21 compared to negative $3.6 million in 1Q20. Besides the changes to profitability as described above, the prior year first quarter also had a large unrealized foreign exchange loss of $6.9 million compared to $0.7 million in the current quarter.

SEGMENT INFORMATION
Original Equipment Manufacturer Segment
OEM revenue for 1Q21 was $42.7 million compared with $34.2 million for 1Q20. The 25% increase in revenue was primarily driven by increased light-duty OEM business sales volumes to OEMs in Russia and India during the quarter, electronics business and higher year-over-year HPDI product sales, more than offsetting a decline in the delayed-OEM business that has been affected by the impact on customer demand due to COVID-19. Notwithstanding increased HPDI product sales year-over-year, global supply chain issues related to, amongst other things, a lack of semi-conductors are impacting automotive manufacturing and creating bottlenecks. These shortages do not currently directly affect manufacturing of the HPDI system, and demand for the HPDI product has increased even more significantly than is reflected in the year-over-year increase in revenues.

Independent Aftermarket Segment
Independent Aftermarket ("IAM") revenue for 1Q21 was $33.7 million compared with $33.0 million for the same prior year period. A 9% increase in the average Euro rate versus the U.S. dollar more than offset lower demand period over period.

CUMMINS WESTPORT INC.
Revenue for 1Q21 was $82.3 million, a 7% increase compared to $76.7 million for 1Q20. Unit sales for 1Q21 were 1,873 compared to 1,513 for 1Q20. The increase in unit sales in the current year period largely reflects the timing of sales and an increase in demand. Parts revenue decreased from $29.1 million to $25.8 million due to fewer parts purchases for repairs, reflecting improving product quality. Gross margin decreased by $0.6 million to $21.0 million, or 26% of revenue, from $21.6 million, or 28% of revenue, in the prior year period. The decrease in gross margin and gross margin percentage primarily reflects product mix and a $1.9 million parts warranty provision.

Operating income for 1Q21 increased by $3.7 million to $17.1 million, or 28% over the same period last year, primarily reflecting lower operating expenses. WFS share of CWI's net income for 1Q21 increased to $6.4 million from $5.3 million in 1Q20.

HYDROGEN ICE
Together with AVL List GmbH, a leading independent automotive engineering firm, in February 2021 WFS published an analysis showing the cost advantages of hydrogen-fueled HPDI 2.0 equipped internal combustion engines for trucking which generated international attention.

In 1Q21, WFS completed promising initial testing demonstrating that hydrogen with HPDI 2.0 delivers efficiency comparable to hydrogen fuel cells in heavy-duty applications, with lower industrialization costs, and a faster pathway to bring zero-carbon fuels to commercial applications and wide-spread adoption in high-horsepower transportation applications.

Like heavy-duty long-haul trucking, high-load applications like mining, marine and rail have come to rely on the efficiency, power, durability and reliability of diesel engines, and there is no other alternative that offers the same potential to leverage established supply chains, manufacturing investment and infrastructure and economies of scale.
In 1Q21, WFS announced a research program with bus and truck manufacturer Scania for additional testing and ongoing development of a hydrogen fueled engine with HPDI 2.0.

CONFERENCE CALL PRESENTATION
WFS 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 the WFS condensed consolidated interim financial statements for the first quarter of 2021.

LIVE CONFERENCE CALL & WEBCAST
WFS has scheduled a conference call for Friday, May 7, 2021 at 7:00 am Pacific Time (10:00 am Eastern Time) to discuss these results. 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 WFS website at
https://investors.wfsinc.com/investors/default.aspx

REPLAY CONFERENCE CALL & WEBCAST
To access the conference call replay, please dial 1-800-319-6413 (Canada & USA toll-free) or 1-604-638-9010 using the pass code 6662. The telephone replay will be available until May 14, 2021. 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
Westport Fuel Systems is driving innovation to power a cleaner tomorrow. Westport Fuel Systems is a leading supplier of advanced fuel delivery components and systems for clean, low-carbon fuels such as natural gas, renewable natural gas, propane, and hydrogen to the global automotive industry. Its technology delivers the performance and fuel efficiency required by transportation applications and the 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, Westport Fuel Systems serves customers in more than 70 countries with leading global transportation brands.
For more information, visit
https://wfsinc.com/

Contact Information
Christine Marks
Investor Relations
Westport Fuel Systems
T: [phone]
[e-mail]

All detailed tabular financial information you can read HERE.
https://investors.wfsinc.com/news/news-details/2021/Westport-Fuel-Systems-Reports-First-Quarter-2021-Financial-Results/default.aspx