VANCOUVER, B.C., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Westport Fuel Systems Inc. (“Westport Fuel Systems”) (TSX:WPRT / Nasdaq:WPRT) reported financial results for the second quarter ended June 30, 2019 and provided an update on our business. All figures are in U.S. dollars unless otherwise stated.
“Our Q2 2019 results demonstrate continued progress for our company: revenue growth and cost reduction resulting in improved profitability and cash flow,” said David Johnson, Chief Executive Officer of Westport Fuel Systems. “Q2 revenues of $82.4 million were robust as market demand for our products is strong in the many market segments and geographies we serve. We achieved our fifth consecutive quarter of positive Adjusted EBITDA and second consecutive quarter of positive EBITDA due to rising demand for our products. Our increasingly disciplined approach to cost management resulted in a 25% reduction in operating expenses.
We are witnessing a real-time market response to new regulations and associated calls to action on urban air quality and climate change. In the marketplace today, vehicles powered by LNG, CNG, RNG and LPG are delivering results. We are delighted that our cost-competitive and commercially available clean transportation products are being increasingly deployed to deliver emission reduction benefits to customers around the world. Our global team is highly focused on becoming a sustainable, profitable company in the clean transportation space and these results demonstrate our commitment to achieving this objective.”
Highlights
Guidance
Based on positive first half results, Westport Fuel Systems full year revenue guidance is being revised to between $285 and $305 million.
Q2 2019 FINANCIAL HIGHLIGHTS
| CONTINUING OPERATIONS | ||||||||||||||||
| ($ in millions, except per share amounts) | Three Months Ended June 30, | Change Better / (Worse) | Six Months Ended June 30, | Change Better / (Worse) | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Consolidated Revenues | $ | 82.4 | $ | 80.5 | 2 | % | $ | 155.6 | $ | 144.3 | 8 | % | ||||
| Consolidated Gross Margin | 19.3 | 21.7 | (11 | )% | 36.5 | 36.4 | — | % | ||||||||
| Consolidated Gross Margin % | 23 | % | 27 | % | — | 23 | % | 25 | % | — | ||||||
| Consolidated Operating Expenses | 25.2 | 33.4 | (25 | )% | 51.1 | 59.1 | (14 | )% | ||||||||
| Income from Unconsolidated Joint Ventures | 5.9 | 7.8 | (24 | )% | 14.5 | 9.3 | 56 | % | ||||||||
| Net loss from Continuing Operations | $ | (2.3 | ) | $ | (5.7 | ) | 59 | % | $ | (5.4 | ) | $ | (18.3 | ) | 71 | % |
| Net loss per Share from Continuing Operations | $ | (0.02 | ) | $ | (0.04 | ) | 50 | % | $ | (0.04 | ) | $ | (0.14 | ) | 71 | % |
| EBITDA (1) | $ | 4.0 | $ | 0.2 | 1,900 | % | $ | 8.2 | $ | (5.2 | ) | 258 | % | |||
| Adjusted EBITDA (1) | $ | 8.1 | $ | 8.5 | (5 | )% | $ | 15.4 | $ | 5.1 | 202 | % | ||||
| (1) EBITDA and Adjusted EBITDA are a non-GAAP measures. Please refer to GAAP and NON-GAAP FINANCIAL MEASURES for the reconciliation. | ||||||||||||||||
CUMMINS WESTPORT INC. HIGHLIGHTS
| CUMMINS WESTPORT HIGHLIGHTS | ||||||||||||||||
| Three Months Ended June 30, | Change Better / (Worse) | Six Months Ended June 30, | Change Better / (Worse) | |||||||||||||
| ($ in millions, except unit amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Units | 1,745 | 2,124 | (18 | )% | 3,736 | 2,941 | 27 | % | ||||||||
| Revenue | $ | 84.0 | $ | 86.9 | (3 | )% | $ | 176.3 | $ | 139.1 | 27 | % | ||||
| Gross Margin | 25.2 | 29.5 | (15 | )% | 53.1 | 42.7 | 24 | % | ||||||||
| Gross Margin % | 30 | % | 34 | % | — | 30 | % | 31 | % | — | ||||||
| Operating Expenses | 9.7 | 9.3 | 4 | % | 17.8 | 19.5 | 9 | % | ||||||||
| Segment Operating Income | $ | 15.5 | $ | 20.3 | (24 | )% | $ | 35.2 | $ | 23.2 | 52 | % | ||||
| Westport Fuel Systems 50% Interest | 5.9 | 7.8 | (24 | )% | 14.5 | 9.3 | 56 | % | ||||||||
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) | 30- Jun-18 | 30- Sep-18 | 31- Dec-18 | 31- Mar-19 | 30- Jun-19 | ||||||||||
| Three months ended | |||||||||||||||
| Net loss from continuing operations | $ | (5.7 | ) | $ | (12.1 | ) | $ | (10.4 | ) | $ | (3.0 | ) | $ | (2.3 | ) |
| Income tax expense | 0.1 | 2.6 | (1.5 | ) | 1.1 | 0.9 | |||||||||
| Interest Expense, net | 1.7 | 2.3 | 2.6 | 1.8 | 1.4 | ||||||||||
| Depreciation and amortization | 4.1 | 4.2 | 4.0 | 4.3 | 4.0 | ||||||||||
| EBITDA | 0.2 | (3.0 | ) | (5.3 | ) | 4.2 | 4.0 | ||||||||
| Stock based compensation | 1.3 | 0.6 | 0.7 | 0.4 | 0.3 | ||||||||||
| Unrealized foreign exchange (gain) loss | 5.2 | 2.2 | 1.6 | 0.1 | (0.7 | ) | |||||||||
| Restructuring, termination and other exit costs | 0.2 | — | — | 0.8 | — | ||||||||||
| Asset impairment | — | — | 0.6 | — | — | ||||||||||
| Costs associated with SEC investigation | 2.5 | 3.5 | 3.1 | 1.8 | 4.5 | ||||||||||
| Other | (0.9 | ) | 1.0 | (0.5 | ) | — | — | ||||||||
| Adjusted EBITDA | $ | 8.5 | $ | 4.3 | $ | 0.2 | $ | 7.3 | $ | 8.1 | |||||
Key Priorities
Our key strategic priorities for 2019 are:
FINANCIAL STATEMENTS & MANAGEMENT'S DISCUSSION AND ANALYSIS
Included in this press release are an unaudited condensed consolidated interim balance sheet and statement of operations and comprehensive loss. To view Westport Fuel Systems full financials for the second quarter ended June 30, 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 second quarter ended June 30, 2019.
LIVE CONFERENCE CALL & WEBCAST
Westport Fuel Systems has scheduled a conference call for today, August 8, 2019 at 5:00 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: 1-855-327-6838 (Canada & USA toll-free) or 1-604-235-2082. The live webcast of the conference call can be accessed through the Westport Fuel Systems website at 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 3492. The replay will be available until August 15, 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 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. Our 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, 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, market demand for Westport Fuel Systems' products, commercial launch of Westport HPDI 2.0TM in China, future volume growth and cost reductions and additions of new OEM customers along with statements regarding revenue, Adjusted EBITDA and cash flow 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 Severson
Investor Relations
Westport Fuel Systems
T: +1 604-718-2046
invest@wfsinc.com
| WESTPORT FUEL SYSTEMS INC. Condensed Consolidated Interim Balance Sheets (unaudited) (Expressed in thousands of United States dollars, except share amounts) June 30, 2019 and December 31, 2018 | ||||||||
| | ||||||||
| June 30, 2019 | December 31, 2018 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 45,390 | $ | 61,119 | ||||
| Accounts receivable | 77,943 | 57,118 | ||||||
| Inventories | 47,655 | 46,011 | ||||||
| Prepaid expenses | 7,382 | 4,835 | ||||||
| Total current assets | 178,370 | 169,083 | ||||||
| Long-term investments | 10,024 | 8,818 | ||||||
| Property, plant and equipment | 61,164 | 63,431 | ||||||
| Operating lease right-of-use assets | 19,425 | — | ||||||
| Intangible assets | 15,218 | 16,829 | ||||||
| Deferred income tax assets | 501 | 1,664 | ||||||
| Goodwill | 3,151 | 3,170 | ||||||
| Other long-term assets | 6,713 | 6,933 | ||||||
| Total assets | $ | 294,566 | $ | 269,928 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 104,437 | $ | 85,429 | ||||
| Current portion of operating lease liabilities | 2,228 | — | ||||||
| Current portion of long-term debt | 11,439 | 10,327 | ||||||
| Current portion of long-term royalty payable | 5,936 | 6,091 | ||||||
| Current portion of warranty liability | 2,162 | 2,800 | ||||||
| Total current liabilities | 126,202 | 104,647 | ||||||
| Long-term operating lease liabilities | 17,197 | — | ||||||
| Long-term debt | 39,468 | 44,983 | ||||||
| Long-term royalty payable | 10,635 | 14,844 | ||||||
| Warranty liability | 2,741 | 2,141 | ||||||
| Deferred income tax liabilities | 5,029 | 5,521 | ||||||
| Other long-term liabilities | 6,736 | 7,116 | ||||||
| Total liabilities | 208,008 | 179,252 | ||||||
| Shareholders’ equity: | ||||||||
| Share capital: | ||||||||
| Unlimited common and preferred shares, no par value | ||||||||
| 133,663,774 (2018 - 133,380,899) common shares | 1,087,776 | 1,087,068 | ||||||
| Other equity instruments | 12,966 | 12,948 | ||||||
| Additional paid in capital | 10,079 | 10,079 | ||||||
| Accumulated deficit | (1,003,958 | ) | (998,361 | ) | ||||
| Accumulated other comprehensive loss | (20,305 | ) | (21,058 | ) | ||||
| Total shareholders' equity | 86,558 | 90,676 | ||||||
| Total liabilities and shareholders' equity | $ | 294,566 | $ | 269,928 | ||||
| Commitments and contingencies | ||||||||
| WESTPORT FUEL SYSTEMS INC. Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (unaudited) (Expressed in thousands of United States dollars, except share and per share amounts) Three and six months ended June 30, 2019 and 2018 | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 82,419 | $ | 80,489 | $ | 155,610 | $ | 144,321 | ||||||||
| Cost of revenue and expenses: | ||||||||||||||||
| Cost of revenue | 63,091 | 58,758 | 119,127 | 107,941 | ||||||||||||
| Research and development | 6,910 | 7,433 | 13,708 | 16,024 | ||||||||||||
| General and administrative | 12,718 | 14,365 | 24,683 | 24,537 | ||||||||||||
| Sales and marketing | 4,284 | 3,951 | 8,101 | 7,909 | ||||||||||||
| Restructuring costs | — | 193 | 825 | 808 | ||||||||||||
| Foreign exchange (gain) loss | (705 | ) | 5,233 | (646 | ) | 5,199 | ||||||||||
| Depreciation and amortization | 2,000 | 2,246 | 4,454 | 4,574 | ||||||||||||
| Loss on sale of investment and assets | — | 3 | — | 59 | ||||||||||||
| 88,298 | 92,182 | 170,252 | 167,051 | |||||||||||||
| Loss from operations | (5,879 | ) | (11,693 | ) | (14,642 | ) | (22,730 | ) | ||||||||
| Income from investments accounted for by the equity method | 5,885 | 7,795 | 14,540 | 9,264 | ||||||||||||
| Interest on long-term debt and accretion on royalty payable | (1,785 | ) | (2,217 | ) | (3,702 | ) | (4,121 | ) | ||||||||
| Interest and other income, net of bank charges | 348 | 543 | 469 | 302 | ||||||||||||
| Loss before income taxes | (1,431 | ) | (5,572 | ) | (3,335 | ) | (17,285 | ) | ||||||||
| Income tax expense | 887 | 99 | 2,022 | 1,003 | ||||||||||||
| Net loss from continuing operations | (2,318 | ) | (5,671 | ) | (5,357 | ) | (18,288 | ) | ||||||||
| Net income (loss) from discontinued operations | (240 | ) | 761 | (240 | ) | (871 | ) | |||||||||
| Net loss for the period | (2,558 | ) | (4,910 | ) | (5,597 | ) | (19,159 | ) | ||||||||
| Other comprehensive loss: | ||||||||||||||||
| Cumulative translation adjustment | 1,279 | (2,731 | ) | 753 | (2,876 | ) | ||||||||||
| Comprehensive loss | $ | (1,279 | ) | $ | (7,641 | ) | $ | (4,844 | ) | $ | (22,035 | ) | ||||
| Loss per share: | ||||||||||||||||
| From continuing operations - basic and diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.14 | ) | ||||
| From discontinued operations - basic and diluted | (0.00 | ) | 0.01 | (0.00 | ) | (0.01 | ) | |||||||||
| Net loss per share - basic and diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.15 | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and diluted | 133,600,880 | 131,946,818 | 133,525,464 | 131,836,351 | ||||||||||||