VANCOUVER, BC – Westport Innovations Inc. (TSX:WPT/NASDAQ:WPRT), a global leader in alternative fuel, low-emissions transportation technologies, today reported financial results for the fourth quarter and fiscal year ended March 31, 2010 (FY2010) and provided an update on operations. All figures are in Canadian dollars based on Canadian GAAP unless otherwise stated.
“We’ve accomplished our goals in revenue for the quarter and beat last year’s revenue performance despite tough market conditions,” said David Demers, CEO of Westport Innovations. “We continue to invest in new market opportunities that we believe will help strengthenWestport’s position as a technology leader in the development of light, medium and heavy-duty engines running on gaseous fuels. Our partnership with Volvo is progressing and our joint venture with Weichai has received government approval. Both tracks have established a clear path for product development and an opportunity to significantly impact our future revenue stream. Our recent announcement with Delphi to supplyWestportinjectors provides a critical piece of our development and commercialization path as it solidifies our ability to ramp production for existing and potential partners.”
"Outside of our development path and improvements in supply chain capabilities, it is clear that events outside our company are helping shape the future for natural gas vehicles (NGVs). The recent introduction of the American Power Act (APA) featuring key incentives for NGVs and related businesses may have a great impact in accelerating the adoption of natural gas for transportation. Adding to the APA’s potential impact on market transformation, the natural gas industry’s constant identification of new gas shales have provided our existing and potential customers with an excellent opportunity to save a great deal of money on their greatest input cost, fuel, for the foreseeable future.”
Reported a net loss of $12.2 million ($0.32 loss per share) for the fourth quarter ended March 31, 2010 compared to a net loss of $12.7 million ($0.43 loss per share) for fourth quarter ended March 31, 2009
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Westport’s consolidated revenues for the three months ended March 31, 2010 was $35.7 million, an increase of $9.4 million, or 35.7%, from $26.3 million in the same period in fiscal year 2009. On a U.S. dollar basis, consolidated revenue was US$121.7 million for the year ended March 31, 2010 compared to US$109.2 for the year ended March 31, 2009. CWI product revenue for the fourth quarter was up $4.6 million as unit sales increased from 671 units to 998 units primarily as the result of increased volume of ISL G sales. CWI parts revenue for the fourth quarter increased by $1.7 million over the same period last year due to an increase in units in service. Non-CWI product revenues increased by $2.4 million with 46 Westport HD systems shipped in the fourth quarter of fiscal 2010 compared with 5 in the comparative quarter.
For the year ended March 31, 2010, consolidated revenues increased $8.9 million, or 7.3%, to $130.7 million from $121.8 million for the year ended March 31, 2009. The Company shipped 3,921 units in fiscal year 2010 compared to 4,038 units shipped in fiscal year 2009. The increase in revenues was primarily due to a 9.5% increase in CWI revenues to $120.3 million on 3,807 units for the year ended March 31, 2010 compared to $109.9 million on 3,907 units for the year ended March 31, 2009. Non-CWI revenues for the year ended March 31, 2010 were $10.4 million on 114 Westport HD Systems shipped compared to $11.9 million on 131 Westport HD Systems shipped in fiscal 2009, a decrease of 14.4%. The foreign exchange impact on revenues from translating revenues from U.S. dollars to Canadian dollars resulted in a reduction in fiscal year 2010 revenues of approximately $4.4 million, or 3.4%.
Net loss for the three months ended March 31, 2010 was $12.2 million, or $0.32 per share, compared to net loss of $12.7 million, or $0.43 per share, in the three months ended March 31, 2009.Westport’s share of CWI’s net income increased $2.1 million from $0.8 million to $2.9 million primarily because of increased revenues and better gross margin percentage. CWI gross margin increased by $5.4 million on higher revenues, and the gross margin percentage increased from 28.8% in the fourth quarter of fiscal 2009 to 40.3% in fiscal 2010 as the result of more favourable warranty experience and an increase in parts margin mainly as a result of CWI negotiating lower selling expenses on certain parts. The non-CWI gross margin decreased $0.6 million, mainly because of an increase inWestport’s inventory obsolescence provision of $1.6 million. Non-CWI operating expenses increased by $2.8 million compared with the fourth quarter of fiscal 2009 primarily due to a one time cost on settling retirement program expenses withWestport’s former President and Chief Operating Officer, which resulted in a charge of $1.8 million.
Westport’s consolidated net loss for the year ended March 31, 2010 was $37.6 million, or $1.10 per share, compared to $24.4 million, or $0.81 per share, for the year ended March 31, 2009. On a comparative basis, results for the year ended March 31, 2009 included approximately $11.9 million in one-time net gains on the sale of investments versus $2.9 million in net gains on the sale of investments for the year end March 31, 2010. Net loss for the year ended March 31, 2010, excluding gains on the sale of investments, was $40.5 million or $1.19 per share utilizing a weighted average of 34,133,247 shares outstanding. For the year ended March 31, 2009, the net loss excluding gains on investment was $36.3 million or $1.20 loss per share utilizing a weighted average of 30,268,947 shares outstanding.
The increase in net loss (excluding net gains on the sale of investments) is primarily due to an increase of $3.6 million in non-CWI operating expenses (research and development, general and administrative, and sales and marketing). Contributing to the consolidated net loss was a $2.2 million reduction in non-CWI gross margin as a result of a lower average selling price and an increase in inventory obsolescence provisions for non-CWI products, an increase in interest expense of $0.9 million, a reduction in investment income of $0.7 million and an increase in net foreign exchange losses of $0.5 million. Helping offset non-CWI net losses, CWI’s net income increased $7.3 million from $7.8 million in fiscal 2009 to $15.1 million in fiscal 2010. The increase was driven primarily by higher product and parts revenue and an increase in gross margin percentage as a result of more favourable warranty experience compared with the prior year. During fiscal year 2010,Westport’s share of CWI’s net income increased by $3.6 million to $7.6 million.
As of March 31, 2010,Westport’s cash, cash equivalents and short-term investments balance was $105.9 million compared to $82.6 million at March 31, 2009. For the year ended March 31, 2010, we raised approximately US$57.4 million in net proceeds from the Company’s public offering completed in December 2009, $2.5 million from the exercise of stock options, and $3.8 million from the sale of shares of Clean Energy and Wild River Resources Inc. For the year ended March 31, 2010, cash used in operations and capital expenditures was $22.0 million and $0.3 million, respectively. Subsequent to March 31, 2010,Westportannounced that 790,614 warrants previously issued to Industry Canada, a department of the Government of Canada, were exercised at a price of $10.65 per warrant generating $8.4 million in cash for Westport.
Westport’s Carbon Project (WCP) has recently been registered to the Voluntary Carbon Standard. The WCP supports our economic and environmental value proposition and demonstrates the rigorously verifiable GHG emission reductions of Westport GX and CWI ISL G engines.
CWI, a 50:50 global joint venture betweenWestportand Cummins Inc., is focused on the development, marketing and sale of mid-range, spark-ignited (SI) natural gas or liquefied petroleum gas (LPG) engines for transit bus, shuttle and urban specialty vehicles such as refuse trucks. CWI revenues increased by 9.5% to $120.3 million from $109.9 million in the prior year. CWI’s net contribution was $7.6 million, after taxes, compared to $3.9 million in the prior year, an increase of $3.7 million or 94.9%.
CWI started the year with the appointment of Roe East as President. Mr. East joined CWI from Cummins, most recently as the Director – Power Systems Marketing & Business Development, based inColumbus,Indiana. During the year, CWI saw growth inIndia, with an order of 460 delivered in cooperation with Cummins India Ltd. and destined for buses in service in theDelhiarea. The year saw CWI’s OEM expansion inNorth Americato include several Kenworth, Peterbilt, Mack as well as Freightliner brand trucks.
Westport HD sales during the quarter were 46 units, bringing the fiscal 2010 total to 114 units, destined for customers inAustraliaand fleets inNorth America. Total revenues for the heavy-duty business unit for the year ended March 31, 2010 were $10.4 million compared to $11.9 million in the prior year when 131 systems were shipped.
A recent development for the HD business unit is the Chinese government’s approval and licensing of the Weichai Westport (WWI) joint venture. The final registration will be completed afterWestportmakes its investment of US$4.5 million, which is expected to be in early June. Over the course of the last 18 months, since announcing the JV formation,Westporthas advanced its injector technology to be more readily adaptable to Weichai’s engine platforms and reduced the cost of key components. WWI continues to experience strong growth in its spark ignited natural gas engine business and anticipates having demonstration vehicles inChinafeaturing Westport HD Systems on the road in less than two years.
Adding to our OEM portfolio of partners during the last twelve months, Volvo Power Train, the engine manufacturing arm ofVolvoAB, signed an agreement withWestportas a Tier 1 Development Supplier for its heavy duty natural gas engines and associated supply chain, building onWestport’s relationship with Volvo which was started in 2008.
In January, 2010 Juniper Engines announced its first customer agreement with Clark Forklifts. With EPA certification in hand for its 2.4L LPG engine, Juniper has commenced shipping of engines and continues to build its customer base. While the forklift business grows organically, Juniper has already begun field trials of its engines in adjacent markets such as oil field applications. Juniper expects its products’ high efficiency and customer satisfaction will provide a distinct competitive advantage in the oil field service and stationary power market.
Westporthas scheduled a conference call for today, Tuesday, June 1, 2010 at 2:00 pm Pacific Time (5:00 pm Eastern Time) to discuss these results. The public is invited to listen to the conference call in real time or by replay. To access the conference call by telephone, please dial: 877-240-9772 (North AmericaToll-Free) or 416-340-8530. To access the conference call replay after the call, please dial 800-408-3053 or 416-695-5800 using the pass code 4817565. The replay will be available until June 15, 2010; however, the webcast will be archived on the Company’s website.
The live webcast of the conference call can be accessed through theWestportwebsite at www.westport.com by selecting “Investors” and then “Investor Overview” from the main menu. Replays will be available in streaming audio on the same website shortly after the conclusion of the conference call.
To view Westport’s full FY2010 financials, please point your browser to the following link: http://www.westport.com/investor/financial.php.
The Westport 2010 Annual Meeting of Shareholders will be held on Thursday, July 15, 2010 at 2:00 PM (Pacific Time) at the Pan Pacific Hotel, 999 Canada Place,Vancouver,British Columbia.
Westport, a division of Westport Fuel Systems Inc., engineers the world’s most advanced natural gas engines and vehicles. We work with original equipment manufacturers worldwide from design through to production, creating products to meet the growing demand for vehicle technology that will reduce both emissions and fuel costs. To learn more about our business, visit www.westport.com, subscribe to our RSS feed, or follow us on Twitter @WestportDotCom.
This document contains forward-looking statements, including statements regarding the demand for our products, the future success of our business and technology strategies, investment, cash and capital requirements, intentions of partners and potential customers, the performance and competitiveness of our products and expansion of product coverage, future market opportunities, speed of adoption of natural gas for transportation, growth in demand as a result of new emission standards and terms of future agreements. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties and are based on 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 and assumptions include risks and assumptions related to our revenue growth, operating results, industry and products, the general economy, conditions of and access to the capital and debt markets, governmental policies and regulation, technology innovations, fluctuations in foreign exchange rates, global government stimulus packages, the acceptance of natural gas vehicles in fleet markets, the relaxation or waiver of fuel emission standards, the inability of fleets to access capital or government funding to purchase natural gas vehicles, the sufficiency of bio methane for use in our vehicles, the development of competing technologies 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 the forward looking statements except as required by National Instrument 51-102.
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