VANCOUVER, BC – Westport Innovations Inc. (TSX:WPT / NASDAQ:WPRT), engineering the world's most advanced natural gas engines and systems, today reported financial results for the first quarter ended March 31, 2014 and provided an update on operations. All figures are in U.S. dollars unless otherwise stated.
(The reconciliation of Adjusted EBITDA is described below)
As previously announced, Westport re-organized its business in 2013 to take advantage of the shift by original equipment manufacturers (OEMs) to develop natural gas vehicle products in-house. Westport's operating business units have the goal of achieving positive Adjusted EBITDA from operations by the end of 2014. The $1.6 million loss is a step change in Adjusted EBITDA, which has averaged about a $9.4 million loss per quarter for the past eight quarters. This has been achieved through significant organizational efficiencies, product portfolio optimization and cost reductions.
"We have made a step change this quarter with Westport revenue growth of 39% year-over-year and significant improvement on Adjusted EBITDA from operations, from an average loss of approximately $9.4 million to a $1.6 million loss," said David Demers, CEO of Westport. "We are on track to achieve positive Adjusted EBITDA from operations by the end of 2014 by continuing to increase sales, shipping committed products, and applying cost and margin discipline. At the same time, we are confident that our investment projects will deliver shareholder value as these products come to market."
"In China, Weichai Westport sold more than 9,100 units in the quarter and recorded $113 million in revenue, 8% and 7% higher than the same period last year. As announced earlier this week, we are excited that Weichai will be the first OEM delivering HPDI 2.0 technology to the market. The WP12 engine is China's first engine featuring Westport HPDI technology, delivering the power and performance of the base diesel engine, while replacing up to 95% of diesel fuel with cleaner burning, less expensive natural gas. Furthermore, we have agreed to develop the 10 litre Weichai Westport WD10 engine with Westport HPDI 2.0, with product availability planned for 2016. We are very pleased to continue to work with Weichai to lead this energy transition in China."
"We have a comprehensive product investment program, collaborating with key global OEMs to launch major new products, resulting in increased sales while reducing investment expenses over the next several years. At the same time, we are continuing to reduce our operating costs and prudently manage our cash flow. The income from our joint ventures and service revenue are expected to cover our corporate costs and investment programs."
"Energy transitions are difficult to accomplish, but with the technologies, resources, and capabilities we have, we are confident that we will benefit from this transition."
Westport expects revenue to be between $175 million and $185 million for the year ended December 31, 2014, which represents growth of 7 to 13% over 2013.
As Westport shifts from market creation work to a full commercial operation and profitability, Westport has announced two interim financial milestones. Westport's first milestone is to have its three operating business units combined to achieve positive Adjusted EBITDA by the end of 2014. Westport's second milestone is to have the Company report consolidated positive Adjusted EBITDA by the end of 2015, driven by contributions from Westport's operating business units, Westport's share of net income (loss) from the joint ventures, and service revenue earned from Westport's development partners.
|($ in millions, except per share amounts)||3 months|
ended MAR 31
Better / (Worse)
|Consolidated revenues||$ 41.9||$ 30.1||39%|
|Consolidated gross margin||12.3||8.1||52%|
|Consolidated gross margin percentage||29.4%||26.9%||-|
(Research and development, general and administrative, and selling)
|(Loss) Income from unconsolidated joint ventures||(0.4)||1.7||(124%)|
|Consolidated Adjusted EBITDA
(The reconciliation of Adjusted EBITDA is described below)
|Cash and short-term investments balance||183.9||173.9||6%|
|Net loss per share||(0.38)||(0.57)||33%|
|($ in millions)||Three months ended|
|Mar 31, 2014||Dec 31, 2013||Sep 30, 2013||Jun 30, 2013|
|Applied Technologies||$ 0.1||$ 1.6||$ 2.1||$ 2.8|
|Total Operating Business Units Adjusted EBITDA||(1.6)||(8.4)||(8.6)||(8.9)|
|($ in millions)||3 months|
ended Mar 31
BETTER / (WORSE)
|Revenue||$ 80.1||$ 44.7||79%|
|Gross margin percentage||9.5%||27.5%||-|
|Gross margin percentage excluding warranty adjustments||28.2%||36.0%||-|
|Segment operating (loss) income||(2.1)||1.5||(240%)|
|Net (loss) income to Westport||(0.8)||0.8||(200%)|
Note: Comparative periods have been recast to conform to current segment presentation.
|($ in millions)||3 months|
ended mar 31
BETTER / (WORSE)
|Revenue||$ 113.4||$ 105.9||7%|
|Gross margin percentage||5.6%||6.6%||-|
|Segment operating income||1.7||3.3||(48%)|
|Westport 35% interest||0.5||1.0||(50%)|
Adjusted EBITDA is used by management to review operational progress of its business units and investment programs over successive periods and as a long-term indicator of operational performance since it ties closely to the unit's ability to generate sustained cash flows. Westport defines Adjusted EBITDA as net income (loss) attributed to the business unit or the consolidated company excluding expenses for (a) income taxes, (b) depreciation and amortization, (c) interest expense, net, (d) non-cash and other unusual adjustments, (e) amortization of stock-based compensation, and (f) unrealized foreign exchange gain or loss. Adjusted EBITDA includes Westport's share of income (loss) from the joint ventures (JVs). 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 Westport'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 Westport's actual cash expenditures. Other companies may calculate similar measures differently than Westport, limiting their usefulness as comparative tools. Westport compensates for these limitations by relying primarily on its U.S. GAAP results and using Adjusted EBITDA only supplementally.
|($ in millions)||3 months|
ended Mar 31
|Net loss||$ (23.9)||$ (31.8)|
|Provision for income taxes||-||0.3|
|Depreciation and amortization||4.3||3.6|
|Interest expense, net||0.8||1.2|
|Non-cash and other unusual adjustments||0.9||-|
|Amortization of stock-based compensation||4.7||3.4|
|Unrealized foreign exchange (gain) loss||(8.9)||(3.0)|
|Adjusted EBITDA||$ (22.1)||$ (26.3)|
|* Excluding non-cash and other unusual adjustments related to the first generation of Westport™ HPDI systems.|
|($ in millions)||Segment |
Share of Income
from the JVs
|For the 3 months ended Mar. 31, 2014|
|Operating Business Units||$(2.7)||$-||$1.1||$(1.6)|
|Corporate and Technology Investments||(24.3)||(0.4)||4.2||(20.5)|
|For the 3 months ended Dec. 31, 2013|
|Operating Business Units*||(9.5)||-||1.1||(8.4)|
|Corporate and Technology Investments||(20.4)||3.5||2.1||(14.8)|
|For the 3 months ended Sep. 30, 2013|
|Operating Business Units||(10.9)||-||2.3||(8.6)|
|Corporate and Technology Investments||(16.0)||3.7||1.4||(10.9)|
|For the 3 months ended Jun. 30, 2013|
|Operating Business Units||(10.8)||-||1.9||(8.9)|
|Corporate and Technology Investments||(25.7)||4.6||2.2||(18.9)|
This press release includes financial outlook information for Westport and such information is being provided for the purpose of updating prior revenue disclosure and may not be appropriate for, and should not be relied upon for, other purposes.
To view Westport’s full financials for the quarter ended March 31, 2014, please see our Financial Information page.
To view unaudited historical financial information, please visit our Financial Information page. Westport is providing this supplement as a guide to Westport’s financial information in a quick reference format and it should be read in conjunction with Westport’s full financials for the quarter ended March 31, 2014 and Westport’s full financials for the year ended December 31, 2013. The Supplementary Financial Information contains previously undisclosed quarterly unaudited historical financial information based on the most recent reporting structure that was implemented in the fourth quarter of 2013 and is being provided in order to allow readers to better reconcile such information with the prior reporting structure.
Westport has scheduled a conference call for today, Thursday, May 1, 2014 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 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 Investors page.
To access the conference call replay, please dial 1-800-319-6413 (Canada & USA toll-free) or 604-638-9010 using the pass code 1847. The replay will be available until May 8, 2014. Shortly after the conference call, the webcast will be archived on Westport website and replay will be available in streaming audio, a downloadable MP3 file, and a slidecast.
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.
This press release contains forward-looking statements, including statements regarding the anticipated timing for Westport's operating business units and consolidated business to be Adjusted EBITDA positive, revenue expectations, growth in core markets, production capacity for HPDI injectors, the effect of the recent reorganization and restructuring of our business, timing for launch, delivery and completion of milestones related to the products referenced herein, including but not limited to the Weichai Westport WD10 engine, the demand for our products, the future success of our business and technology strategies, investment in new product and technology development and otherwise, cash and capital requirements, intentions of partners and potential customers, the performance and competitiveness of Westport's products and expansion of product coverage, future market opportunities, speed of adoption of natural gas for transportation and terms and timing of future agreements as well as Westport 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 and uncertainties 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, operating expenses, the availability and price of natural gas, global government stimulus packages, the acceptance of and shift to natural gas vehicles, the relaxation or waiver of fuel emission standards, 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 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.
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