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Westport Fuel Systems Reports Fourth Quarter and Full Year 2023 Results
Friday, April 12, 2024Company Profile | Careers | Follow Company
Vancouver, BC, April 9, 2024--(T-Net)--Westport Fuel Systems Inc. (TSX: WPRT) (Nasdaq: WPRT) today reported financial results for the fourth quarter and year ended December 31, 2023, and provided an update on operations.
All figures are in U.S. dollars unless otherwise stated.
Dan Sceli, CEO, Westport Fuel Systems
"I am privileged to report that despite challenges last year, we achieved new milestones, evolved strategically, and prioritized operational efficiency and financial strength and, in doing so, we generated record revenues. Consistent with our priority to drive sustainable growth, our team increased sales volumes in our delayed OEM and electronics, and fuel storage businesses, while also increasing the engineering services we delivered in our heavy-duty OEM business."
said Dan Sceli, Chief Executive Officer.
"As we progress, Westport is dedicated to growth and adaptability, continuing to innovate and evolve with the ever-changing regulatory and macro-economic landscapes. Anticipating the road ahead, I am resolved to steer Westport through strategic and decisive actions. Our success hinges on seamlessly integrating disciplined operations with a robust strategic framework. To this end, I will guide our efforts towards three essential pillars: harnessing the potential of our HPDI joint venture to drive success, enhancing operational excellence, and continuous innovation to shape the world's hydrogen-powered future. We have a lot of work ahead of us. With a dedicated team and the unwavering pursuit of excellence, I have full confidence in our capacity to not only meet but exceed our objectives."
Financial Highlights
Consolidated Results |
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($ in millions, except per share amounts) |
Over / (Under) % |
Over / (Under) % |
||||
4Q23 |
4Q22 |
FY23 |
FY22 |
|||
Revenues |
$ 87.2 |
$ 78.0 |
12 % |
$ 331.8 |
$ 305.7 |
9 % |
Gross Margin(2) |
8.0 |
4.6 |
74 % |
48.9 |
36.2 |
35 % |
Gross Margin %(2) |
9 % |
6 % |
— |
15 % |
12 % |
— |
Income from investments accounted for by the equity method (1) |
0.1 |
— |
— |
0.8 |
0.9 |
(11) % |
Net Income (Loss) from Continuing Operations |
(13.9) |
(16.9) |
18 % |
(49.7) |
(32.7) |
(52) % |
Net Income (Loss) per Share from Continuing Operations |
(0.81) |
(1.00) |
19 % |
(2.90) |
(1.91) |
(52) % |
EBITDA (2) |
(10.9) |
(13.5) |
19 % |
(35.9) |
(17.5) |
(105) % |
Adjusted EBITDA (2) |
(10.0) |
(12.9) |
22 % |
(21.5) |
(27.8) |
23 % |
(1) |
This includes income primarily from our Minda Westport. joint venture. |
(2) |
These financial measures and ratios are non-GAAP measures. Please refer to GAAP and NON-GAAP FINANCIAL MEASURES for the reconciliation. |
Operational Highlights
Westport closed 2023 focused on driving sustainable growth in our existing markets, unlocking new and emerging markets, driving operational excellence, and extracting efficiencies through prudent capital management. Based on these priorities, Westport can report several achievements that occurred during and subsequent to the fourth quarter of 2023.
__________________________ |
1 Adjusted earnings before interest, taxes and depreciation is a non-GAAP measure. Please refer to GAAP and NON-GAAP FINANCIAL MEASURES in Westport's Management Discussion and Analysis for the reconciliation. |
Segment Information
Original Equipment Manufacturer ("OEM")
OEM revenue for the three months and year ended December 31, 2023 was $61.2 million and $222.8 million, respectively, compared with $47.8 million and $198.0 million for the three months and year ended December 31, 2022. The increase of $13.4 million as compared to the fourth quarter 2022 was primarily driven by higher sales volumes in the light-duty OEM and electronics businesses and higher engineering service revenue from the heavy-duty OEM business. This was partially offset by lower sales volumes in heavy-duty OEM, delayed OEM and fuel storage businesses compared to the prior year.
Revenue for the year ended December 31, 2023 increased by $24.8 million compared to the prior year, primarily driven by increased sales volumes in the delayed OEM, electronics and fuel storage businesses, and higher engineering service revenue from the heavy-duty OEM business as well as increased sales volumes in Eastern Europe for our light duty business. This was partially offset by lower sales volumes in our hydrogen business and lower sales in the light-duty OEM business in India.
Gross margin2 increased by $1.6 million to $0.8 million, or 1% of revenue for the three months ended December 31, 2023, compared to negative $0.8 million, or negative 2% of revenue, for the same prior year period. The increase in gross margin for the three months ended December 31, 2023 is driven primarily by increased sales volumes in the light-duty OEM and electronics businesses, as well as increased gross margin in the heavy-duty OEM business due to higher engineering service revenue. The heavy-duty OEM business was negatively impacted by a $4.5 million inventory write-down. In addition, the increased gross margin is partially offset by lower sales volumes in the fuel storage business, a negative sales mix in the hydrogen business, and the higher production input costs stemming from global supply chain challenges and inflation in logistics, utilities, labor and other costs, which we have only partially been able to pass on to our OEM customers.
Gross margin for the year ended December 31, 2023 increased by $11.7 million to $25.3 million, or 11% of revenue, compared to $13.6 million, or 7% of revenue, for the prior year. The increase in gross margin and gross margin percentage for the year ended December 31, 2023 is primarily driven by higher contribution margins from engineering services and higher volumes sales in the delayed OEM and fuel storage businesses. This was offset by lower margins in the hydrogen business due to lower sales volumes and a negative impact on the heavy-duty OEM business due to a $4.5 million inventory write-down.
_______________________________ |
2 Gross margin is a non-GAAP measure. Please refer to GAAP and NON-GAAP FINANCIAL MEASURES in Westport's Management Discussion and Analysis for the reconciliation. |
Independent Aftermarket
Revenue for the three months and year ended December 31, 2023 was $26.0 million and $109.0 million, respectively, compared with $30.2 million and $107.7 million for the three months and year ended December 31, 2022. The decrease in revenue for the three months ended December 31, 2023 was $4.2 million compared to the prior year period was primarily driven by lower sales volumes in the Africa and South America markets offset by increased sales volumes in Europe. The increase in IAM revenue for the year ended December 31, 2023 was $1.3 million compared to the prior year, primarily driven by higher sales volumes to South America offset by lower sales to Europe and Africa.
Gross margin for the three months ended December 31, 2023 increased by $1.8 million to $7.2 million, or 28% of revenue, compared to $5.4 million, or 18% of revenue, for the same prior year period, primarily driven by the positive sales mix, lower electronic component costs and increased volumes sales in Europe.
Gross margin for the year ended December 31, 2023 increased by $1.0 million to $23.6 million, or 22% of revenue, compared to $22.6 million, or 21% of revenue, for the prior year, primarily driven by higher margins and a positive sales mix in South America. This was partially offset by a negative sales mix in Africa.
SEGMENT RESULTS |
4Q23 |
||||||
Revenue |
Operating income (loss) |
Depreciation & amortization |
Equity income |
||||
OEM |
$ 61.2 |
$ (11.7) |
$ 2.5 |
$ 0.1 |
|||
IAM |
26.0 |
1.9 |
0.6 |
— |
|||
Corporate |
— |
(4.3) |
0.1 |
— |
|||
Total consolidated |
$ 87.2 |
$ (14.1) |
$ 3.2 |
$ 0.1 |
SEGMENT RESULTS |
4Q22 |
||||||
Revenue |
Operating income (loss) |
Depreciation & amortization |
Equity income |
||||
OEM |
$ 47.8 |
$ (12.8) |
$ 1.8 |
$ — |
|||
IAM |
30.2 |
0.6 |
0.8 |
— |
|||
Corporate |
— |
(5.0) |
0.1 |
— |
|||
Total consolidated |
$ 78.0 |
$ (17.2) |
$ 2.7 |
$ — |
2024 Outlook
The alternative fuels industry is becoming more dynamic, driven by increased investment, industrial applications, and policy support. Specifically, the hydrogen project pipeline has approximately 1,400 projects announced globally, with investments totaling US$570 billion and 45 million tons per annum of clean hydrogen supply announced through 20303. Over the same period, hydrogen is expected to not only become more available but also more affordable.
As government policies and regulatory changes worldwide accelerate the shift towards zero emissions, Westport's alternative fuel-based solutions enable its customers to deliver cleaner performance with practical and affordable applications today. We expect demand for our products and services to continue increasing and the widespread transition to hydrogen-based transport to be competitive with traditional fuels by the 2030s.
As we progress, Westport is dedicated to growth and adaptability, continuing to innovate and evolve with the ever-changing regulatory and macro-economic landscape. Our efforts in 2024 will be guided towards three essential pillars: harnessing the potential of our HPDI joint venture to drive success, enhancing operational excellence, and continuous innovation to shape the world's hydrogen-powered future. Our success relies on these three essential pillars over the near-, medium- and long-term, respectively:
1) Driving Success Via Our HPDI Joint Venture
Our HPDI joint venture marks a new era for Westport, culminating over two decades of dedication and innovation. The joint venture is a cornerstone of Westport's business strategy moving forward and it is time to innovate and drive growth together.
Looking to the future, the joint venture will leverage the collective expertise of the partners, capitalize on growth opportunities, and solidify our position as a leader in alternative fuels.
2) Improving Operational Excellence
We are relentless in our pursuit of operational excellence, embarking on bold initiatives to streamline processes, enhance efficiency, and reduce costs. Notably, our restructuring endeavors in India exemplify our commitment to optimizing capital efficiency and maximizing throughput across all operational fronts.
We are starting to deploy a combination of levers to grow earnings and improve profitability, including implementing significant cost-cutting measures expected to encompass both operating and general and administrative expenses.
3) Reimagining A Hydrogen-Powered Future
Embracing the potential for alternative fuels, particularly hydrogen, is exciting as we position ourselves at the forefront of this transformative shift. Armed with advanced technological capabilities, leveraging our existing hydrogen components business and a deep understanding of the market dynamics and customer needs, we are primed to capitalize on emerging growth opportunities while maintaining our commitment to sustainability and relevance in an ever-evolving landscape.
_______________________ |
3 Source: Hydrogen Insights 2023", Hydrogen Council and McKinsey & Company, December 2023 |
Financial Statements and Management's Discussion and Analysis
To view Westport full financials for the fourth quarter and year ended December 31, 2023, please visit https://investors.wfsinc.com/financials/
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 transportation 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.
Additional Details on Earnings Report GAAP and Non-GAAP Financial Measures Our financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These U.S. GAAP financial statements include non-cash charges and other charges and benefits that may be unusual or infrequent in nature or that we believe may make comparisons to our prior or future performance difficult. [ MORE ] |
Forward Looking Information This press release contains "forward-looking information" within the meaning of applicable securities laws ("forward looking statements"). Forward looking statements are frequently characterized by words such as "expect", "intend", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. [ MORE ] |
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