Natural Gas as a Transportation Fuel October 2010 Forward Looking - - PowerPoint PPT Presentation

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Natural Gas as a Transportation Fuel October 2010 Forward Looking - - PowerPoint PPT Presentation

Natural Gas as a Transportation Fuel October 2010 Forward Looking Statements This presentation contains forward-looking statements that are based on the beliefs of Westports management and reflect Westports current expectations. Investors


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Natural Gas as a Transportation Fuel

October 2010

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Forward Looking Statements

This presentation contains forward-looking statements that are based on the beliefs of Westport’s management and reflect Westport’s current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in these forward-looking statements, including, without limitation, Westport’s ability to develop viable fuel systems; Westport’s ability to provide the capital required for research, product development, operations, and marketing; product development, production and commercial launch delays; changing environmental regulations; Westport’s ability to attract and retain key personal and business partners; competition from conventional diesel fueled engines; and Westport’s ability to protect its intellectual property. These factors should be considered carefully and investors should not rely on any forward- looking statements. Investors are encouraged to review Management’s Discussion and Analysis and the Risk Factors section in Westport’s most recently filed Annual Information Form and filings with securities regulators for a more complete discussion of factors that could affect Westport’s future performance. We undertake no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by law. All figures are in U.S. dollars unless otherwise stated.

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Westport at a Glance

  • Headquartered in Vancouver, B.C.
  • Toronto Stock Exchange: “WPT” - NASDAQ: “WPRT”
  • Market cap ~C$692 million (~U.S.$651 million)

Market Focus Position Strategy

  • Transformation of markets for

petroleum-fueled engines to alternative fuels

  • Global leader in medium- and

heavy-duty commercial vehicle engines operating on alternative fuels

  • Market penetration via OEM

partnerships and JVs; All manufacturing outsourced

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Deep and Comprehensive IP

  • Global patent portfolio

pivotal to Westport’s market leading position

  • Core competencies in

alternative fuel technologies

  • 65 U.S. patents as of

August 4, 2010

Compressors HPDI Cryogenic Storage / Delivery CNG Direct Injection

Technologies

Hydrogen Direct Injection Aftertreatment Systems

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Recognized Leadership

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Investment Highlights

Highly Profitable and Capital Efficient Business Model Natural Gas Vehicle Market Appears to be Approaching a Global Tipping Point Strategic Alliances with Industry Leaders Creating Highly Scalable Business Model and Significant Barriers to Entry Dominant Market Position in Medium- and Heavy-Duty Natural Gas Engine Market Working with Five of Top Six Truck Producers and Three of the Top Four Engine Producers Globally

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Growing Policy Support for Natural Gas Globally

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  • Proposes incentive for the adoption of

natural gas as a transportation fuel:

– $3.8 billion rebates available for 75-90%

  • f the incremental cost of natural gas

vehicles, up to a maximum of $64,000 – Rebates are available for qualified vehicles put into service between 2013 and 2015 – Rebates are not considered taxable income to a qualified owner – Grants of up to $50,000 per unit to qualified refuelers for installation of natural gas infrastructure put into service between 2011 and 2015

  • Additional $2 billion loans available for

manufacturers to re-equip, expand or establish a facility to produce any new qualified alternative motor fuel vehicle or component

  • $300 million in funding for 25 projects

– Aims to deploy over 9,000 alternative fuel vehicles and 542 refueling stations – Funding for approximately 2,300 CNG vehicles and 500 LNG trucks was awarded

  • We anticipate a significant portion of

these 2,800 vehicles will use Westport engines

  • EU – Requires a portion of government

vehicles purchased to run on alternative fuels

  • Italy – purchase credit erases differential
  • India / China – Both have expressed their

desire to move towards less polluting fuels over the next five years

Clean Energy Jobs Bill DOE Clean Cities Program Global Initiatives

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Market Strategy

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Target Market Segments

Segment (Engine Size)

Light Duty (1 – 5 litre) Medium Duty (5.9 – 9 litre) Heavy Duty (11 – 16 litre) High Horsepower (> 16 litres)

Applications Westport Business Unit Business Unit Summary

  • First Revenue Q1/FY11
  • Acquired OMVL for

$23M (July 2010)

  • High volume market
  • OEM focus
  • LTM Revenue $116m
  • Launched 2001
  • Profitable since 2004
  • CY2006-2009 CAGR ~30%
  • LTM revenue $10m
  • First product 2007
  • Shifting to long haul in the U.S.
  • Largest potential market
  • OEM Partnerships with:

– Cummins – Volvo – Weichai 9

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Global Leader: Natural Gas Bus and Truck Engines

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School Buses Delivery Vehicles Refuse Haulers Transit Buses Short-Haul Trucks

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CWI Business Model

A leader in gaseous fuel engine technology and market creation A leading independent builder of commercial diesel engines with global production and distribution

  • 50:50 JV established in 2001
  • Minimal working capital / capital investment

required

  • Sells mid-range alternative fuel 5.9- to 8.9-

liter engines to vehicle OEM’s globally

  • 25,000+ natural gas engines, engine kits sold

to date

  • Production in North Carolina, China and India
  • 29.5% revenue CAGR from CY 2005-2009;

profitable since CY 2004

  • Market penetration: approx 20% of U.S.

transit bus; estimate similar rate in refuse truck markets

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CWI’s Future Objectives

  • Continue to profitably grow revenue
  • Several bright spots:

– Regional truck product launch 2009 (Freightliner, Mack, Peterbilt) – Bus engines in India: deliver Delhi order and expand market – US Stimulus programs (DOE Clean Cities, school bus, refuse)

  • FY2011: growth acceleration with economic recovery
  • Evaluate new products, new markets
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Direct Injection Fuel System

  • Heavy-duty truck natural gas

engine with diesel-equivalent performance, range and efficiency

  • Fuel injectors only change to

engine

  • Proprietary and patented

technology; 9 years development; >$200 million invested

  • Complete LNG fuel solution

including proprietary tanks/fuel pumps integrated with engine

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LNG Truck Launch Partner: Ports of Los Angeles and Long Beach

  • Clean Truck Program announced

November 2006; implemented 2008: heavy port incentives for new trucks

  • Port opportunity created OEM

truck availability:

– Kenworth, Peterbilt (Westport HD) – Sterling, Freightliner (CWI)

  • Despite economic turmoil, over

700 LNG trucks on the road

  • Valuable feedback from fleets

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Addressing the US Truck Market: Infrastructure

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Addressing the Canadian Truck Market: Infrastructure

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Source: Encana Presentation February 23, 2010

  • Proposed Transportation Corridors

East: Quebec City, Quebec to Windsor, Ontario West: Edmonton, Alberta to Vancouver, BC

  • Industry Partners, Federal and Provincial Governments
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50 100 150 200 250 300

Scania Caterpillar MAN CNHTC Cummins Daimler Volvo Weichai

100 200 300 400 500 600 700 800

All Others Scania Shanxi Auto Hino Iveco MAN CNHDTC Ford Navistar Paccar FAW Tata Dongfeng Volvo Daimler

6-16 tonnes > 16 tonnes

(CWI) (CWI / Westport HD)

World Truck Production 2007 (Thousands)

NG Products Supplied by WPRT / CWI

Source: Power Systems Research.

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World Truck and Engine Production

Engine Development Partnerships / Joint Ventures

Source: The World’s Truck Manufacturers, A strategic review of finance and operations, 11th Edition (2008), Edited by Jonathan Storey, Data by Polk-Marketing Systems, Published by Automotive World Ltd., www.automotiveworld.com.

Westport supplies natural gas products to 5 of the top 6 truck (& bus) manufacturers

World Truck Production World Engine Production

Westport has partnerships / joint ventures with 3

  • f the top 4 engine manufacturers

World Engine Production 2007, 9-18 Liter Displacement (Thousands)

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Volvo Collaboration

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  • Commercialization of HD

natural gas engines commenced November 2009

  • Global scope planned
  • Westport and Volvo will

mutually agree on the priority for commercial launch of gaseous fuel engines and will share the risks of development

  • Program will result in an

engine that will meet future emission requirements and be commercialized according to a mutually agreed timeline

  • Responsible for NG

engine development

  • Will supply gas-

related components

  • Will support Volvo in

developing market for natural gas vehicles

  • Will generate

revenue on each new natural gas / biogas engine sold

  • Will reimburse R&D

expenditures on approved engine platforms at passage through successful development gates

  • Will collaborate on

supply chain and cost reduction initiatives by Westport

  • Will manufacture and

market the natural gas vehicles

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Weichai Westport JV

  • JV first announced 2008;

formal JV commenced 2010

  • Existing natural gas bus engine

business demonstrating strong growth

  • Target: HD engines in Asia and

for export

Weichai Westport Inc.

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Hong Kong Peterson (CNG) Equipment Limited 25% share 35% share

  • Technology license
  • Market experience
  • Commitment to supply

fuel system components

  • Existing CNG bus engine

business (50%)

  • Technology license; base

engine design

  • Market presence;

brands; distribution

  • Commitment to

manufacture engines

  • Existing CNG bus engine business

(50%)

  • Market experience

40% share

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Corporate Structure

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  • Formed in October 2007

– Headquartered in Vancouver, Canada – Operations centers in Canada, Italy, Argentina and Korea – Sales in more than 40 countries – Acquired OMVL (Original JV Partner) July 2010

  • Juniper will be a provider of clean

light-duty industrial and automotive engines

– Global focus, competitive pricing – Long term supply partnership with Hyundai

  • f Korea

– Strong global brand in delivering components for automotive business

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Industrial Market Opportunity

  • Juniper is initially targeting the industrial market,

segmented as follows:

– FORKLIFT 1.5-3.5 TON:

  • Estimated market size of 62,000, down from 80,000

units per year prior to the economic slowdown – OILFIELD:

  • The oilfield market includes artificial lift and gas

compression engines

  • Annual sales are not well defined, however Alberta

had 100,000 natural gas wells operating in 2007, and the U.S. had 400,000 – OTHER INDUSTRIAL:

  • Includes agriculture pumping, construction and

power generation

(1) Industrial Truck Association. (2) Cummins Western Canada (CWC) estimates there are more than 10,000 engines sold per year in North America into this segment, mainly natural gas. (3) The Petroleum Education Research Council (PERC) estimates that this segment approximates the forklift segment, or approximately 50,000 units per year in 2008, mainly LPG. Note: In the case of PERC and CWC, certain of data used in compiling these estimates have been provided to Westport through interviews and other informal means but have not been published elsewhere.

22 Oilfield Engines 10,000 Other Industrial Engines 50,000 Forklift Engines 62,000

2008 North American Alternative Fuel Industrial Segments and Unit Sales

(2) (1) (3)

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Acquisition of OMVL

  • Acquired OMVL (Original JV Partner) July 2010

– Designs, manufactures, and markets complete fuelling systems for new OEM light-duty vehicles and for the aftermarket conversion of engines from gasoline (petrol) to CNG and LPG – A leading supplier of alternative fuel kits and components in global markets including Europe, China, and Australia – OEM automotive partnerships in place including Magna-GAZ (Russia) and PSA Peugeot-Citroën (France) – Calendar year 2009: shipped more than 300,000 units (components and systems) and generated revenues of ~$23M

  • Juniper’s light-duty automotive strategy

– Focus on global OEM growth – Leverage OMVL’s capabilities and assembly facilities in Italy and Argentina

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Financials

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Summary Historical Financial Overview

$19.4 $21.9 $27.9 $38.7 $5.6 $8.8 $0 $10 $20 $30 $40 $50 FY 2007 FY 2008 FY 2009 FY 2010 1Q 2010 1Q 2011

Revenue Gross Profit

Margin 36.5% 31.5% 25.3% 31.6% 25.6% 34.4%

$0 $25 $50 $75 $100 $125 FY 2007 FY 2008 FY 2009 FY 2010 1Q 2010 1Q 2011 Westport HD CWI $121.7 $53.1 $69.7 $109.2

Notes:

  • First quarter FY2011 overall growth
  • Q1 revenue grew 17% year over year
  • Q1 gross margin increased from 26% to

34% year over year

$21.8 $25.5

(US$ millions; Westport Fiscal Year ended March 31st)

26% 18% 18% 29% 4% 5% 7% 70% 49% 57% 75% 77% 64% 14% 30% 7% 21% 29%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 Rest of World Asia Americas

Geographic Breakdown

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Business Strategies for FY2011

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  • 1. Continue to profitably grow CWI
  • 2. Expand product coverage to new markets, partners,

product features to position for scalable growth post-recession

  • 3. Accelerate commercialization of HD Truck business

to demonstrate lower total economic cost per mile in this huge global market

  • 4. Build Juniper’s global presence in light-duty

industrial and automotive markets

  • 5. Maintain prudent, focused cash control and strong

balance sheet

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Thank you