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May 11, 2017
Q1 2017 Conference Call Presentation May 11, 2017 NANCY GOUGARTY - - PowerPoint PPT Presentation
Q1 2017 Conference Call Presentation May 11, 2017 NANCY GOUGARTY - - PowerPoint PPT Presentation
Q1 2017 Conference Call Presentation May 11, 2017 NANCY GOUGARTY > Chief Executive Officer MARKET LEADERSHIP Broad Range of Brands and Products for Diverse Applications BRAND EQUITY IN ALTERNATIVE FUEL SPACE BREADTH OF REACH Heavy-Duty
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MARKET LEADERSHIP
Broad Range of Brands and Products for Diverse Applications
Medium-Duty Heavy-Duty Passenger Car & Light Truck
BRAND EQUITY IN ALTERNATIVE FUEL SPACE BREADTH OF REACH
CNG Refueling Electronics High Horsepower
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INDUSTRY EXPERIENCED EXECUTIVE TEAM
Clear Alignment of Goals
Ashoka Achuthan
CFO
- 20+ years of Senior
Finance roles with Siemens in Asia, Europe and North America
- Proven track record of
financial management, investments and driving profitability
- Board member of Cummins
Westport and Weichai Westport
Andrea Alghisi
COO,
Automotive & Industrial Group
- Previous COO of Fuel
Systems Solutions
- Managing Partner of
AlixPartners
- 20+ years of consulting
experience leading performance improvement and growth strategy programs in the automotive and industrial goods industries with major OEMs and Tier 1 suppliers
Thom Rippon
CTO,
EVP of Engineering
- Extensive tenure at
General Motors in North America & Asia
- 40+ years of program
management, powertrain and manufacturing experience in the automotive sector
- Member of Cummins
Westport Board of Directors
Jack Keaton
EVP,
Innovation Group
- Extensive experience
at General Motors in various countries, functions and joint ventures around the globe
- 30+ years of product
development, program management and
- perational
experience in the automotive sector
Jim Arthurs
EVP,
Electronics Chairman, Cummins Westport Inc.
- Senior positions with
Westport since 2011
- Past President of Cummins
Westport Inc.
- Operations, sales and
executive management positions with IBM, Weyerhaeuser, Loewen Group, and Jim Pattison Group
- Current Chairman of the
Board of Directors for Cummins Westport
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AUTOMOTIVE CORPORATE & TECHNOLOGY JOINT VENTURES
- Systems and components for
Passenger cars, Commercial vehicles, Trucks
- Electronics and High
pressure components
- CNG Refueling
- OEM & Aftermarket
- Advanced Engineering
- GDI / PFI technology
- HPDI (High Pressure Direct
Injection Engine technology)
- HESI (High Efficiency Spark
ignited engine technology)
- Cryogenics (Fuel Storage and
delivery solutions)
- Cummins Westport Inc.
- Medium to Heavy-Duty
engine markets (trucks, buses, refuse trucks & tractors)
Westport Fuel Systems
CONTINUING OPERATIONS
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High pressure CNG lines CNG cylinder valve Filling valve & external CNG filling valve CNG & LPG reducer Fuel injection rail CNG & LPG filter Electronic controls
AUTOMOTIVE SEGMENT
Advanced Components for Gaseous Fuels
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> 50%/50% joint venture with Cummins Inc. formed in 2001 > Develops and sells 6 to 12 liter spark-ignited natural gas
engines for trucks and buses. Based on Cummins diesel platforms, built in Cummins engine plants
> Over 70,000 Cummins Westport engines in service worldwide
CUMMINS WESTPORT JOINT VENTURE
Global Leader in Spark Ignited Natural Gas Engines
LN9 ISX12 N B6.7N
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TRUCK SOLUTION
CORPORATE AND TECHNOLOGY SEGMENT
WESTPORT™ HPDI TECHNOLOGY
*Series production components available for delivery to OEM AVL is the world's largest independent company for the development of powertrain systems with internal combustion engines. https://www.avl.com/web/guest/company
Start HPDI 2.0 Program HPDI 1.0 Launched LAUNCH*
2010 2011 2012 2013 2014 2015 2016
2017
HPDI 1.0 Production Ended “OEMs will not be able to avoid implementing HPDI technology in order to fulfill greenhouse gas (“GHG”) limit values. When using renewable natural gas, GHG emissions could be reduced by more than 80 percent compared to
- diesel. AVL believes this is a significant reason for vehicle manufacturers’
high interest in HPDI technology”. AVL, lastauto omnibus magazine, July 2016
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ANDREA ALGHISI
> Chief Operating Officer, Automotive
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> Solid and improved overall performance, restructuring and realignment efforts yielding results > Additional initiatives underway to drive further A-EBITDA contributions
AUTOMOTIVE SEGMENT
- 1. Adjusted EBITDA is a Non-GAAP number
($ in millions)
3 Months Ended
Total Revenues $56.4
$59.1
Gross Margin $13.8 $12.4 GM% 25.0% 20.1%
Adjusted EBITDA1
$3.6 $0.4
Adjusted EBITDA %1
6.4% 0.7%
AUTOMOTIVE
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ASHOKA ACHUTHAN
> Chief Financial Officer
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> Cash and cash equivalents of $47.7 million at March 31, 2017 > Closed the sale of APU assets in April, net proceeds of approximately $60 million > In negotiation for the sale of another non-core asset > On track to exceed initial merger synergy targets by the end of 2017 > HPDI 2.0 commercial components to launch in 2017, leading to reduced spending in 2018
STRONG START TO 2017
ADJUSTED EBITDA1,2
($ in millions)
Quarter Ended Adjusted EBITDA1,2 ($11.9) ($11.7) ($10.8) ($11.0) ($4.1)
- 1. 2016 numbers adjusted to exclude the impact of discontinued operations
- 2. this is a Non-GAAP number
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> Improving overall performance > Q1 gross margins return to more normalized levels > Strong customer interest in the new 2018 engine lineup
CUMMINS WESTPORT
($ in millions)
3 Months Ended Total Revenues $70.7 $65.0 Gross Margin $21.8 $16.6 GM% 30.8% 25.6% Research & Development 10.8 9.0 General & Administrative 0.3 0.3 Sales & Marketing 5.5 6.3 Income before tax $5.2 $0.8
- 1. Adjusted for warranty policy changes, see note 8 of our financial statements for further information
CWI
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R&D SG&A
SG&A AND R&D1
($ in millions)
3 Months Ended 3/31/2017 12/31/2016 9/30/2016 Automotive $8.7 $8.9 $7.4 Corporate and Technology $6.5 $5.8 $9.5 Total SG&A $15.2 $14.7 $16.9
($ in millions)
3 Months Ended 3/31/2017 12/31/2016 9/30/2016 Automotive $3.7 $4.2 $4.9 Corporate and Technology $8.3 $10.6 $9.4 Total R&D $12.0 $14.8 $14.3
- 1. 2016 numbers adjusted to exclude the impact of discontinued operations
Ongoing initiatives to reduce expenses costs and align costs with revenues A more focused product portfolio, R&D cost to decline with HPDI commercial launch
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QUARTERLY CASH WALK
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> Expect 2017 Automotive segment revenues in the range of $200-$230 million > Industrial segment recorded in Discontinued Operations > Adjusted EBITDA positive in early 2018 > Efforts underway to further strengthen balance sheet
OUTLOOK
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Q&A
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This presentation contains forward-looking statements, including statements regarding Westport's operating business units and consolidated business, revenue, liquidity and cash usage expectations, future revenues and the timing for achieving positive Adjusted EBITDA, the anticipated timing and benefits of transactions including the referenced transaction for non-core assets, timing and benefits of financing options, continued research and development investment, future of our development programs, timing for launch, delivery and completion of milestones related to the products referenced herein (including HPDI commercialization) and to the integration of Westport’s and Fuel Systems’ businesses and the
- btaining of related synergy targets, future sales of assets and the benefits therefrom, future sales of products and gross margin, the demand for and future availability of our
products, the future success of our business and technology strategies, the performance and competitiveness of Westport's products and expansion of product coverage, future market opportunities, consolidated footprint. 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
- f 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, regulation and approvals, 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, 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 Westport’s most recent Annual Report on Form 40-F for the year ended December 31, 2016 and other filings made by Westport with securities regulators. Readers should not place undue reliance
- n 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 presentation are not incorporated by reference herein.
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This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the United States Securities Act of 1933, as amended. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly
- r indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including
without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction.