Investor Presentation June 05, 2020 2020
Westport Fuel Systems s at a Glanc nce Renewable Manufacturing Tier 1 Alternative Fuels 7 Global Locations Automotive Supplier 1,400 >100 70 Patents & Global Distributors Countries (Sales) Applications Nasdaq:WPRT / TSX:WPRT PAGE 2
201 019 Highlig light hts: s: Executing ng on our Strategy Transportation revenue increased to $305M • Revenue increased by $35M: up 13% over 2018 and 33% over 2017 • Delive ver Sustai ained Growth Growth mainly due to HPDI ramp in Europe and development revenues • Independent Aftermarket generated an increase of $5.8M • Tripled HPDI volume in Europe, increase volumes to achieve economies of scale • Accelerate HPDI Weichai commercial launch expected 2020 • HPDI 2.0 is the only commercially-available technology that fully and affordably • Commercialization responds to the new European CO 2 regulations for trucks Potential for net-zero carbon for heavy-duty trucking with HPDI and renewable gas • Net income from continuing operations up $41M over 2018 and $62M over 2017 • Align Cost Struct cture with h First full year of positive EBITDA of $24.9M and adjusted EBITDA of $28.4M • Revenue ue to Improve ve Cash h Seventh consecutive quarter of positive adjusted EBITDA • Flow & Operat ating Resul ults Significant YoY improvement in adjusted cash flow from operations of $14M • Nasdaq:WPRT / TSX:WPRT PAGE 3
1Q20 Headli line ne Financ ncia ial l Result lts • Consolidated revenue of $67.2 million, a decrease of $6.0 million or 8% compared to the same period last year • Adjusted EBITDA of -$3.6 million, lower compared to $7.3 million in 1Q19, due primarily to a one-time field service campaign cost of $10.0 million and not including expected insurance recoveries • Successful efforts to shore up the balance sheet and improve liquidity: • $6 million in 2020 principal payment deferrals to Export Development Canada (EDC) • € 5 million loan secured through UniCredit • $10 million bridge facility with EDC • $4 million in wage subsidies expected in Q2 via government support programs in Canada, Italy and the Netherlands Nasdaq:WPRT / TSX:WPRT PAGE 4
2020 Strategic ic Object ctive ives 1. The successful commercial launch of Westport HPDI 2.0™ in China. 2. Material and structural cost reductions to improve margins and cash flow. 3. New light-duty and heavy-duty OEMs in key market geographies. 4. Profitable growth of our light-duty product sales through aftermarket and OEM channels. PAGE 5 Nasdaq:WPRT / TSX:WPRT
Macro Trends Drivin ing Rapid id Change Stringent Regulatory Demand for Clean, Refuelling Renewable Gas for Sustainability Leadership Frameworks Affordable Transport Transport at Scale Infrastructure Build-Out and Differentiation • European CO 2 • • • • CNG and LNG The “ready now” Deploy production Population growth refuelling alternative fuel solutions, not and economic • HD: -15% / -30% infrastructure demonstrations development • Shell building 50 • LD: -33% / -50% expanding across • • carbon neutral LNG Fleet and customer Urban air quality Europe, China and stations in Germany demand for lower- • China VI concerns India. carbon fuels • • UPS purchases 170 • India BS VI Affordability • million DGE of RNG Well-to-wheel required to achieve • Increased anti-diesel analysis of fuel scale sentiment impacts needed Nasdaq:WPRT / TSX:WPRT PAGE 6
We Design, n, Deve velop and Manufa fact cture Alternative ive Fuel Component nts s and Systems s Valves Regulators Injectors Electronics CNG CNG Natural Gas Pressure Tank Regulators Injectors Valves Type 1 CNG Tank System CNG CNG Electronic LPG Injector Fill Control Pressure Rails Valves Modules Reducers LPG Level Sensor Solenoid Cylinder Valves HPDI HPDI LNG Gas Pump Conditioning Integrated Module Bi-Fuel Tank Valve Electronic Regulator Control Modules HPDI H2 Injector Pressure H2 Tank Control Valves Modules HPDI LNG Tank Module Nasdaq:WPRT / TSX:WPRT PAGE 7
Alternative ive Fuel Capabil bilit ities Broad Range of Products that Deliver Emission Reductions LPG CNG LNG H 2 Liquefied Petroleum Compressed Liquefied Hydrogen Gas / Propane / Natural Gas Natural Gas Autogas • High and low pressure • • • Components and complete Components and complete Complete systems components systems systems • Heavy-duty and high • Light- to heavy-duty and • • Light- and medium-duty Light-duty applications – horsepower applications industrial applications applications vapor and liquid LPG • Monofuel and dual fuel • Hydrogen/CNG blends or • • Monofuel, bi-fuel, dual fuel Monofuel, bi-fuel, dual fuel solutions pure hydrogen solutions solutions • The most commonly used alternative fuel in the world All Available as Renewable Fuels Substitute for fossil based fuels Nasdaq:WPRT / TSX:WPRT PAGE 8
Stringent Regulatory Frameworks Driving a Real-Time Market Response Nasdaq:WPRT / TSX:WPRT PAGE 9
Natural al Gas Offers OEMs a C Compl plian ance Pathw hway for Europe’s Light -Du Duty ty Emission Standar dards ds • Path to achieve the 2021 target of 95 The EU’s stringent regulations for passenger cars/vans requires a ~33% g/km is disrupted by reduction in CO 2 emissions in 2025 and ~50% in 2030 compared to 2018. declining diesel share, the growth of petrol, and the growth of Penalties are set at €95 for each SUVs. g/km above the target from 2025. Collectively, the industry trajectory is 20g/km over the target, which would result in an average penalty of € 1,900 per vehicle. Average historical CO 2 emission value and adopted CO 2 standards for new passenger cars in the EU (2019) Source: https://www.theicct.org/sites/default/files/publications/EU-LCV-CO2-2030_ICCTupdate_20190123.pdf and https://www.eea.europa.eu/highlights/average-co2-emissions-from-new Nasdaq:WPRT / TSX:WPRT PAGE 10
HPDI Delive vers s CO 2 Emission Reductions Now… Europe (2019 baseline): The only commercially viable, cost-competitive HD technology -15% CO 2 required by 2025 solution available today to meet EU regulations -30% CO 2 required by 2030 Fossil LNG United States: • HPDI 2.0 reduces CO 2 more than o The 2025 EU requirement with Fossil LNG - Up to 25%** CO 2 reduction -20% o The 2030 EU requirement with just 20% RNG from 2017 through 2027 Penalty for non- compliance in EU is €4,250 per • 20% Renewable gram/ton-km starting in 2025 LNG o Penalty up to €38,000 per truck -34%* Preserves substantial OEM investments • * Assuming recognition of 20% carbon intensity reduction with 20% renewable gas blend and 90% gas energy ratio ** Varies by vehicle class and application Nasdaq:WPRT / TSX:WPRT PAGE 11
Competitive Total Cost of Ownership and Emission Reductions Nasdaq:WPRT / TSX:WPRT PAGE 12
Total l Cost of Ownership hip and Emiss ssio ion Re Reduct ctions s Passenger Cars Heavy-Duty Trucks Petrol LPG CNG Diesel HPDI LNG Incremental price per vehicle €1,000 €1,500 €40,000 Fuel cost ( €/litre or kg) €1.50 €0.65 €0.95* €1.36 €0.95* Annual distance (km) 20,000 20,000 20,000 120,000 120,000 Fuel consumption (km/l or kg)** 12 11 21 3.3 4.8 Annual fuel cost €2,500 €1,200 €900 €49,000 €23,900 Annual Fuel Cost Savings €1,300 €1,600 €25,100 Payback (months) 9 11 19 CO 2 Emission Reductions (%)*** ~20% ~25% ~20% FOR ILLUSTRATIVE PURPOSES ONLY The actual payback period is dependent upon vehicle transaction prices, annual distance traveled, fuel prices * Euro 0.95/kg = 0.684 Euro/m3 and the impact of taxes and incentives. All of these factors can vary over time and between jurisdictions. ** Average European car Fuel prices as of 11/19 *** Emission reductions greater with blends of renewable gas Nasdaq:WPRT / TSX:WPRT PAGE 13
TM – Commercial HPDI 2.0 TM ally Availab able and Viabl ble Now • Regulation and total Westport cost of ownership Battery Hydrogen Long Haul HD Truck Application Diesel HPDI will drive growth Electric FCV 2.0™ • Same torque and X ✓ ✓ ✓ efficiency as diesel Meet EU 2025/2030 requirements? engine with reduced CO 2 emissions Meet customer requirements? X X ✓ ✓ • Range, payload, performance, durability • No change to engine • Operations, refuel/recharge time architecture X X ✓ X ➔ ✓ • Minimal change to Refueling Infrastructure? vehicle architecture X X ✓ ✓ Commercially available and viable? Total Cost of Operation Baseline Lower Higher Higher Nasdaq:WPRT / TSX:WPRT PAGE 14
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