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 Passenger Car & Light Truck Medium-Duty High Horsepower CNG Refueling Electronics PAGE 3
INDUSTRY EXPERIENCED EXECUTIVE TEAM Clear Alignment of Goals Ashoka Andrea Jack Jim Thom Keaton Arthurs Alghisi Rippon Achuthan COO, CTO, EVP, EVP, CFO Automotive EVP of Innovation Group Electronics & Industrial Group Engineering Chairman, Cummins Westport Inc. • • • 20+ years of Senior • Previous COO of Fuel • Extensive tenure at Extensive experience Senior positions with Systems Solutions at General Motors in Westport since 2011 Finance roles with Siemens General Motors in North various countries, in Asia, Europe and North America & Asia • Managing Partner of • Past President of Cummins America functions and joint • 40+ years of program AlixPartners Westport Inc. ventures around the • Proven track record of management, powertrain globe • 20+ years of consulting • Operations, sales and financial management, and manufacturing experience leading • executive management 30+ years of product investments and driving experience in the positions with IBM, performance improvement development, profitability automotive sector and growth strategy Weyerhaeuser, Loewen program • Board member of Cummins • Member of Cummins programs in the automotive Group, and Jim Pattison management and Westport and Weichai and industrial goods Westport Board of Group operational Westport industries with major OEMs Directors experience in the • Current Chairman of the and Tier 1 suppliers automotive sector Board of Directors for Cummins Westport PAGE 4
CONTINUING OPERATIONS Westport Fuel Systems AUTOMOTIVE CORPORATE & JOINT VENTURES TECHNOLOGY • Systems and components for • Advanced Engineering • Cummins Westport Inc. Passenger cars, Commercial • GDI / PFI technology • Medium to Heavy-Duty vehicles, Trucks engine markets (trucks, • HPDI (High Pressure Direct • Electronics and High buses, refuse trucks & Injection Engine technology) pressure components tractors) • HESI (High Efficiency Spark • CNG Refueling ignited engine technology) • OEM & Aftermarket • Cryogenics (Fuel Storage and delivery solutions) PAGE 5
AUTOMOTIVE SEGMENT Advanced Components for Gaseous Fuels CNG & LPG Fuel injection rail filter CNG cylinder valve Electronic controls High pressure Filling valve & external CNG lines CNG filling valve CNG & LPG reducer PAGE 6
CUMMINS WESTPORT JOINT VENTURE Global Leader in Spark Ignited Natural Gas Engines > 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 LN9 ISX12 N B6.7N PAGE 7
CORPORATE AND TECHNOLOGY SEGMENT WESTPORT™ HPDI TECHNOLOGY HPDI 1.0 HPDI 1.0 Production LAUNCH* Launched Ended 2010 2011 2012 2013 2014 2015 2016 2017 Start HPDI 2.0 Program TRUCK SOLUTION “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 *Series production components available for delivery to OEM PAGE 8 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
ANDREA ALGHISI > Chief Operating Officer, Automotive
AUTOMOTIVE SEGMENT > Solid and improved overall performance, restructuring and realignment efforts yielding results > Additional initiatives underway to drive further A-EBITDA contributions AUTOMOTIVE 3 Months Ended ($ in millions) $ 56.4 $59.1 Total Revenues Gross Margin $13.8 $12.4 GM% 25.0% 20.1% Adjusted EBITDA 1 $3.6 $0.4 Adjusted EBITDA % 1 6.4% 0.7% PAGE 10 1. Adjusted EBITDA is a Non-GAAP number
ASHOKA ACHUTHAN > Chief Financial Officer
STRONG START TO 2017 > Cash and cash equivalents of $47.7 million at March 31, 2017 > Closed the sale of APU assets in April, net proceeds of approximately $60 million > In negotiation for the sale of another non-core asset > On track to exceed initial merger synergy targets by the end of 2017 > HPDI 2.0 commercial components to launch in 2017, leading to reduced spending in 2018 ADJUSTED EBITDA 1,2 Quarter Ended ($ in millions) Adjusted EBITDA 1 ,2 ($11.9) ($11.7) ($10.8) ($11.0) ($4.1) 1. 2016 numbers adjusted to exclude the impact of discontinued operations PAGE 12 2. this is a Non-GAAP number
CUMMINS WESTPORT > Improving overall performance > Q1 gross margins return to more normalized levels > Strong customer interest in the new 2018 engine lineup CWI 3 Months Ended ($ in millions) 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 $0.8 PAGE 13 1. Adjusted for warranty policy changes, see note 8 of our financial statements for further information
SG&A AND R&D 1 Ongoing initiatives to reduce expenses costs SG&A and align costs with revenues 3 Months Ended ($ in millions) 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 $16.9 A more focused product portfolio, R&D cost R&D to decline with HPDI commercial launch 3 Months Ended ($ in millions) 3/31/2017 12/31/2016 9/30/2016 $3.7 $4.2 $4.9 Automotive Corporate and Technology $8.3 $10.6 $9.4 Total R&D $12.0 $14.8 $14.3 PAGE 14 1. 2016 numbers adjusted to exclude the impact of discontinued operations
QUARTERLY CASH WALK PAGE 15
OUTLOOK > 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 PAGE 16
Q&A
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