[Management View]
Westport Fuel Systems announced its Q4 2024 and full-year results, highlighting a strategic divestiture of its light-duty business to focus on hard-to-decarbonize segments of long-haul heavy-duty transport and industrial space. The company aims to strengthen its financial position and streamline operations.

[Outlook]
Westport plans to close the divestiture by Q2 2025, subject to shareholder approval. The company will focus on HPDI technology and high-pressure controls and systems, with an eye on potential bolt-on acquisitions. The resurgence of natural gas and renewable natural gas, particularly in North America, presents significant growth opportunities.

[Financial Performance]
- Q4 2024 revenue: $75.1 million (down 14% YoY)
- Full-year 2024 revenue: $302.3 million (down 9% YoY)
- Q4 2024 gross margin: $14.3 million (19% of revenue, up from 9% in Q4 2023)
- Full-year 2024 gross margin: $57.6 million (19% of revenue, up from 15% in 2023)
- Q4 2024 adjusted EBITDA loss: $1.8 million (improved from $10.9 million loss in Q4 2023)
- Full-year 2024 adjusted EBITDA loss: $11.2 million (improved from $21.5 million loss in 2023)
- Cash and cash equivalents at end of 2024: $37.6 million (down from $54.9 million at end of 2023)

[Q&A Highlights]
Question 1: Did HPDI drive sales in Q4, and what are the expectations for 2025?
Answer: Q4 volumes increased with OEM customer production builds, and this trend is expected to continue into 2025. The marketplace is adopting HPDI technology, and the business is growing as planned.

Question 2: What is the status of additional OEMs for HPDI?
Answer: Efforts to bring in additional OEMs are ongoing, with active discussions and meetings. The global market is shifting back towards natural gas, which is positively impacting these efforts.

Question 3: How much debt is tied to the light-duty business being divested?
Answer: Approximately $7 million of debt will remain with Westport, with the rest tied to the light-duty business being divested.

Question 4: What is the strategy for the remaining business, and how long will it take to grow the natural gas and hydrogen components?
Answer: The strategy involves increasing HPDI volumes and pivoting to natural gas market opportunities. The high-pressure controls and systems business will leverage its hydrogen-based components expertise to enter the CNG market.

Question 5: What types of M&A opportunities is Westport considering?
Answer: Westport is looking to build out its high-pressure controls into a full system capability, with a focus on North America but also considering global opportunities.

Question 6: Does Westport have the R&D capabilities to pursue its new strategy?
Answer: Yes, the high-pressure controls group in Cambridge, Ontario, is fully equipped to operate independently and build out the business.

[Sentiment Analysis]
Analysts and management expressed optimism about the strategic refocus and the potential for growth in the HPDI and high-pressure controls segments. The tone was positive, with a focus on disciplined management and operational excellence.

[Quarterly Comparison]
| Metric | Q4 2024 | Q4 2023 | YoY Change |
|-------------------------|---------------|---------------|------------|
| Revenue | $75.1 million | $87.3 million | -14% |
| Gross Margin | $14.3 million | $8 million | +78.75% |
| Adjusted EBITDA Loss | $1.8 million | $10.9 million | +83.49% |
| Cash and Cash Equivalents| $37.6 million | $54.9 million | -31.51% |

[Risks and Concerns]
- The divestiture is subject to shareholder approval and other customary closing conditions.
- The company projects that its cash and cash equivalents will not be sufficient to fund operations for the next 12 months without the divestiture.
- The transition to focusing on HPDI and high-pressure controls involves execution risks and market adoption uncertainties.

[Final Takeaway]
Westport Fuel Systems is strategically refocusing by divesting its light-duty business to strengthen its financial position and concentrate on high-growth opportunities in the heavy-duty transport and industrial sectors. The company is optimistic about the potential of its HPDI technology and high-pressure controls, particularly in the natural gas and hydrogen markets. While the divestiture and strategic pivot present risks, the management's disciplined approach and operational improvements provide a solid foundation for future growth.