• Total Revenue: $66.2 million, a 14% decrease compared to the prior year period.
• Cespira Revenue: $16.2 million, up from $13.5 million in the same quarter last year.
• Gross Margin: $14.5 million or 22% of revenue, up from $13.2 million or 17% of revenue in Q3 2023.
• Adjusted EBITDA Loss: $800,000, improved from a $3 million loss in the prior year period.
• Light-Duty Revenue: $61.5 million, up from $60.2 million in Q3 2023.
• Light-Duty Gross Margin: $13.9 million or 23% of revenue, compared to $12 million or 20% of revenue in Q3 2023.
• High Pressure Gas Controls Revenue: $1.6 million, down from $3.7 million in Q3 2023.
• Heavy-Duty OEM Revenue: $3.1 million, down $10.4 million compared to the same quarter last year.
• Cash and Cash Equivalents: $33.3 million as of September 30, 2024, a decrease of $8.2 million from the end of Q2 2024.
• Net Cash Used by Operating Activities: $9.9 million.

• Warning! GuruFocus has detected 4 Warning Signs with WPRT.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Westport Fuel Systems Inc (NASDAQ:WPRT) successfully reduced research and development as well as sales, general, and administrative expenses by approximately 40% compared to the same period last year.
• The joint venture Cespira generated $16.2 million in revenue during its first full operational quarter, offsetting the decline in consolidated revenue.
• Gross margin improved to $14.5 million or 22% of revenue, up from $13.2 million or 17% of revenue in Q3 2023.
• The light-duty segment performed well, with revenue increasing to $61.5 million, driven by increased sales in the light-duty OEM and independent aftermarket businesses.
• Westport Fuel Systems Inc (NASDAQ:WPRT) is seeing increased customer demand for its Euro 6 LPG program and anticipates exceeding delivery expectations for 2024.

Negative Points

• Total revenue for the third quarter of 2024 decreased by 14% compared to the prior year period, primarily due to the transition of the heavy-duty OEM business to Cespira.
• There has been no significant order from Weichai under the existing technology development and supply agreement, and no significant orders are anticipated by the end of 2024.
• The high-pressure Gas Controls revenue decreased to $1.6 million from $3.7 million in Q3 2023, primarily due to a slowdown in the hydrogen market.
• Cash and cash equivalents decreased by $8.2 million from the end of Q2 2024, with net cash used by operating activities amounting to $9.9 million.
• The company acknowledges a slowdown in hydrogen infrastructure development, which could delay the adoption of hydrogen-powered automotive and industrial applications by several years.

Q & A Highlights

Q: Can you discuss the factors contributing to the improvements in gross margin? A: Daniel Sceli, CEO: The improvements are due to a combination of pricing, supply chain optimization, and changes in sales mix. We are reviewing our entire cost structure, including supply chain and labor, to achieve these reductions.

Q: What is the current status and future outlook for the partnership with Weichai? A: Daniel Sceli, CEO: We have not received significant orders from Weichai and do not anticipate any by the end of 2024. However, we continue to collaborate on HPDI technology for the Chinese market, although no orders are currently in place.

Q: How are you addressing the working capital and operational cash needs? A: William Larkin, CFO: We are focusing on reducing inventory levels, improving inventory turns, and better managing accounts receivable and payable. We expect inventory to normalize by the end of 2024, which will help reduce working capital needs.

Q: What are the expectations for Cespira's revenue to reach positive gross margins? A: Daniel Sceli, CEO: It is difficult to specify an exact revenue number due to the mix of final product assembly and aftermarket parts. We are still in the process of setting up the business, and it will take time to reach positive gross margins.

Q: What is the impact of the current hydrogen infrastructure development on Westport's strategy? A: Daniel Sceli, CEO: We acknowledge a slowdown in hydrogen infrastructure development, which may delay adoption. However, we remain confident in hydrogen's role in the future and continue to develop solutions for alternative fuels, including LNG and CNG, which are seeing increased volumes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.