VANCOUVER, British Columbia, March 22, 2018 (GLOBE NEWSWIRE) -- Westport Fuel Systems Inc. (“Westport Fuel Systems”) (TSX:WPRT) (Nasdaq:WPRT) reported financial results for the fourth quarter and year ended December 31, 2017 and provided an update on operations. All figures are in U.S. dollars unless otherwise stated.
2017: A Transformative Year
"We have made solid progress on our company’s transformation, which has stabilized the company overall," said Nancy Gougarty, Chief Executive Officer of Westport Fuel Systems. "Ever increasingly urgent demands for clean vehicles in key markets prove our market and industry is primed and ready for alternative fuels. Today we have market-ready solutions for our transportation customers. Our global reach, extensive product portfolio, and innovations will further advance our leading position in the alternative fuel industry and help us build a sustainable, profitable company that delivers value to shareholders for the long-term."
2018-2022 STRATEGIC FOCUS
Several macro trends are driving rapid change within the transportation sector, including adverse sentiment for diesel-fueled vehicles, urban air quality issues, and increased deployment of new alternative fuel technologies. To advance Westport Fuel Systems position in the markets and as a key player in the alternative fuel industry, the company has identified critical strategic initiatives that will drive leadership:
2018 KEY PRIORITIES
As a result of the strategic focus, the key priorities for 2018 are:
Westport Fuel Systems expects to achieve positive adjusted EBITDA during the second quarter of 2018, driven by continued reduction in research and development expenses and Cummins Westport Inc.'s ("CWI") performance.
In 2013 and 2014, the company implemented a strategy to hire several seasoned automotive industry professionals. They were representative of the talent needed to execute the Westport Fuel Systems mid-term strategic objectives, recognizing that several of these hires would transition or exit the company in or after 2018. As a result, succession planning in the near-term has resulted in and will continue to include internal realignment of employees moving into new positions, combined with an increase in external recruitment initiatives. Westport Fuel Systems Chief Financial Officer (“CFO”), Ashoka Achuthan, has indicated his plan to step down once his successor has been identified and appointed. Mr. Achuthan will remain with the company as an advisor for a period of time, assist with the CFO transition, and continue to serve as a member of the CWI Board of Directors. The company has initiated a search and is actively seeking his successor.
Q4 2017 & FULL YEAR 2017 FINANCIAL HIGHLIGHTS
|($ in millions, except per share amounts)||Three Months Ended|
|Consolidated Gross Margin||16.0||13.1||22||%||64.1||36.4|
|Consolidated Gross Margin %||25||%||23||%||—||26||%||20||%|
|Consolidated Operating Expenses||32.6||44.4||27||%||129.1||161.0|
|Research & Development Expenses (1)||11.7||15.0||22||%||51.1||55.9|
|Income from Unconsolidated Joint Ventures (2)||(0.3||)||1.3||(123||)%||12.5||5.8|
|Net Loss from Continuing Operations||$||(19.2||)||$||(44.4||)||57||%||$||(61.1||)||$||(99.4||)|
|Net Loss per Share from Continuing Operations||$||(0.14||)||$||(0.43||)||67||%||$||(0.51||)||$||(1.09||)|
|Adjusted EBITDA (3)||$||(3.5||)||$||(10.6||)||67||%||$||(17.9||)||$||(43.4||)|
*Notes: The year ended December 31, 2016 included only seven months of Fuel Systems Solutions, Inc. and its year-over-year comparison is not meaningful.
(1) Research & development expenses are included in consolidated operating expenses.
(2) The company's income from unconsolidated joint ventures would have been $6.4 million and $19.2 million for the quarter ended and year ended December 31, 2017, respectively, excluding the $6.7 million one-time unfavourable tax charge related to a deferred tax asset adjustment as a result of the U.S. tax legislation passed in December 2017.
(3) Adjusted EBITDA is a non-GAAP measure. Please refer to GAAP and NON-GAAP FINANCIAL MEASURES for the reconciliation.
|SELECTED BALANCE SHEET DATA|
|($ in millions)||Year Ended|
|Cash and Cash Equivalents||$||71.8||$||60.9||18||%|
|Total Debt and Royalty Payable||73.5||100.6||27||%|
CUMMINS WESTPORT INC. HIGHLIGHTS
|CUMMINS WESTPORT HIGHLIGHTS|
|Three Months Ended|
|($ in millions, except unit amounts)||2017||2016||2017||2016|
|Gross Margin %||34||%||25||%||—||34||%||28||%||—|
|Segment Operating Income||$||21.2||$||4.6||362||%||$||57.3||$||16.2||254||%|
|Westport Fuel Systems 50% Interest||(0.3||)||1.2||(129||)%||12.5||5.6||123||%|
NEW OPERATING BUSINESS SEGMENTS IN Q1 2018
Effective January 2018, commensurate with the commercial launch of Westport HPDI 2.0™, the company restructured its business segments to allow for further integration of product offerings. The Westport HPDI 2.0™ product line and all other Technology related activities previously reported under the Corporate & Technology segment will be combined with the Automotive business segment and renamed Transportation.
Under the new organization structure, Westport Fuel Systems will manage and report the results of its business through three segments: Transportation, the CWI Joint Venture, and Corporate:
GAAP and NON-GAAP FINANCIAL MEASURES
Management reviews the operational progress of its business units and investment programs over successive periods through the analysis of net income, EBITDA and Adjusted EBITDA. The Company defines EBITDA as net loss from continuing operations before income taxes adjusted for interest expense (net), depreciation and amortization. Westport Fuel Systems defines Adjusted EBITDA as EBITDA from continuing operations excluding expenses for stock-based compensation, unrealized foreign exchange gain or loss, and non-cash and other adjustments. Management uses Adjusted EBITDA as a long-term indicator of operational performance since it ties closely to the business units’ ability to generate sustained cash flow. Adjusted EBITDA includes the company's share of income from joint ventures.
The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles ("U.S. GAAP") and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net loss or other consolidated statement of operations data prepared in accordance with U.S. GAAP. Among other things, Adjusted EBITDA does not reflect the company's actual cash expenditures. Other companies may calculate similar measures differently than Westport Fuel Systems, limiting their usefulness as comparative tools. The company compensates for these limitations by relying primarily on its U.S. GAAP results and using Adjusted EBITDA as supplemental information.
|GAAP & NON-GAAP FINANCIAL MEASURES FROM CONTINUING OPERATIONS|
|($ in millions)||31-Dec-16||31-Mar-17||30-Jun-17||30-Sep-17||31-Dec-17|
| Three months ended|
|Net loss from continuing operations||$||(44.4||)||$||(12.8||)||$||(13.4||)||$||(15.7||)||$||(19.2||)|
|Income tax expense||3.6||(0.8||)||(4.0||)||0.5||(0.1||)|
|Interest Expense, net||4.3||3.4||6.3||0.9||2.5|
|Depreciation and amortization||3.4||3.7||3.5||3.9||3.9|
|Stock based compensation||1.2||1.1||3.1||2.1||0.7|
|Unrealized foreign exchange (gain) loss||8.1||(1.6||)||1.0||2.5||(1.3||)|
|Inventory impairment from product line closure||1.3||—||—||—||—|
|Bargain purchase gain||7.1||—||—||—||—|
|(Gain) loss on sale of investments||(0.3||)||—||—||—||—|
|Restructuring, termination and other exit costs||1.5||1.6||(1.6||)||(0.1||)||1.8|
|CWI US tax adjustment||—||—||—||—||6.7|
FINANCIAL STATEMENTS & MANAGEMENT'S DISCUSSION AND ANALYSIS
To view Westport Fuel Systems full financials for the fourth quarter and year ended December 31, 2017, please visit www.wfsinc.com/investors/financials.
CONFERENCE CALL PRESENTATION
The company is providing a conference call presentation as a guide to its financial information in a quick reference format and it should be read in conjunction with Westport Fuel Systems full financials for the year ended December 31, 2017.
LIVE CONFERENCE CALL & WEBCAST
Westport Fuel Systems has scheduled a conference call for today, Friday March 23, 2018 at 5:30 am Pacific Time (8:30 am Eastern Time) to discuss these results. The public is invited to listen to the conference call in real time by telephone or webcast. To access the conference call by telephone, please dial: 1-800-319-4610 (Canada & USA toll-free) or 604-638-5340. The live webcast of the conference call can be accessed through the Westport Fuel Systems website at www.wfsinc.com/investors/financials.
REPLAY CONFERENCE CALL & WEBCAST
To access the conference call replay, please dial 1-855-669-9658 (Canada & USA toll-free) or 604-674-8052 using the pass code 2079. The replay will be available until March 30, 2018. Shortly after the conference call, the webcast will be archived on the Westport Fuel Systems website and replay will be available in streaming audio and a downloadable MP3 file.
2018 ANNUAL & SPECIAL MEETING OF SHAREHOLDERS
The Westport 2018 Annual & Special Meeting of Shareholders will be held on Monday, May 7, 2018 at 10:00 am Eastern Time at 3400 One First Canadian Place, Toronto, ON M5X 1A4.
About Westport Fuel Systems
At Westport Fuel Systems, we are driving innovation to power a cleaner tomorrow. We are inventors, engineers, manufacturers and suppliers of advanced clean-burning fuel systems and components that can change the way the world moves. Our technology delivers performance, fuel efficiency and environmental benefits to address the challenges of global climate change and urban air quality. Headquartered in Vancouver, Canada, we serve our customers in more than 70 countries with leading global transportation brands. At Westport Fuel Systems, we think ahead. For more information, visit www.wfsinc.com.
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements, including statements regarding revenue and cash usage expectations, the effect of and timing of reorganization and restructuring of our business, the future strategic initiatives, future rationalization of operations and reduction of overhead expenses, continued research and development investment, future of our development programs (including those relating to the referenced HPDI and HESI program), Westport Fuel Systems' expected actionstiming and results of organizational restructurings, the demand for our products, the future success of our business and technology strategies, investment in new product and technology development and otherwise, cash and capital requirements, intentions of partners and potential customers, the performance and competitiveness of Westport Fuel Systems' products and expansion of product coverage, future market opportunities, speed of adoption of natural gas for transportation and terms and timing of future agreements as well as Westport Fuel Systems management's response to any of the aforementioned factors. 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 of activities, performance or achievements expressed in or implied by these forward looking statements. These risks,uncertainties and assumptions include those related to our revenue growth, operating results, industry and products, the general economy, conditions of and access to the capital and debt markets, solvency, governmental policies and regulation, technology innovations, fluctuations in foreign exchange rates, operating expenses, continued reduction in research and development expenses, increasing trends in gross margin from operations, CWI performance, 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 our most recent Annual Information Form and other filings with securities regulators. Readers should not place undue reliance on 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 press release are not incorporated by reference herein.