Westport Reports First Quarter Fiscal 2014 Financial Results

         Westport Reports First Quarter Fiscal 2014 Financial Results

PR Newswire

VANCOUVER, May 1, 2014

~ First Quarter Revenue Up 39% Year over Year; Step Change Improvement in
Westport Operating Business Units' Adjusted EBITDA ~

VANCOUVER, May 1, 2014 /PRNewswire/ - Westport Innovations Inc. (TSX:WPT /
NASDAQ:WPRT), engineering the world's most advanced natural gas engines and
systems, today reported financial results for the first quarter ended March
31, 2014 and provided an update on operations. All figures are in U.S. dollars
unless otherwise stated.

Highlights include:

Revenue & Net Results

  *Westport revenue, excluding joint ventures' revenues, for the quarter
    ended March 31, 2014 was $41.9 million compared with $30.1 million for the
    same period last year, an increase of 39%.
  *Joint venture segment revenue for the quarter ended March 31, 2014 was
    $80.1 million for Cummins Westport Inc. (CWI), an increase of 79% over the
    same period last year; and $113.4 million for Weichai Westport Inc. (WWI),
    an increase of 7% over the same period last year.
  *Westport consolidated net loss and net loss per share for the quarter
    ended March 31, 2014 decreased to $23.9 million and $0.38, respectively,
    from $31.8 million, and $0.57, respectively in 2013.

Adjusted EBITDA (The reconciliation of Adjusted EBITDA is described below)

  *For the quarter ended March 31, 2014, Westport reported an Adjusted EBITDA
    loss from operations of $1.6 million compared with an Adjusted EBITDA loss
    from operations of $8.7 million for the quarter ended March 31, 2013, an
    improvement of approximately 81% year-over-year.
  *For the quarter ended March 31, 2014, Westport reported a consolidated
    Adjusted EBITDA loss of $22.1 million for the Company, compared with a
    loss of $26.3 million in the prior year period.

As previously announced, Westport re-organized its business in 2013 to take
advantage of the shift by original equipment manufacturers (OEMs) to develop
natural gas vehicle products in-house. Westport's operating business units
have the goal of achieving positive Adjusted EBITDA from operations by the end
of 2014. The $1.6 million loss is a step change in Adjusted EBITDA, which has
averaged about a $9.4 million loss per quarter for the past eight quarters.
This has been achieved through significant organizational efficiencies,
product portfolio optimization and cost reductions.

Increased Product Volumes / Revenue:

  *For the quarter ended March 31, 2014, On-Road Systems revenue increased by
    277% to $17.7 million compared with $4.7 million in the same period last
    year due primarily to the addition to revenue from acquired organizations,
    BAF Technologies (BAF) and its subsidiary, ServoTech Engineering, Inc.
    (ServoTech), shipment of Westport iCE PACK™ liquefied natural gas (LNG)
    Tank Systems, and increased sales of Volvo cars with Westport bi-fuel
    systems.
  *For the quarter ended March 31, 2014, CWI revenue increased by 79% to
    $80.1 million on 2,480 units, compared with $44.7 million on 1,313 units
    in the same period last year.
  *For the quarter ended March 31, 2014, WWI revenue increased by 7% to
    $113.4 million on 9,172 units, compared with $105.9 million on 8,529 units
    in the same period last year.

Reducing Costs and Prioritizing Investments

  *Cash used in the quarter ended March 31, 2014 was $26.7 million, including
    a one-time payment to Clean Energy Fuels Corp. of $5.0 million for a
    previously announced joint marketing and sales program related to the
    acquisition of BAF and its subsidiary, ServoTech, in June 2013. This is
    compared with $26.9 million for the quarter ended December 31, 2013.
    Westport is continuing to focus on cost reduction initiatives and
    management of Westport's investment programs.
  *Westport is co-investing with OEMs to develop a portfolio of new natural
    gas vehicle technologies and related systems and components. Since 2012,
    Westport has invested $214.9 million into various programs, including
    trucking, automotive, and off-road applications, as well as advanced
    engineering and capital expenditures. These are investments with 3 to 5
    year development cycles from the start of development to product sales.
    Westport is carefully managing the programs and allocating capital to
    products and technologies designed to deliver high margin returns in the
    future.

Business Highlights

  *Westport and Delphi Automotive are combining their intellectual property
    and engineering strengths to co-develop and manufacture high-pressure
    natural gas fuel injectors designed for multiple engine OEMs, establishing
    Westport high pressure direct injection (Westport™ HPDI) as the leading
    natural gas technology platform for heavy-duty engine applications. The
    family of injectors to be developed will be one of the core components of
    Westport™ HPDI 2.0 fuel system. Delphi and Westport plan to ramp
    production capacity to 100,000 HPDI injectors per year by 2018.
  *Westport and Weichai launched final customer validation units of the next
    generation Westport™ ^ HPDI 2.0 on the Weichai Westport WP12 engine
    platform; and initiated development of the 10 litre Weichai Westport WD10
    engine with Westport HPDI 2.0. The current generation Weichai Westport
    WD10 and WP12 natural gas engines, using lean burn spark ignited
    technology, account for about 75 percent of WWI's engine unit sales. With
    the strong demand for natural gas engines in China, WWI is expanding its
    manufacturing capacity to 100,000 engines per year by the end of 2014.
  *Westport received California Air Resources Board (CARB) certification for
    its 2014 model year Westport WiNG™ Ford F-150 3.7L pickup truck with the
    dedicated compressed natural gas (CNG) system.
  *Westport received Environmental Protection Agency (EPA) certification for
    its 2015 model year Ford F-250 and F-350 super duty trucks with the
    Westport WiNG™ bi-fuel CNG system.
  *Westport and Tata Motors Limited launched a new spark-ignited (SI) natural
    gas 3.8L turbocharged engine featuring the Westport WP580 Engine
    Management System (EMS). Westport also unveiled its newest proprietary
    technology, Westport gas enhanced methane diesel (Westport GEMDi™)
    targeted for medium-duty trucks and buses in India.
  *Westport and Universal LNG has signed an agreement to develop a range of
    LNG portable power units for a diverse range of applications. Westport
    will initially develop two water pump units powered by the Westport™ ^
    2.4L industrial power unit or a low cost natural gas 7L engine platform,
    fitted with the Westport WP580 EMS for larger applications, and integrated
    with the Westport iCE PACK LNG Tank System to supply the fuel. The power
    unit is design protected to meet future requirements of Universal LNG's
    customers in marine transit, utility, power generation and tractor
    applications. Upon successful completion of the development phase,
    Westport expects to build and supply units for a large scale trial in the
    U.S. and Asia Pacific markets.
  *Westport is developing an advanced, durable, and fuel efficient 3.8L
    industrial engine, designed to operate on either natural gas or liquefied
    petroleum gas (LPG). This new industrial product is based on Hyundai Motor
    Company's 3.8L automotive engine and is targeted for use in industrial
    applications such as forklift, oil & gas, power generation, and
    construction equipment. The engine will feature a multi-point fuel
    injection system designed and manufactured by Westport, and the Westport
    WP580 EMS. With the new 3.8L engine, Westport expects to broaden its
    market opportunity and engage new OEMs in the mobile and stationary
    industrial markets. The engine is expected to meet EPA and CARB emissions
    standards.

"We have made a step change this quarter with Westport revenue growth of 39%
year-over-year and significant improvement on Adjusted EBITDA from operations,
from an average loss of approximately $9.4 million to a $1.6 million loss,"
said David Demers, CEO of Westport. "We are on track to achieve positive
Adjusted EBITDA from operations by the end of 2014 by continuing to increase
sales, shipping committed products, and applying cost and margin discipline.
At the same time, we are confident that our investment projects will deliver
shareholder value as these products come to market."

"In China, Weichai Westport sold more than 9,100 units in the quarter and
recorded $113 million in revenue, 8% and 7% higher than the same period last
year. As announced earlier this week, we are excited that Weichai will be the
first OEM delivering HPDI 2.0 technology to the market. The WP12 engine is
China's first engine featuring Westport HPDI technology, delivering the power
and performance of the base diesel engine, while replacing up to 95% of diesel
fuel with cleaner burning, less expensive natural gas. Furthermore, we have
agreed to develop the 10 litre Weichai Westport WD10 engine with Westport HPDI
2.0, with product availability planned for 2016. We are very pleased to
continue to work with Weichai to lead this energy transition in China." 

"We have a comprehensive product investment program, collaborating with key
global OEMs to launch major new products, resulting in increased sales while
reducing investment expenses over the next several years. At the same time, we
are continuing to reduce our operating costs and prudently manage our cash
flow. The income from our joint ventures and service revenue are expected to
cover our corporate costs and investment programs."

"Energy transitions are difficult to accomplish, but with the technologies,
resources, and capabilities we have, we are confident that we will benefit
from this transition."

Financial Outlook for 2014 and Path to Profitability
Westport expects revenue to be between $175 million and $185 million for the
year ended December 31, 2014, which represents growth of 7 to 13% over 2013.

As Westport shifts from market creation work to a full commercial operation
and profitability, Westport has announced two interim financial milestones.
Westport's first milestone is to have its three operating business units
combined to achieve positive Adjusted EBITDA by the end of 2014. Westport's
second milestone is to have the Company report consolidated positive Adjusted
EBITDA by the end of 2015, driven by contributions from Westport's operating
business units, Westport's share of net income (loss) from the joint ventures,
and service revenue earned from Westport's development partners.

First Quarter 2014 Financial Highlights

                                  Three Months Ended March 31,    % Change
($ in millions, except per share        2014          2013      Better/(Worse)
amounts)
Consolidated revenues                  $ 41.9     $ 30.1      39%
Consolidated gross margin                    12.3           8.1      52%
Consolidated gross margin                   29.4%         26.9%       -
percentage
Operating expenses (Research and
development, and selling, general            39.3          39.5       1%
and administrative)
(Loss) Income from unconsolidated           (0.4)           1.7     (124%)
joint ventures
Consolidated Adjusted EBITDA
(The reconciliation of Adjusted            (22.1)        (26.3)      16%
EBITDA is described below)
Cash and short-term investments             183.9         173.9       6%
balance
Net loss                                   (23.9)        (31.8)      25%
Net loss per share                         (0.38)        (0.57)      33%

  *The increase in gross margin percentage for the quarter ended March 31,
    2014 is due primarily to sales of higher margin product such as the
    Westport WiNG™ System and service revenue.
  *Research and development expenses were $21.0 million for the quarter ended
    March 31, 2014, compared with $20.4 million in the same period last year.
  *Selling, general and administrative expenses were $18.3 million for the
    quarter ended March 31, 2014, a decrease of $0.8 million from $19.1
    million in the same period last year. The decrease year over year is
    primarily due to cost reduction initiatives.

Operating Business Unit Highlights

Business Units Adjusted EBITDA*

                                          Three Months Ended
($ in millions)             March 31,   December 31,   September 30,  June 30,
                                 2014           2013            2013      2013
Applied Technologies       $  0.1  $  1.6  $  2.1 $   
                                                                           2.8
On-Road Systems                 (1.2)          (6.9)           (6.8)     (8.6)
Off-Road Systems                (0.5)          (3.1)           (3.9)     (3.1)
Total Operating Business        (1.6)          (8.4)           (8.6)     (8.9)
Units Adjusted EBITDA

*Adjusted EBITDA reconciliation is described below.

Applied Technologies

  *Applied Technologies revenue for the quarter ended March 31, 2014
    decreased 6% to $21.9 million compared with $23.3 million in the prior
    year period primarily due to the weakness in certain markets, particularly
    Italy, offset by continued growth in China.
  *Applied Technologies gross margin and gross margin percentage for the
    quarter ended March 31, 2014 decreased to $5.6 million and 25.6%,
    respectively, compared with $6.7 million and 28.8%, respectively, in the
    prior year period primarily due to mix of products.
  *Applied Technologies operating expenses for the quarter ended March 31,
    2014 increased by $1.3 million to $6.1 million compared to the prior year
    period primarily related to higher research and development costs for new
    products.

On-Road Systems

  *On-Road Systems revenue for the quarter ended March 31, 2014 increased by
    277% to $17.7 million compared with $4.7 million in the same period last
    year due primarily to the addition of revenue from acquired organizations,
    BAF and its subsidiary, ServoTech, shipment of Westport iCE PACK LNG Tank
    systems, and increased sales of Volvo cars with Westport bi-fuel systems.
  *On-Road Systems gross margin and gross margin percentage for the quarter
    ended March 31, 2014 increased to $5.5 million and 31.1%, respectively,
    from $0.2 million and 4.3%, respectively. The increase is primarily due to
    economies of scale as a result of higher shipments and product mix.
  *On-Road Systems operating expenses for the quarter ended March 31, 2014
    decreased by $2.1 million to $7.1 million compared to the prior year
    period due primarily to reduced expenses related to changes in operating
    structure, consolidation of facilities, and exiting production of the
    first generation of Westport™ HPDI system.

Off-Road Systems

  *Off-Road Systems revenue for the quarter ended March 31, 2014 increased by
    18% to $1.3 million compared with $1.1 million in the prior year period.
  *Off-Road Systems operating expenses decreased by $2.2 million to $0.8
    million for the quarter ended March 31, 2014 primarily due to cost
    reduction initiatives.

Cummins Westport Inc. Highlights

                                  Three Months Ended March 31,    % Change
($ in millions)                        2014           2013      Better/(Worse)
Units                                       2,480         1,313      89%
Revenue                             $ $ 44.7      79%
                                             80.1
Gross margin                                  7.6          12.3     (38%)
Gross margin percentage                      9.5%         27.5%       -
Gross margin percentage excluding           28.2%         36.0%       -
warranty adjustments
Operating expenses                            9.7          10.8      10%
Segment operating (loss) income             (2.1)           1.5     (240%)
Net (loss) income to Westport               (0.8)           0.8     (200%)

  *CWI engine shipments for the quarter ended March 31, 2014 increased by 89%
    to 2,480 units compared with 1,313 units in the prior year period. The
    yearly volumes in North America increased by 102% driven by higher sales
    in all segments particularly truck applications, up 223%, as a result of
    the launch of the ISX12 G. The ISX12 G has been performing to expectations
    and has been well received. CWI quarterly volumes in the international
    market also increased by 48% as a result of large deliveries for fleets in
    regions such as China and South America.
  *Gross margins in the first quarter of 2014 and 2013 were impacted by
    adjustments to warranty of $15.0 million and $3.8 million, respectively,
    and the gross margin percentage excluding these adjustments would have
    been 28.2% and 36.0% in 2014 and 2013, respectively. The majority of
    warranty adjustments are associated with the Cummins Westport 8.9L ISL G.
  *The decrease in CWI operating expenses were primarily driven by lower
    research and development expenses as a result the launch of the Cummins
    Westport ISX12 G last year and cost management initiatives.
  *CWI's net loss attributable to Westport was $0.8 million, compared with
    $0.8 million income in the prior year period. Excluding the warranty
    impact, CWI's net income attributable to Westport would have been $4.1
    million.

Weichai Westport Inc. Highlights

                         Three Months Ended March 31,    % Change
($ in millions)                2014          2013      Better/(Worse)
Units                              9,172         8,529       8%
Revenue                     $ 113.4  $ 105.9       7%
Gross margin                         6.3           7.0     (10%)
Gross margin percentage             5.6%          6.6%       -
Operating expenses                   4.6           3.7     (24%)
Segment operating income            1.7           3.3     (48%)
Westport's 35% interest              0.5           1.0     (50%)

  *Gross margin decreased $0.7 million or 10% in the quarter ended March 31,
    2014 due primarily to competitive product mix.
  *Operational expenses increased by $0.9 million for the three months ended
    March 31, 2014 due primarily to increased product development costs
    related to new products, facilities and support costs associated with
    continued growth of this business.
  *For the quarter ended March 31, 2014, WWI increased volume by 8% compared
    to the same period last year.

Non-GAAP Financial Measure; Adjusted EBITDA Results
Adjusted EBITDA is used by management to review operational progress of its
business units and investment programs over successive periods and as a
long-term indicator of operational performance since it ties closely to the
unit's ability to generate sustained cash flows. Westport defines Adjusted
EBITDA as net income (loss) attributed to the business unit or the
consolidated company excluding expenses for (a) income taxes, (b) depreciation
and amortization, (c) interest expense, net, (d) non-cash and other unusual
adjustments, (e) amortization of stock-based compensation, and (f) unrealized
foreign exchange gain or loss. Adjusted EBITDA includes Westport's share of
income (loss) from the joint ventures (JVs). 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 Westport'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 Westport's actual cash expenditures. Other companies may calculate
similar measures differently than Westport, limiting their usefulness as
comparative tools. Westport compensates for these limitations by relying
primarily on its U.S. GAAP results and using Adjusted EBITDA only
supplementally.

                                        Three Months Ended March 31,
                                            2014          2013
Net loss                                   $ (23.9)      $ (31.8)
Provision for income taxes                          -             0.3
Depreciation and amortization                     4.3             3.6
Interest expense, net                             0.8             1.2
Non-cash and other unusual adjustments            0.9               -
Amortization of stock-based compensation          4.7             3.4
Unrealized foreign exchange (gain) loss         (8.9)           (3.0)
                                                                  
Adjusted EBITDA                            $ (22.1)    $ (26.3)

For the                                                                                            
three
months
ended March
31, 2014
                                                           Adjustments                              
                                                 Westport's              Stock-based
                                                  Share of              compensation
($ in             Segment operating              Income from            and non-cash         Adjusted
millions)           income (loss)                  the JVs               adjustments          EBITDA
Operating        $ (2.7)  $   -    $ 1.1   $ 
Business                                                                                        (1.6)
Units
Corporate                         4.2 
and                                 (24.3)                   (0.4)                               (20.5)
Technology
Investments

                                                                                                  
For the three months ended December 31, 2013
                                                           Adjustments                              
                                                 Westport's
                                                  Share of
($ in             Segment operating              Income from            Stock-based         Adjusted
millions)           income (loss)                  the JVs              compensation          EBITDA
Operating                $ (9.5)        $ -     $ 1.1      
Business                                                                                       $
Units*                                                                                            (8.4)
Corporate                           (20.4)                     3.5                     2.1       (14.8)
and
Technology
Investments
*Excluding non-cash and other unusual adjustments related to the first generation of Westport^TM HPDI
systems.

For the three months ended September 30, 2013
                                                           Adjustments                              
                                                 Westport's
                                                  Share of
($ in             Segment operating              Income from            Stock-based         Adjusted
millions)           income (loss)                  the JVs              compensation          EBITDA
Operating                   $  (10.9)        $ -     $ 2.3      
Business                                                                                       $
Units                                                                                             (8.6)
Corporate      
and                                 (16.0)                     3.7                     1.4       (10.9)
Technology
Investments
                                                                                                  
For the                                                                                            
three
months
ended June
30, 2013
                                                           Adjustments                              
                                                 Westport's
                                                  Share of
($ in             Segment operating              Income from            Stock-based         Adjusted
millions)           income (loss)                  the JVs              compensation          EBITDA
Operating         $     $   -  $  1.9      $
Business                            (10.8)                                                        (8.9)
Units
Corporate      
and                                 (25.7)                     4.6                     2.2       (18.9)
Technology
Investments
                                                                                                  

Outlook
This press release includes financial outlook information for Westport and
such information is being provided for the purpose of updating prior revenue
disclosure and may not be appropriate for, and should not be relied upon for,
other purposes.

Financial Statements & Management's Discussion and Analysis
To view Westport's full financials for the quarter ended March 31, 2014,
please visit www.westport.com/company/investors/financial.

Supplementary Financial Information
To view unaudited historical financial information, please point your browser
to the following link: www.westport.com/company/investors/financial. Westport
is providing this supplement as a guide to Westport's financial information in
a quick reference format and it should be read in conjunction with Westport's
full financials for the quarter ended March 31, 2014 and Westport's full
financials for the year ended December 31, 2013. The Supplementary Financial
Information contains previously undisclosed quarterly unaudited historical
financial information based on the most recent reporting structure that was
implemented in the fourth quarter of 2013 and is being provided in order to
allow readers to better reconcile such information with the prior reporting
structure.

Live Conference Call & Webcast
Westport has scheduled a conference call for today, Thursday, May 1, 2014 at
2:00 pm Pacific Time (5:00 pm 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 website at
www.westport.com/company/investors.

Replay Conference Call & Webcast
To access the conference call replay, please dial 1-800-319-6413 (Canada & USA
toll-free) or 604-638-9010 using the pass code 1847. The replay will be
available until May 8, 2014. Shortly after the conference call, the webcast
will be archived on Westport website and replay will be available in streaming
audio, a downloadable MP3 file, and a slidecast.

About Westport Innovations Inc.
Westport engineers the world's most advanced natural gas engines and vehicles.
More than that, we are fundamentally changing the way the world travels the
roads, rails and seas. We work with original equipment manufacturers (OEMs)
worldwide from design through to production, creating products to meet the
growing demand for vehicle technology that will reduce both emissions and fuel
costs. To learn more about our business, visit westport.com, subscribe to our
RSS feed, or follow us on Twitter @WestportDotCom.

This press release contains forward-looking statements, including statements
regarding the anticipated timing for Westport's operating business units and
consolidated business to be Adjusted EBITDA positive, revenue expectations,
growth in core markets, production capacity for HPDI injectors, the effect of
the recent reorganization and restructuring of our business, timing for
launch, delivery and completion of milestones related to the products
referenced herein, including but not limited to the Weichai Westport WD10
engine, 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's
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 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 and
uncertainties include risks and assumptions related to our revenue growth,
operating results, industry and products, the general economy, conditions of
and access to the capital and debt markets, governmental policies and
regulation, technology innovations, fluctuations in foreign exchange rates,
operating expenses, 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 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.

SOURCE Westport Innovations Inc.

Contact:

Darren Seed
Vice President, Investor Relations & Communications
Westport
T 604-718-2046
invest@westport.com
 
Press spacebar to pause and continue. Press esc to stop.