Westport Fuel Systems Inc

Good morning, ladies and gentlemen. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Westport Fuel Systems Q4 2023 conference call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And if at any time you require period assistance, please press star zero. And to get in the conference queue, you would need to press star followed by one on your telephone keypad. And if you would like to withdraw from the question queue, simply press start in number two. And I would like to turn the conference over to Ms. Ashley Newell. Please go ahead.

Good morning, everyone. Welcome to Westport Fuel Systems' fourth quarter conference call for the 2023 fiscal year. This call is being held to coincide with the press release containing Westport's financial results that was issued yesterday. On today's call, speaking on behalf of Westport, is Chief Executive Officer and Director Dan Selay and Chief Financial Officer Bill Larkin. Attendance on this call is open to the public, but questions will be restricted to the investment community. You're reminded that certain statements made on this conference call and our responses to certain questions may constitute forward-looking statements within the meaning of the U.S. and applicable Canadian securities laws. And as such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. With that, I'll turn the call over to you, Dan.

Thanks, Ashley. And good day, everyone. I'm pleased to join you on my first call as CEO and director of Westport. Today, we'll be covering our strategic objectives from 2023, recapping our highlights from last year and providing an outlook for 2024. I'll then turn the call over to Bill to walk us through our Q4 and annual results. I wanted to start by hitting some of the key highlights and top line numbers for 2023. With the recent announcement of the signed investment agreement, we are excited to be in the last stage of finalizing our HPDI joint venture to accelerate the commercialization and global adoption of Westport's HPDI fuel system technology for long haul and off-road applications. We are now working towards closing the joint venture and ensuring it's set up for success from day one. Touching on our financials, For the full year, we generated revenue of $331.8 million as compared to $305.7 million in 2022. In addition, we continued to delivering improved gross margins both in dollar terms and as a percentage revenue with total gross margin for 2023 of $48.9 million or 15% of revenue as compared to $36.2 million or 12% of revenue in 2022. We improved our adjusted EBITDA by over $6 million to a negative $21.5 million in 2023, as compared to a loss of $27.8 million in 2022. My first two months with Westport have been a great adventure. I have visited all our main facilities, gained a deep understanding of our technology and products, and learned about Westport's strengths and what improvements need to be made to optimize our productivity. After assessing Westport's current situation, I established three main priorities for the company in 2024 and beyond, including number one, driving success via our HPDI joint venture with Volvo, number two, improving operational excellence, and number three, reimagining a hydrogen-powered future. To ensure that Westport achieves growth and success over the long term, we need disciplined operations that flow from a strong strategic plan. These priorities are consistent with that need and are expected to elevate the performance and the value of our business long into the future. However, in the near term, we have already begun to act in a more disciplined way by cutting costs and making headcount reductions where necessary. As an example, in 2023, our overall headcount declined compared to the previous year. primarily due to the necessity to scale down operations at our facility in Argentina, the consolidation efforts in Italy, and closing of our production plant in India. We expect this trend to continue and for our overall headcount to decline compared to certain financial metrics like gross margin as we increase our discipline and focus on operational excellence. I am also excited to announce that earlier this year, We delivered the first LPG fuel system to our global OEM customer. This program is a demonstration of exactly the type of work that our light duty business should be undertaking. We were able to secure a multi-year program and deliver against this program with minimal capital expenditures and no expansion to our production footprint. Regarding Asia, our recent pivot in India is proving to be beneficial so far. We are seeing some benefits from our restructuring and our new approach appears to be net positive. This includes leveraging our local partner to deliver components and systems into this market, which is one of the fastest growing markets in the world. Regarding China, facility construction is underway and capital investment for the assembly lines and other equipment is in progress. Recently, the regulations associated with hydrogen components have changed in China, resulting in a slightly longer timeline to complete the certification of the initial products we plan to launch in China. We therefore anticipate production will commence in the second quarter of 2025 rather than later in 2024 as originally expected. Westport is fortunate to be part of a compelling industry in which alternative fuels are seeing increased support and investments. Many industry experts believe that over the next six years, alternative fuels will become more affordable and easier to access. Government policies and regulations are also being implemented to support this shift as hydrogen fuel stations are beginning to populate the transportation corridors across the EU. By 2030, we expect to see a significant change in the alternative fuels industry that aligns with Westport's goals of offering more hydrogen fuel-based options to support the future of sustainable transportation. I also wanted to highlight our recent efforts around the commercialization of our products across multiple modes of transport. We are at the intersection of innovation and sustainability, and each program I'm about to discuss represents another step forward in the pursuit of cleaner, more sustainable energy solutions. First, in November of 2023, we announced a collaboration with a leading global OEM in the rail industry. This partnership aims to adapt our hydrogen HPDI fuel system for applications in locomotives and related equipment used in freight and transit rail sectors. By leveraging the power of hydrogen, we hope to contribute to a greener future for rail transportation. Secondly, in December, Westport proudly announced a monumental development program with a global heavy truck manufacturer. This program focuses on adapting our next generation LNG HPDI fuel system to meet the stringent Euro 7 emissions requirements for heavy duty vehicles. With a significant investment of 33 million funded by the OEM, we are working diligently to integrate cleaner energy solutions into the transportation sector. Lastly, we are engaged in a proof of concept project with a global supplier of power solutions for marine applications. Beginning this quarter, this project will explore the use of our HPDI fuel system, fueled with methanol, for marine propulsion. With the support of our OEM partner, we aim to explore alternative sustainable energy sources for maritime transportation. Methanol is easier to handle, requires less room and less expense to bunker on a vessel, and it has a lower CO2 footprint than emissions-intensive fossil fuels. The testing of HPDI technology for use with methanol in a marine application is a natural extension of our HPDI technology. We expect that our HPDI fuel system with methanol will be able to provide similar torque, power, and efficiency to diesel, while also potentially reducing NOx emissions. These initiatives represent more than just technological advancements. They embody our unwavering commitment to a brighter, greener future for generations to come. Through collaboration, innovation and dedication, Westport is leading the charge toward a world where sustainability and progress go hand in hand. Together we are embarking on a journey towards a future defined by a cleaner, healthier future for all. Regarding the progress of our HPDI joint venture, as I mentioned above, the investment agreement has been signed. We are in a good place to start working on closing the joint venture and hope to have it operational prior to the end of the second quarter. However, we still have a lot of work ahead of us. Even once the JV is closed, as a company, we still must invest significant time and energy into supporting its growth as it begins its journey as a standalone enterprise. Volvo and Westport have collaborated for over 15 years and share the vision of creating sustainable transport solutions. We look forward to a long and prosperous future with the Volvo team. And with that, I'll hand it over to Bill, who will walk you through our financial results. Bill?