Westport Fuel Systems Inc

Good day and thank you for standing by. Welcome to the Westport Fuel Systems Q2 2024 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ashley Newell, VP, Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Welcome to Westport Fuel Systems' second quarter conference call for 2024. 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 are reminded that certain statements made on this 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 will turn the call over to you, Dan.

All right, thanks, Ashley, and good day, everyone. Today, I'll be recapping our progress and results in the second fiscal quarter of 2024, providing updates on our 2024 strategic priorities, including an update on the JV with Volvo, introducing our new reporting segments, and touching on the success of our July 4th event before turning the call over to Bill to walk us through our Q2 results and new segment reporting structure in more detail. Q2 was a solid quarter, demonstrated by improvements in our margins. Impacting results was the launch of the JV with the Volvo Group. During the quarter, we were excited to close this HPDI JV transaction, which resulted in us recognizing two months of revenue from the heavy-duty business in our results. Beginning in June, the HPDI JV was accounted for under the equity method of accounting for investments. The improvement in our margins and adjusted EBITDA we saw in the quarter reflects the initiatives we have undertaken to reduce costs and streamline our business, along with initial results from our more recent growth initiatives, such as our LPG fuel system sales to our OEM customer. Our evolving business strategy has long recognized the value of strategic partnerships. million, plus up to an additional $45 million of the earn-out subject to performance of the joint venture. We know our partnership with Volt is just beginning, and we are excited to continue working together. Also in June, we shared our 2023 ESG report, which highlights our commitment to environmental stewardship, social responsibility, and strong governance. We are dedicated to sustainable operations because we see the value it brings to our customers. Guided by our core values of integrity, respect, and perseverance, we're especially focused on reducing carbon emissions in transportation to help clean the air and build a more sustainable future. We continue to make advancements against our three main priorities for 2024 and beyond. As a reminder, those priorities include, one, driving success via our HPDI joint venture with Volvo, two, improving operational excellence, and three, reimagining a hybrid-powered future. Regarding our first priority, as I mentioned, we closed our HPDI joint venture in June of 2024. Although closing the JV with Volvo was a significant milestone, the hard work is still ahead of us. We have a lot to accomplish together to ensure that the JV results in the acceleration of the globalization and global adoption of of the HPDI fuel system technology for long-haul and off-road applications. Thankfully, the work has already begun. As we progress, we actively promote and develop markets for our technologies and sectors that are challenging to decarbonize, thereby expanding the joint venture's reach into the future. As I have said before, our pursuit of profitability and cost-cutting is not a priority. It is essential. In Q2, we closed the amended Westport in JV with the restructuring in India. It is expected to transition this initiative to generating positive cash flow. We have a number of things to resize the business and cut costs where we can. Many of these changes won't be visible in the financials immediately. However, in Q2 2024, we began to see some of our initiatives materialize. Our margins grew from 17% of revenue in Q2 of 2023 to 21% of revenue this quarter, which was achieved by implementing tighter controls and beginning to see the benefits of our newer growth projects supported by strong margins. One of the significant changes in our recast financial segments is the additional transparency we now offer our growing high-pressure controls and systems business. Here, we are at the forefront of the clean energy revolution, designing, developing, and producing high-demand components for transportation and industrial applications. This includes fuel containment and fuel pressure management components for fuel storage and fuel delivery systems. We partner with the world's leading fuel cell and hydrogen manufacturers and companies committed to decarbonizing transport, offering versatile solutions that serve a variety of fuel types. While hydrogen is the key to the future, decarbonization and export, our components and solutions are already powering emission-reduced innovation today across a range of gas fuels, including both PNG and hydrogen. With decades of experience, market-leading brands, and unmatched engineering expertise, we are leading the march. While we're still small, our strategic position and innovative capabilities focus on the cusp of significant growth, ensuring we're the go-to choice for those shaping the future of clean energy today. and tomorrow. In the supplementary information we provide this quarter, aligning our historical results with the past under the new segments, let's show the business narrative of $20.23 million, representing approximately $70 million in additional revenue to be generated in the latter part of the decade. Westport is excited to play a part in an innovative industry in which alternative fuels are seeing increased support in investments. We are poised to deliver now, providing alternative fuel solutions to support transport and industrial applications and are prepared to capture the growth as hydrogen develops into the fuel source of the future in the mobility sector. On July 4th, Volvo and Westport marked a defining moment in the journey of our newly formed joint venture. The two companies celebrated the official launch of our partnership with an exclusive event at the University of British Columbia, the birthplace of Westport's HPDI fuel system technology. Leaders from both companies joined in in the celebration of this milestone, emphasizing the significance of the partnership in driving forward HPDI's breakthrough technology in tackling the urgent challenges of climate change. By combining Volvo's extensive expertise in commercial vehicle and power system manufacturing with Westport's innovative fuel system technology. We are creating a powerful force for change that can make a meaningful contribution to reduce carbon emissions immediately. With that, I'll hand the mic over to Bill, who'll talk you through the results.