Westport Fuel Systems Inc

Good day and thank you for standing by. Welcome to Westport's third quarter 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'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Ashley Newell, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Westport Fuel Systems' third 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 Zelai 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 the 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.

All right, thanks. Thanks, Ashley. Good morning, everyone. Today, I will be summarizing Westport's progress and results for the third quarter of 2024, providing updates on our strategic priorities, including an update on the JV with Bobo. Bill will then walk us through our Q3 results and provide some commentary on the ATM offering that we announced in the quarter. Q3 was a steady quarter with wins in key areas. This was the first full quarter with Suspira being operational. That, along with the steps that we have taken with respect to cost cutting, has enabled Westport to lower expenditures in research and development, as well as sales general and administrative expenses by approximately 40%, as compared to the same period last year. This has all led to improved gross margins and adjusted EBITDA. Although we reported a decrease in total revenue this quarter, we view our revenue results for the quarter as a win and I want to provide some clarity as to why. As I mentioned, this is the first full quarter with Suspira being operational. That means we transitioned our HPDI revenue from our heavy duty OEM segment into the joint venture in the quarter and accounted for under the equity method of accounting for investments. During the quarter, Suspira generated $16.2 million in revenue, more than offsetting our reported decline in consolidated revenue. With respect to our HPDI joint venture, I want to provide a couple of different updates. The background on its new name, my perspective on its first full quarter of operations, and some insight into the partnership in China. First, JV unveiled its name Suspira as part of its participation in the IAA one of the most important industry events for commercial vehicles, transport, and logistics. The name Suspira, which combines espira, meaning breathe out in Latin, with a C for clean, perfectly embodies the joint venture's mission and vision. Regarding the JV operations, third quarter revenue for Suspira was $16.2 million, a $2.7 million increase from the same quarter last year, which was formally captured under our heavy-duty OEM segment. Next, I want to touch on our work with WHAI. As you know, we have a technology development and supply agreement, which includes an obligation for WHAI to order certain volumes of HPDI fuel from system components prior to the end of this year. Currently, we have not received any significant orders against this agreement, and we don't currently anticipate orders for any significant additional volume by the end of 2024. Both Westport and as well as Suspiria continue to collaborate with Wechai Power on an HPDI fuel system equipped version of the Wechai engine platforms and we are currently discussing the next stages of this work and the obligations of each party going forward. We continue to do things to right-size the business and cut costs where we can. Many of these changes aren't visible in the financial statements immediately, however, In Q3 2024, we really began to see some of our initiatives materialize. Given this is the first quarter with Suspira operational, some of our expenses, of course, will now be reflected as part of Suspira. Yet, we are also seeing wins in our other business units. During the quarter, we decreased the company's SG&A expenses by almost 40%, as compared to third quarter of last year, a decrease of $6.6 million, of which only $2.3 million relates to expenses that now sit in Suspira. This is a major accomplishment that I'd like to highlight. Further, our R&D expense has also decreased by over 40% compared to the same quarter of last year, a $2.5 million difference in expenses, mostly attributable to Suspira. We will continue to remain diligent when it comes to cost-cutting and decreasing expenses, ensuring that the business runs more efficiently and effectively over time. We are pleased with our progress so far, but acknowledge that there is still much work ahead of us on this front. We remain confident in the role that alternative fuels will play in driving sustainability in the future of transportation and industrial application spaces. We do see a slowdown in hydrogen infrastructure development, which is leading to a slower adoption of automotive and industrial applications powered by hydrogen. We believe that it could be a multi-year delay when it comes to the availability of low-cost, low-carbon hydrogen and hydrogen refueling infrastructure. However, We remain confident on the role that hydrogen will play in driving sustainability in the future of transportation and industrial application spaces and in the future of Westport. While hydrogen is key to the future decarbonization of transport, our components and solutions are already powering emission reducing innovation today across a range of alternative fuels, including natural gas, renewable natural gas, propane and hydrogen. With decades of experience, market leading brands and unmatched engineering expertise, We are a leader in the market. Our light duty segment has been performing well. We continue to focus on innovation, creating and deploying fuel system solutions that allow our customers to benefit from the cost advantage of alternative fuels. As you know, we started production earlier this year for the Euro 6 LPG program for a leading global OEM. Although we got off to a slow start earlier in the year, this business is performing well and we are expecting to exceed our delivery expectations for 2024 driven by an increased customer demand. Niro 7 LPG fuel system deliveries for this same global OEM customer are anticipated to begin mid to late 2025. We are also excited to be part of the new Kia Niro tri-fuel in Italy, inspired by innovation and efficiency. Born from a partnership with Kia Italy, this is the first ever OEM hybrid vehicle powered by HEV and LPG technology. This car can travel over 1,600 kilometers or almost 1,000 miles on full tanks, all while delivering reduced emissions and uncompromised performance. Finally, our Prince brand has globally released an LPG fuel system for the Ram 1500 Hurricane 3.0 DI Twin Turbo engine, enabling customers to benefit from lower fuel costs and lower emissions. Lastly, as we have shared before, one of our key delayed OEM customers paused orders as they worked through a buildup of inventory on their end. Orders from this customer have seen an uptick over the last month, and we continue to work closely with their team. With that, I'll turn it over to Bill to discuss our Q3 2024 financial results in more detail.