Westport Fuel Systems (US) ((TSE:WPRT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Westport Fuel Systems (US) recently held its earnings call, revealing a mixed sentiment characterized by strategic achievements and ongoing challenges. The company highlighted successful initiatives such as the divestiture of its Light-Duty segment and growth in Cespira revenue, yet faced hurdles like a decline in revenue from continuing operations and negative EBITDA. This blend of positive developments and financial struggles paints a balanced outlook for the company’s future.
Strategic Transformation and Divestiture
Westport Fuel Systems successfully divested its Light-Duty segment, a move that has strengthened its balance sheet and sharpened its strategic focus on high-impact opportunities in commercial transportation and industrial applications. This strategic transformation is expected to enhance the company’s ability to concentrate on its core strengths.
Cespira Revenue Growth
Cespira, a joint venture, generated $12 million in revenue during the quarter, marking a significant increase from $4.1 million in the same period last year. This growth underscores the venture’s potential and the company’s commitment to expanding its market presence.
Cost Reduction Initiatives
The company implemented cost reduction initiatives, decreasing operating expenses, including R&D, sales and marketing, and G&A, to $15.5 million in Q2 2025 from $21.6 million in Q2 2024. These efforts reflect Westport’s focus on improving operational efficiency.
Strong Positioning in Hydrogen Market in China
Westport opened a state-of-the-art hydrogen innovation center and manufacturing facility in China, positioning itself strongly in the hydrogen transportation solutions sector. This strategic move is anticipated to drive growth and innovation in the burgeoning hydrogen market.
Revenue Decline in Continuing Operations
Despite some positive developments, Westport experienced an 11% decline in consolidated revenue from continuing operations, dropping to $12.5 million compared to $14.1 million in the same period last year. This decline was primarily due to decreased sales volumes in High-Pressure Controls & Systems and Heavy-Duty OEM segments.
Negative Adjusted EBITDA
Westport reported a negative adjusted EBITDA of $1 million for the quarter, an improvement from negative $2 million in the same quarter last year. This improvement, despite ongoing cost reductions, highlights the financial challenges the company continues to face.
Gross Margin Decline
The gross margin decreased significantly to $100,000 or 3% of revenue, down from $1.1 million or 31% of revenue in Q2 2024. This decline was primarily due to lower revenue and increased material costs, impacting the company’s profitability.
Continued Cash Burn
Net cash used in operating activities from continuing operations was $5.6 million, driven by operating losses and funding of the Cespira joint venture. This continued cash burn underscores the financial pressures Westport is under as it seeks to stabilize its operations.
Forward-Looking Guidance
Looking ahead, Westport Fuel Systems aims to grow Cespira’s market presence, particularly in heavy-duty transportation, by leveraging the adoption of CNG, LNG, and RNG fuels. The company is also focusing on geographic expansion and OEM partnerships. Relocating its European operations to Canada and establishing a hydrogen innovation center in China are part of its strategy to align manufacturing with innovation hubs globally. Westport plans further investments and restructuring activities to strengthen its financial position.
In summary, Westport Fuel Systems’ earnings call highlighted a blend of strategic achievements and financial challenges. While the company has made significant strides in divesting non-core segments and expanding its market presence, it continues to face revenue declines and profitability issues. The forward-looking guidance suggests a focus on strategic growth and operational efficiency, aiming to navigate the market uncertainties and enhance its competitive positioning.