WPRT profits name for the duration finishing December 31, 2024.
Symbol supply: The Motley Idiot.
Westport Gas Programs (WPRT -2.59%)This fall 2024 Income CallMar 31, 2025, 1:30 p.m. ET
Contents:
Ready Remarks Questions and Solutions Name Contributors
Ready Remarks:
Operator
Excellent day, and thanks for status by way of. Welcome to Westport’s This fall convention name. At the moment, all contributors are in a listen-only mode. After the audio system’ presentation, there shall be a question-and-answer consultation.
[Operator instructions] Please be urged that as of late’s convention is being recorded. I might now like at hand the convention over for your speaker as of late, Ashley Nuell, vice chairman of investor members of the family. Please move forward.
Ashley Nuell — Senior Director, Investor Family members
Excellent morning, everybody. Welcome to Westport Gas Programs convention name referring to effects for the fourth quarter and 2024 fiscal yr. This name is being held to coincide with the clicking unlock containing Westport’s monetary effects that have been issued previous as of late. On as of late’s name, talking on behalf of Westport is Leader Government Officer and Director Dan Sceli; and Leader Monetary Officer Invoice Larkin.
Attendance in this name is open to the general public, however questions shall be limited to the funding group. You’re reminded that positive statements made in this name and our responses to positive questions might represent forward-looking statements throughout the which means of the U.S. and acceptable Canadian securities rules. And as such, forward-looking statements are made in response to our present expectancies and contain positive dangers and uncertainties.
With that, I can flip the decision over to you, Dan.
Dan Sceli — Director and Leader Government Officer
Thank you, Ashley. Excellent morning, everybody. Previous this morning, no longer solely did we announce our 2024 fourth-quarter and full-year effects, however we additionally introduced an exhilarating transaction that will result in the divestment of our light-duty industry. This proposed transaction is anticipated to allow Westport to develop into considerably more potent from a monetary standpoint and make allowance us to taper our center of attention on developing answers for hard-to-decarbonize segments of the long-haul heavy-duty delivery and commercial area.
Given the thrill round this transaction, we’ve adjusted the go with the flow of this name so we will be able to center of attention our time on outlining the proposed transaction the possible that it provides Westport and its shareholders. So, as of late, following a couple of opening remarks from me, we will kick the decision off with Invoice strolling during the fourth-quarter and year-end effects. After which I’m going to dive into the main points of the transaction sooner than we move to our question-and-answer duration. Regardless of revenues for the yr being down by way of 9% as in comparison to the former yr, essentially because of the HPDI earnings now sitting in Cespira, our willpower to our 3 key pillars, located us to ship enhancements around the board, together with in our gross benefit and gross benefit margins.
Our adjusted EBITDA and for probably the most first instances ever, we delivered sure web money from operations. I am very happy with how Westport carried out within the 2024 duration and acknowledge we nonetheless have numerous paintings in entrance folks as we proceed to adapt the corporate in 2025. I’m going to now hand the decision over to Invoice so he can give some additional information at the monetary effects. Invoice?
Invoice Larkin — Leader Monetary Officer
Thanks, Dan. Shifting directly to our fourth-quarter and year-end effects. As anticipated, the transition of the heavy-duty OEM industry and the Cespira impacted revenues for each the fourth quarter and whole yr 2024. This used to be partly offset by way of an building up in gross sales in our light-duty phase.
Within the fourth quarter of 2024, we generated 75.1 million in earnings. It is a 14% lower in comparison to the prior-year duration. For the entire yr of 2024, earnings used to be 302.3 million, a 9% lower in comparison to the former yr. In keeping with our key precedence of bettering operational excellence and decreasing charge, we delivered progressed margins in each the fourth quarter and whole yr ended December 31, 2024.
Gross margin larger to fourteen.3 million or 19% of earnings in This fall of 2024. That is up from 8 million or 9% of earnings in This fall of 2023. For the entire yr of 2024, gross margin larger to 57.6 million or 19% of earnings. That is up from 48.9 million or 15% of earnings for the entire yr of 2023.
An building up in gross sales to determine Ecu consumers moderately than rising markets additionally helped to fortify our margins. We demonstrated persevered enhancements in our adjusted EBITDA metrics for each the fourth quarter and yr ended December thirty first, 2024. For the quarter, we reported an adjusted EBITDA lack of 1.8 million. That is considerably not up to the adjusted EBITDA lack of 10.9 within the fourth quarter of 2023.
For the entire yr, we reported an adjusted EBITDA lack of 11.2 million. It is a really extensive development in comparison to an adjusted EBITDA lack of 21.5 million for the entire yr of 2023. Relating to liquidity, our money and money equivalents on the finish of 2024 have been 37.6 million, as in comparison to 54.9 million on the finish of 2023. The lower used to be essentially pushed by way of debt bills, partly offset by way of money equipped by way of our working and making an investment actions.
2024 marked probably the most first instances Westport generated sure money go with the flow from operations, with web money equipped by way of working actions of seven.2 million. The discount in working losses, in conjunction with an building up in money accumulated from accounts receivable, together with the sale of Italian value-added tax receivables of five.9 million, drove the development in money equipped by way of working actions, that have been partly offset by way of stock associated with our heavy-duty OEM and light-duty companies. Web money equipped by way of making an investment actions used to be 4.5 million for the yr, pushed by way of proceeds from the sale of investments of 30 million, essentially associated with the Cespira, partly offset by way of purchases of assets, crops, and gear of 16.9 million and our capital contributions to Cespira of 9.9 million. Web money utilized in financing actions used to be 25.2 million in 2024.
In January 2024, we bought new time period mortgage of three.8 million from UniCredit that has non-public repayments beginning in 2025. Right through 2024, along with our scheduled foremost bills on our time period debt we paid in filled with revolving credit score facility with RBC with 15.2 million used to be exceptional in this credit score facility on the finish of 2023. We closed this revolving financing facility with RBC in November of 2024. As you learn in our press unlock and fiscal effects launched this morning, in response to our projected capital expenditures, debt servicing responsibilities and working money necessities underneath our present marketing strategy, we’re projecting that our money and money equivalents may not be enough to fund our operations for the following 365 days.
This morning, we additionally introduced the sale of our light-duty industry, which is able to improve our stability sheet. As well as, we plan to proceed using our cost-reduction initiative. Now we have made many sure adjustments right through 2024, together with enhancements in margin and altered EBITDA as I reviewed previous. We consider this transaction leads the industry in the correct path whilst permitting us to center of attention thru with our dedication to strengthening the stability sheet and creating the HPDI and high-pressure controls and methods segments.
With that, I can move the decision again to Dan, who’s going to stroll thru our divestiture announcement. Dan?
Dan Sceli — Director and Leader Government Officer
Yeah. Thanks, Invoice. So, this morning, Westport introduced that it has entered into an settlement to divest its light-duty industry, which contains the light-duty OEM industry, not on time OEM, and impartial aftermarket companies. Along with considerably strengthening our stability sheet as Invoice discussed, the proposed transaction simplifies our aggressive technique and streamlines our operations, permitting Westport to concentrate on HPDI era in our Cespira three way partnership and on our high-pressure controls and methods industry, the place we see the most powerful alternatives for expansion.
The transaction is valued at 75.1 million or 69.5 million euros, with the possibility of an incremental 6.5 million or 6 million euros to be paid in earn-outs if positive prerequisites are met. We watch for last the transaction by way of the tip of Q2 2025, topic to the receipt of shareholder approval and different standard last prerequisites. The transaction considerably improves our monetary place, and transferring ahead, we’re dedicated to keeping up a more potent stability sheet. The proposed transaction would convey ahead extra money as of late than we expected underneath the light-duty industry’ five-year money go with the flow projections and lets in us to fund near-term natural expansion alternatives for each Cespira and the high-pressure controls and methods phase.
It additionally allows us to imagine bolt-on acquisitions. In spite of everything, put up transaction, our group shall be a lot smaller and extra targeted. We will be able to intend to align the fee construction with that of a smaller, extra environment friendly group. The resurgence of herbal gasoline and renewable herbal gasoline globally supplies a marketplace alternative for Westport, in particular in North The us, the place herbal gasoline infrastructure is considerable and RNG manufacturing is rising.
As well as, we consider that hydrogen will play a job in hard-to-decarbonize cell packages long run. Each Cespira and our high-pressure controls and methods phase have merchandise and applied sciences enabling using lower-carbon fuels as of late to handle decarbonization with web 0 and low-carbon fuels, whilst additionally having an inexpensive resolution when zero-carbon hydrogen turns into extra to be had. With this announcement, our objective is to revert again to our roots and develop into a extra targeted group. Westport has 30 years of revel in turning in element answers and creating HPDI applied sciences.
At its core, Westport is a blank tech innovation corporate that gives OEMs with simplified answers to decarbonize difficult segments of the heavy-duty delivery and commercial markets, using plenty of selection fuels. Thru Cespira, the HPDI gas method does the on-engine paintings, whilst our high-pressure controls and methods phase produce merchandise do the off-engine paintings. As our international inhabitants continues to develop, transportation of products stays seriously vital. The worldwide heavy-duty truck marketplace is anticipated to achieve virtually 2 million new vehicles at the street in 2025.
As this phase grows, offering answers to allow emission discounts is important. Regardless of technological developments, decarbonizing long-haul heavy-duty delivery stays a problem with considerable discounts in CO2 emissions nonetheless to be discovered. If truth be told, in Europe, the era recently making the most important affect on heavy-duty long-haul trucking GHG emissions are herbal gasoline and biogas gas inside combustion engines with HPDI main the best way. Whilst OEMs have explored a couple of possible choices, popular adoption has been restricted, whilst herbal gasoline and biogas fueled inside combustion engines have observed modest adoption.
Such adoption, however, eclipses the adoption of some other carbon mitigating answers. As well as, fleet operators are prioritizing cost-effectiveness and general charge of possession with emissions frequently taking a secondary position. Due to this fact, for answers to realize traction, they will have to take care of efficiency and be cost-effective. Hydrogen is identified as an answer for the long-haul packages long-term.
In the meantime, call for continues to develop for low and zero-carbon possible choices in hard-to-decarbonize packages equivalent to heavy-duty trucking. To deal with those demanding situations, Westport thru Cespira is advancing fuel-agnostic heavy-duty delivery similar applied sciences, rising its herbal gasoline and biogas answers as of late whilst laying the groundwork for hydrogen adoption at some point. The HPDI gas method is probably the most inexpensive, commercially viable choice that doesn’t compromise on efficiency and that may ship web 0 carbon emissions and heavy-duty delivery. As further hard-to-decarbonize packages emerge within the delivery sector, high-pressure methods and controls shall be wanted without reference to the powertrain and supplement the transition from herbal gasoline to renewables to hydrogen.
Our high-pressure controls and methods industry designs, develops and produces, and sells elements for transportation and commercial packages. Construction during the last 5 years is concentrated at the hydrogen marketplace however with contemporary expansion in CNG, we intend to leverage our high-pressure experience and develop the CNG product portfolio, offering tremendous answers for decarbonization by using selection fuels as of late whilst advancing zero-emissions hydrogen answers for the longer term with choice to these serving heavy-duty, off-road, and commercial packages. We plan to mix our controls capacity direct with our tank valves, regulators, and stress reduction units, transferring us towards a system-based resolution. This transition is deliberate to incorporate the development of our product portfolio and extra CNG packages, leveraging the functions in our high-pressure controls and methods industry to shorten the timeline to go into the North American marketplace with a product providing that may run on RNG as of late and hydrogen at some point.
As we glance to the longer term, Westport seems to amplify its addressable marketplace, enjoying a bigger a part of the ecosystem in mobility and commercial area that’s not simply electrified. In last, first, thanks to everybody who joined the profits name as of late. Your persevered reinforce is precious to us. We’re desirous about Westport’s long run, and we wish to transfer thru 2025 with function, developing cost for our shareholders and cultivating alternatives to develop as an organization.
We consider that transferring our center of attention to our HPDI and our high-pressure controls and methods segments will supply us with the most productive conceivable long run. We keep in mind that so much is proposed to be converting. And with alternate comes challenging paintings, however we are prepared to embody. Thanks once more for becoming a member of us as of late.
Questions & Solutions:
Operator
[Operator instructions] Please stand by way of whilst we collect the Q&A roster. Our first query comes from Eric Stine from Craig-Hallum Capital Team.
Eric Stine — Analyst
Hello, everybody. Thank you for taking the questions.
Dan Sceli — Director and Leader Government Officer
Hiya, just right morning, Eric.
Invoice Larkin — Leader Monetary Officer
Excellent morning.
Eric Stine — Analyst
Hiya, hi. So, perhaps simply beginning with HPDI. I do know you do not escape gadgets however obviously a step-up in revenues in This fall. So, perhaps if you need to simply, from a excessive stage, speak about roughly unit traits that you simply noticed within the quarter causes for that? After which any element you’ll give on expectancies, whether or not it is gadgets or expansion for ’25.
Invoice Larkin — Leader Monetary Officer
Certain, positive. Neatly, indubitably, we did see This fall volumes move up with our OEM buyer expanding manufacturing builds. And we are going to see the ones sporting on thru into 2025. So, what we are seeing is {the marketplace} adopting this era.
It is beginning to get its legs beneath it. After all, we are coping with an international marketplace and the plan all alongside has been that this industry would develop over the primary two, 3, 4 years, and it is if truth be told doing that. So, we are hitting the plan as opposed to manufacturing volumes, and we really feel superb about the place it is headed.
Eric Stine — Analyst
Were given it. After which perhaps simply an replace, sticking with HPDI. I do know that you have indubitably expressed self belief in previous calls and investor outreach on further OEMs. I do know that that may be a mandate of the three way partnership and its companions.
The place do issues stand there?
Dan Sceli — Director and Leader Government Officer
Neatly, the efforts to herald different OEMs continues challenging. I am if truth be told sitting out of the country presently, strolling — simply popping out of conferences with further OEMs running at it. And as you recognize, we aren’t allowed to make use of their names they do not like that very a lot. However that is, if truth be told, the place I’m presently.
So, the ones efforts are choosing up steam. I feel the largest factor that we will have to be staring at is that this pendulum shift within the herbal gasoline international, proper? I feel that we are seeing an international that is swinging again from electrify the entirety or gas cells for the entirety. We are feeling the load of that coming. And so, the industrial discussions with different OEMs are taking place and proceeding to pick out up tempo.
Eric Stine — Analyst
Were given it. Were given it. After which perhaps simply — I’m going to sneak in yet another after which flip it over simply at the divestiture.
Dan Sceli — Director and Leader Government Officer
Yeah, positive. Certain.
Eric Stine — Analyst
Are you able to simply ring a bell in me how a lot debt is tied to that light-duty industry? I sense that it is a first rate quantity, but when you need to simply roughly dial that piece in for us that you’re going to now not have, that will be useful.
Dan Sceli — Director and Leader Government Officer
Certain. Invoice, you wish to have to do this?
Invoice Larkin — Leader Monetary Officer
Yeah. Necessarily, all of the debt, with the exception of for about 7 million, is said to the light-duty industry. So, you are looking —
Eric Stine — Analyst
That is — that is long past, proper? I imply, that shall be on?
Invoice Larkin — Leader Monetary Officer
Sure. Yeah. So, it is going to simply be — the EDC debt, that is still with the industry with us.
Eric Stine — Analyst
OK, that is nice. Thanks.
Dan Sceli — Director and Leader Government Officer
All proper. Thanks, Eric.
Operator
Thanks. One second for our subsequent query. Our subsequent query comes from the road of Rob Brown from Lake Boulevard Capital Markets.
Rob Brown — Lake Boulevard Capital Markets — Analyst
Hello, just right morning.
Dan Sceli — Director and Leader Government Officer
Excellent morning, rob.
Invoice Larkin — Leader Monetary Officer
Excellent morning.
Rob Brown — Lake Boulevard Capital Markets — Analyst
Simply to explain the closing level, your sale worth of 73 million is form of web of the entirety, after which the debt will — that portion of debt shall be long past. So, your form of undertaking cost of the entire used to be over, I assume, over 100 million. Is that proper?
Invoice Larkin — Leader Monetary Officer
Neatly — so, you’ll offset that towards the money at the different facet.
Rob Brown — Lake Boulevard Capital Markets — Analyst
OK. OK. So, you’ll be able to web after the debt. Were given it.
Invoice Larkin — Leader Monetary Officer
Yep.
Rob Brown — Lake Boulevard Capital Markets — Analyst
After which perhaps at the technique — roughly the tactic of the industry going ahead. What is form of the earnings fee of the industry that you simply retain? And I do know you laid out quite a few the elements that you simply glance to develop, however perhaps a way of the way you manner that marketplace, how lengthy it takes to get the ones merchandise extra into the herbal gasoline facet in addition to the hydrogen and simply perhaps form of a way of the tactic of the continued industry.
Dan Sceli — Director and Leader Government Officer
Yeah. The solution is actually two other buckets. Clearly, the HPDI or Cespira bucket, we are on a drift trail of accelerating volumes in line with plan that have been constructed into this industry to start out it up. And the ones are going to proceed to head at that tempo.
Clearly, touchdown every other OEM does not give us quick earnings bump as a result of any OEM we land will move during the construction cycle, however it does get — it provides a dedication to the era. The opposite piece of our industry ultimate is the high-pressure controls and methods. And the expansion that we have got been seeing during the last yr has all been hydrogen-based elements. We received a vital quantity of latest industry.
And — however the manufacturing launches for many of that industry is 2, 3 years down the street. What we are doing now, spotting what is took place on the market, we are going to be pivoting challenging. We’re pivoting challenging to head and create alternatives for those self same sorts of stress regulate elements and methods within the herbal gasoline marketplace. So, we see an enormous swing towards the compressed herbal gases in North The us.
And it is mainly the similar era that we use for the hydrogen controls, proper? So, what our plan is as effectively, the place the techniques will come down the street for hydrogen, we wish to be promoting into the CNG methods now, and that’s the reason what we are pivoting to do. I do not need any explicit timeline to speak to when that industry goes to start out rolling in. It is an initiative that we have now pivoted to as a result of we have now listened to the marketplace. And, in fact, some buyers have introduced it up.
Its — evidently, it is a massive alternative, we consider, in North The us that we are going to benefit from.
Rob Brown — Lake Boulevard Capital Markets — Analyst
Nice, thanks. I’m going to flip it over.
Operator
Thanks. [Operator instructions] Our subsequent query comes from the road of Chris Dendrinos from RBC Capital Markets.
Chris Dendrinos — RBC Capital Markets — Analyst
Yeah, just right morning, and congratulations at the transaction.
Invoice Larkin — Leader Monetary Officer
Thanks.
Chris Dendrinos — RBC Capital Markets — Analyst
I assume perhaps to start out, simply going again to the tactic, and I feel you all had discussed that M&A generally is a element of this. And so, may you perhaps simply speak about what sorts of issues you could possibly be taking into account? And is there — is it the U.S. or North The us that you are searching to construct a larger presence in? Or may this be one thing that is international in scale? Simply lend a hand us flush that concept procedure out a bit bit. Thank you.
Dan Sceli — Director and Leader Government Officer
Certain, positive. Our technique actually is searching to take the controls that we have got, the high-pressure controls, and construction it out right into a complete method capacity. So, we will be searching at doable alternatives to, if truth be told, do this. We expect that the bigger quick alternative is undoubtedly in North The us for that, however this can be a international industry.
There is — compressed herbal gasoline is used in every single place the arena. So — however we are going to be searching to construct out that industry to be shifted from being a elements play to a methods play. We do have our era functions for the entire engine regulate method. So, mix that with the stress controls, and there is going to be some alternatives out there to construct that out.
Chris Dendrinos — RBC Capital Markets — Analyst
Were given it. After which I assume perhaps from an operational point of view, do you’ve got the R&D functions in-house to pursue that as of late? Or is that this going to be a work of the tale the place you might be shrinking one of the vital, I assume, name it, worker footprint with the sale however then searching so as to add new staff in most of these expansion spaces? Thank you.
Dan Sceli — Director and Leader Government Officer
Certain, positive. The high-pressure controls is an R&D and engineering team utterly break away the light-duty industry in Europe. It is positioned in Cambridge, Ontario in North The us and simply out of doors of Toronto. And they’re absolutely provided to function independently and construct out this — from a technical standpoint, construct out this industry.
Chris Dendrinos — RBC Capital Markets — Analyst
Were given it. Thanks.
Operator
Thanks. At the moment, I might now like to show the convention again over to Dan Sceli, CEO, for last remarks.
Dan Sceli — Director and Leader Government Officer
Nice. Thanks very a lot. Neatly, once more, thanks to everybody becoming a member of the decision as of late, and recognize the nice questions. I do know we will have additional discussions, and we’re very desirous about our long run.
We are going to proceed to stick very targeted managing this industry with self-discipline and excellence. That is probably the most giant — probably the most largest issues that I feel we will be able to glance again on is transferring the tradition to an excessively disciplined group in order that as we make strategic choices, as we execute operationally, we are doing it in an excessively skilled method. And we are going to organize our prices very, very, very tightly and no longer get out of regulate on spending. So, I am proud to mention that we are a well-run industry with a workforce that is utterly motivated to expire this technique and supply an excellent long run for the shareholders.
So, thanks very a lot.
Operator
[Operator signoff]
Length: 0 mins
Name contributors:
Ashley Nuell — Senior Director, Investor Family members
Dan Sceli — Director and Leader Government Officer
Invoice Larkin — Leader Monetary Officer
Eric Stine — Analyst
Rob Brown — Lake Boulevard Capital Markets — Analyst
Chris Dendrinos — RBC Capital Markets — Analyst
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