Westport Innovations Inc. (NASDAQ:WPRT) Q2 2019 Earnings Conference Call - Final Transcript

Aug 08, 2019 • 05:00 pm ET


Westport Innovations Inc. (NASDAQ:WPRT) Q2 2019 Earnings Conference Call - Final Transcript


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Thank you for standing by. This is the conference operator. Welcome to the Westport Fuel Systems Second Quarter 2019 Financial Results Conference Call. [Operator Instructions]

I would now like to turn the conference over to Shawn Severson with alphaDIRECT Advisors, Westport's Investor Relations representative. Please go ahead, Mr. Severson.

Shawn Severson

Thank you, and good afternoon, everyone. Welcome to Westport Fuel Systems second quarter conference call, which is being held to coincide with the press release containing Westport Fuel Systems financial results that was distributed this afternoon. On today's call, speaking on behalf of Westport Fuel Systems, is Chief Executive Officer, David Johnson; and acting Chief Financial Officer, Jim MacCallum.

Attendance at this call is open to the public and to media, but questions will be restricted to the investment community. You are reminded that certain statements made in this conference call and our responses to various questions may constitute forward-looking statements within the meaning of the U.S. and applicable Canadian securities laws, and such forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. Actual results may differ materially from these projected in the forward-looking statements so you are cautioned not to place any undue reliance on these statements. Information contained in this conference call is subject to and qualified in its entirety by information contained in the company's public filings.

I'll now turn the call over to David. David?

David M. Johnson

Good afternoon. Thanks for joining the Westport Fuel Systems Q2, 2019 conference call. I'm pleased to share our latest financial results, highlight market drivers that are advancing our clean transportation industry globally, and showcase a few trends and data points specific to our markets and our customers. Our excellent results validate our strategy. They are further proof that our cost-effective market-ready products combined with stringent emission standards are driving our company's growth.

Let me turn straight to the financial results. With strength in OEM sales and our independent aftermarket channel, transportation revenue was $82.4 million, up 12.6% over Q1 of 2019. Adjusted EBITDA of $8.1 million is our fifth consecutive quarter of positive adjusted EBITDA, and also the second quarter of positive EBITDA. We generated $2.5 million of positive cash flow from operations this quarter compared to consuming $2 million during Q2 a year ago. Our Cummins Westport JV contributed $5.9 million to our bottom line in Q2 and $14.5 million in the first half of this year. Overall, another strong quarter with contributions from across the business.

Our financial results aligned well, with market trends that we expect will not only persist, but will accelerate. We're witnessing a real-time market response to new regulations. Europe's new heavy duty CO2 regulations require our truck OEMs to achieve a fleet average CO2 reduction of 15% by 2025 and 30% by 2030, compared to a 12 month baseline that's being created right now. That is from the beginning of last month through the end of June 2020. This regulation is driving OEM decision making. In May, along with Delphi