Westport Reports Strong Fourth Quarter and Fiscal 2005 Results; Cummins Westport Continues Strong International Growth
VANCOUVER, British Columbia--June 7, 2005--Westport Innovations Inc. (TSX:WPT) today reported that total consolidated revenues in the three months ending March 31, 2005 were $10.4 million, with 445 units shipped. This was the strongest revenue performance of the fiscal year and the second best quarter in the past two years. Loss for the quarter was $9.3 million compared to $6.6 million this quarter last year. Included in the loss figures is $3.1 million related to a non-cash write-down of the company's investment in Edge Technologies.Total consolidated revenues for the fiscal year ended March 31, 2005 were $34.4 million, a 6% increase from prior year revenues of $32.4 million. Revenues in the year were positively impacted by Cummins Westport Inc.'s (CWI's) increased role in its parts business and resulting change in accounting, but negatively impacted by the translation of revenues from a weakened US dollar into Canadian dollars.
Continued strong margin contribution from sales, aggressive cost management, and third party co-funding of Westport's R&D programs meant that the company reduced its burn rate (this is on a cash basis and is a non-GAAP measure. See figure 1) by 46% compared to the prior year, from $25 million to $13.6 million, bettering its target of a 30% reduction by almost $4 million. Loss for the year was $26.2 million compared to $37.7 million last year, a 31% improvement. The corresponding loss on a per share basis for fiscal 2005 was $0.38 compared to $0.64 in 2004.
As at March 31, 2005, Westport ended the year with $20.3 million in cash and short-term investments. During the year, Westport raised $15.2 million in equity financing, invested $13.6 million in operations, and made debt repayments totaling $1.2 million. Westport ended the year with the same amount of cash on hand as at the start of the year, and with a substantially reduced sustainable burn rate.
"We are very pleased with our fiscal 2005 results, which demonstrate our continuing transformation from a technology development company to a growing commercial company with expanding markets," said David Demers, Westport's Chief Executive Officer. "We continue to see strong growth in our international markets, our current products are the established market leaders in North America, and our new development programs, which are increasingly supported by strategic partners, are well positioned to support our growth objectives."
Strategic highlights of the year
In fiscal 2005, CWI, Westport's 50:50 joint venture with Cummins Inc., posted a profit for its fiscal year, which ended December 31, 2004. In US dollar terms, revenues increased by 40% compared to 2003, which was itself 36% higher than 2002. Operationally, Cummins Westport saw continuing improvements in product reliability and increasing sales into international markets with units exported outside of North America increasing by 85%. Significant new international orders included transit buses for Manila and refuse trucks to Paris.
Renault launched two commercial vehicles featuring Cummins Westport natural gas engines as factory options, providing CWI with its first major European vertically integrated OEM partnership. CWI is now part of the product offerings of more than 35 OEM vehicle manufacturers around the world.
CWI completed development of its B Gas International (BGI) product offering, which will allow international Cummins diesel engine plants to produce this leading natural gas engine. Manufacturing license agreements for the BGI were concluded with Cummins India Ltd. and a second license agreement is planned with Dongfeng Cummins Engine Company in China. Local manufacturing of the BGI engine will reduce costs and increase competitiveness with domestic manufacturers in international markets.
In North America, CWI introduced its top-of-the line L Gas Plus engine in a major sale to Los Angeles Metro Transit for use in its new, articulated Bus Rapid Transit vehicle - the MetroLiner. The first MetroLiners are now operating on the streets of Los Angeles, with an initial order of approximately 200 to be delivered during the next year.
CWI also announced its plans for the next generation engine program that will meet stringent 2010 US EPA emissions standards and 2007 California Air Resources Board (CARB) urban bus standards. Scheduled for commercial launch in 2007, three years ahead of the deadline, the new engine will reduce emissions of nitrogen oxides by more than 80% while improving fuel economy and performance.
Guan Saw, CWI's new President as of April 1, 2005, noted that these international developments, along with having the leading high performance low emissions product line for the North American market, will be key factors in Cummins Westport's future growth.
Westport advances direct-injection technologies
Westport announced several strategic alliances to advance development of products incorporating its proprietary direct injection fuel systems. Significant financial commitments for High Pressure Direct Injection (HPDI) heavy-duty truck engines were received from the US Department of Energy's National Renewable Energy Laboratory, and California's South Coast Air Quality Management District (AQMD). During the year, the demonstration program at Norcal Waste's fleet surpassed 6.5 million kilometres (4.2 million miles) of operation, and has shown ongoing improvements in reliability and performance. A second heavy-duty truck demonstration has commenced service along the Highway 401 Corridor in Ontario.
A new agreement with Isuzu will see next-generation prototype Isuzu ELF trucks delivered in 2005. These vehicles use Westport's compressed natural gas direct injection (CNG-DI) technology with hot-surface ignition. In October, Isuzu presented a paper on CNG-DI technology at the 9th International Association for Natural Gas Vehicles Conference and Exhibition in Buenos Aires, Argentina that highlighted Westport's mono-fuel CNG-DI engines as up to 75% cleaner than today's diesel engines, and 25%-30% more energy-efficient than today's natural gas engines.
Westport initiated discussions with Energy Developments Limited (EDL) of Australia, and with a number of prospective partners in China related to development of new markets for natural gas commercial vehicles.
Westport signed new agreements for supply and development tasks relating to hydrogen-fueled injection components with BMW and Ford.
Dr. Michael Gallagher, Westport's President and Chief Operating Officer, said, "Our strong financial results and technical achievements last year give the company momentum for carrying its business plan forward. We see strong commitment to Westport's new development programs from government and industry partners, while our existing commercial business with Cummins Westport demonstrates strong international growth. Westport's objective continues to be to develop market alliances with strategic partners in order to realize commercial opportunities and grow our business."
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Figure 1: GAAP to Non-GAAP Reconciliation --"Cash Burn"
In thousands of Canadian dollars, except for per share amounts and
units shipped
For the fiscal years
ended March 31
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2005 2004
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Units shipped 1,277 1,255
Total Revenue $ 34,436 $ 32,430
Net loss per share - basic and diluted (1) (0.38) (0.64)
Net loss for the period, a GAAP measure $ (26,209) $ (37,722)
Items not involving cash:
Amortization 6,323 6,861
Stock-based compensation expense 1,747 1,315
Accretion of TPC warrants 1,143 1,143
Rent expense in excess of payments 18 189
Write down of equipment, furniture, and
leasehold improvements 403 3,219
Write off of long-term investment 3,072 -
Gain on disposal of equipment, furniture
and leasehold improvements (138) -
Joint Venture Partner's share of
profit in joint venture 69 -
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Burn rate, a non-GAAP measure $ (13,571) $ (24,994)
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(1) Fully diluted loss per share is not materially different as the
effect of stock options, warrants and performance share units would
be anti-dilutive.
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Results Conference Call
Westport has scheduled a public conference call for Tuesday, June 7, 2005 at 8 am (Pacific Time) to discuss the quarterly and year end results. The public is invited to listen to the conference call in real time or by replay. To access the conference call by telephone, please dial: 1-800-936-9754 (North America Toll-Free) or 1-973-935-2048 (International).
Alternatively, the webcast of the conference call can be accessed through the Westport web site at http://www.westport.com, by selecting "Our Investors", and then "Conference Calls & AGMs", from the menu. Replays will be available in streaming audio shortly after the conclusion of the conference call.
To view Westport's fiscal 2005 financials, please point your browser to the following link: http://www.westport.com/investor/financial.php.
Annual Meeting of Shareholders
The Westport Innovations Inc. Annual Meeting of Shareholders will be held on Thursday, July 7, 2005 at 11:00 a.m. (Pacific Time) in the Malaspina Room of the Fairmont Waterfront Hotel, 900 Canada Place Way, Vancouver, BC, V6C 3L5.
About Westport
Westport Innovations Inc. is the leading developer of technologies that allow engines to operate on clean-burning fuels such as natural gas, hydrogen, and hydrogen-enriched compressed natural gas (HCNG). Westport has technology development alliances in place with Ford, MAN, BMW, and Isuzu, as well as an ownership interest in Clean Energy, the largest provider of natural gas for vehicles in North America.
About Cummins Westport
Cummins Westport Inc., Westport's 50:50 commercial joint venture with Cummins Inc., manufactures and sells the world's widest range of low-emissions alternative fuel engines for commercial transportation applications such as trucks and buses.
Note: This document contains forward-looking statements about Westport's business, operations, technology development, or to the environment in which it operates, which are based on Westport's estimates, forecasts, and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond Westport's control. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Westport disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
WESTPORT INNOVATIONS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)
March 31, 2005 and 2004
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2005 2004
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Assets
Current assets:
Cash and cash equivalents $ 319,806 $ 1,436,638
Short-term investments 19,970,877 19,346,964
Accounts receivable 6,040,026 5,073,384
Inventory 1,481,513 -
Prepaid expenses 552,231 532,848
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28,364,453 26,389,834
Long-term investments 9,133,876 12,206,286
Equipment, furniture and leasehold
improvements 5,774,875 10,704,682
Intellectual property 1,168,416 847,850
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$ 44,441,620 $ 50,148,652
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 4,466,661 $ 3,209,863
Deferred revenue 2,639,316 533,604
Demand instalment loan 2,252,720 3,206,755
Current portion of long-term debt
obligations 104,975 214,413
Current portion of warranty
liability 3,665,175 3,814,163
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13,128,847 10,978,798
Long-term debt and other long-term
obligations 1,545,064 1,041,846
Warranty liability 3,063,678 4,059,744
Joint Venture Partner's share of
income from joint venture 68,870 -
Shareholders' equity:
Share capital:
Authorized:
Unlimited common shares, no par
value
Unlimited preferred shares in
series, no par value
Issued:
73,964,088 (2004 - 64,340,430)
common shares 230,378,934 213,965,067
Other equity instruments 5,035,663 3,007,665
Additional paid in capital 2,918,568 91,770
Deficit (211,698,004) (182,996,238)
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26,635,161 34,068,264
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$ 44,441,620 $ 50,148,652
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WESTPORT INNOVATIONS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
Years ended March 31, 2005 and 2004
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2005 2004
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Product revenue $ 25,660,939 $ 28,113,478
Parts revenue 8,775,417 4,316,336
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34,436,356 32,429,814
Cost of revenue and expenses:
Cost of revenue 23,762,246 22,516,283
Research and development 18,422,831 26,090,116
General and administrative 5,627,112 6,226,986
Sales and marketing 3,883,553 6,213,389
Foreign exchange gain (603,382) (1,022,997)
Depreciation and amortization 6,323,407 6,861,066
Bank charges and interest 276,524 307,621
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57,692,291 67,192,464
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Loss before undernoted (23,255,935) (34,762,650)
Interest and investment income 453,202 717,678
Write down of equipment, furniture
and leasehold improvements (402,966) (3,219,469)
Gain on disposal of equipment,
furniture and leasehold improvements 138,366 -
Write off of long-term investment (3,072,410) -
Joint Venture Partner's share of
income from joint venture (68,870) -
Restructuring costs - (457,400)
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Loss for the year (26,208,613) (37,721,841)
Deficit, beginning of year
as reported (182,996,238) (145,274,397)
Cumulative adjustment for change
in accounting for stock-based
compensation (2,493,153) -
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Deficit, beginning of year
as adjusted (185,489,391) (145,274,397)
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Deficit, end of year $ (211,698,004) $ (182,996,238)
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Basic and diluted loss per share $ (0.38) $ (0.64)
Weighted average common shares
outstanding 69,381,968 59,046,993
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WESTPORT INNOVATIONS INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
Years ended March 31, 2005 and 2004
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2005 2004
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Cash flows from operations:
Loss for the year $ (26,208,613) $ (37,721,841)
Items not involving cash:
Depreciation and amortization 6,323,407 6,861,066
Stock-based compensation expense 1,746,819 1,315,237
Accretion of TPC warrants 1,142,857 1,142,857
Change in deferred lease
inducements 18,244 189,285
Write down of equipment,
furniture, and leasehold
improvements 402,966 3,219,469
Write off of long-term investment 3,072,410 -
Gain on disposal of equipment,
furniture and leasehold
improvements (138,366) -
Joint Venture Partner's share of
income from joint venture 68,870 -
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(13,571,406) (24,993,927)
Changes in non-cash operating
working capital:
Accounts receivable (966,642) 2,006,897
Inventory (1,481,513) -
Prepaid expenses (19,383) (265,956)
Accounts payable and accrued
liabilities 921,053 (5,106,315)
Deferred revenue 2,105,712 533,604
Warranty liability (1,145,054) 726,678
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(14,157,233) (27,099,019)
Cash flows from investments:
Purchase of equipment, furniture
and leasehold improvements (558,898) (2,704,227)
Proceeds on sale (purchase) of
short-term investments, net (623,913) 6,506,087
Proceeds on disposition of equipment,
furniture and leasehold
improvements 138,366 -
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(1,044,445) 3,801,860
Cash flows from financing:
Issue of common shares, net of
issuance costs 15,214,347 22,100,250
Issue of demand instalment loan - 1,700,000
Repayment of demand instalment loan (954,035) (993,245)
Repayment of long-term debt and
other long-term obligations (265,466) (339,545)
Leasehold inducement 90,000 -
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14,084,846 22,467,460
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Decrease in cash and cash
equivalents (1,116,832) (829,699)
Cash and cash equivalents,
beginning of year 1,436,638 2,266,337
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Cash and cash equivalents,
end of year $ 319,806 $ 1,436,638
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Supplementary information:
Interest paid $ 163,675 $ 248,063
Non-cash transactions:
Purchase of equipment,
furniture and leasehold
improvements by assumption of
capital lease obligation - 204,250
Shares issued on exercise of
performance share units 1,145,968 2,000,214
Leasehold improvements acquired
through leasehold inducements 551,000 -
Intellectual property acquired
for shares to be issued and
accounts payable and accrued
liabilities 1,007,234 -
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Westport Innovations Inc. (TSX:WPT)