Westport Results for First Quarter Ending June 30, 2005 Show Steady Progress
VANCOUVER, British Columbia--July 28, 2005--Westport Innovations Inc. (TSX:WPT) today reported results for its first fiscal quarter ended June 30, 2005, and provided an update on its business operations.Westport's consolidated net loss for the three months ended June 30, 2005 was $6.2 million ($0.08 loss per share) compared to $6.9 million ($0.11 loss per share) for this quarter last year, a 10% improvement. Higher dollar gross margins and decreased amortisation contributed to the decreased loss. Total consolidated revenues for the quarter were $10.5 million, up from $8.8 million for the same period last year, a 19% increase.
Revenues and gross margins in the quarter were positively impacted by Cummins Westport Inc.'s (CWI's) higher parts revenue and engine product mix. Parts revenues were $3.5 million compared to $2.3 million this quarter last year. Product revenues were up 8% at $7.0 million on shipments of 310 engines this quarter, compared to $6.5 million on 352 units for this quarter last year. However, the mix was improved with more of the higher horsepower and accordingly higher priced C Gas Plus and L Gas Plus engines being shipped than the lower horsepower B-series natural gas engine, resulting in increased revenues and dollar margins on a per unit basis. Approximately 75% of revenue was from North American customers, primarily transit agencies and where demand for natural gas continues to be strong. Gross margin percentages were steady at 26%.
Expenses were relatively flat except for a $0.4 million increase in sales and marketing as the company continues its business development efforts, particularly in Asia. CWI continued to be profitable in the quarter, contributing a positive $0.1 million to Westport's results, a significant improvement over CWI's $1.2 million loss this quarter last year. Although revenues and contribution can be volatile from quarter to quarter, since CWI was re-launched on January 1, 2004, it has been profitable in 4 of 6 quarters.
At June 30, 2005, Westport's cash and short term investments were $14.6 million, down from $20.3 million at March 31, 2005. For the quarter, cash used in operations before changes in working capital improved by 35% to $3.0 million, down from $4.7 million this quarter last year. However, slower than anticipated collection on government funding receivables was a primary contributor to the $2.3 million in cash used for working capital purposes. Subsequent to June 30, 2005, $1.7 million of government funding receivables were collected.
"We're making steady progress on our business plan," said David Demers, Westport's Chief Executive Officer. "Our net loss continues to decrease, CWI continues to be profitable, and we are intensifying our business development efforts to capitalize on new opportunities, particularly in Asia and Australia, and to move our existing projects forward."
Business Programs Update
Cummins Westport Inc.
Cummins Westport's earlier sales and marketing efforts continue to come to fruition. The Philippines took delivery of their first ever natural gas buses for public transit, with the President of the Philippines Gloria Macapagal-Arroyo as well as Chinese and Canadian Ambassadors present at the launch. These buses are powered by Cummins Westport engines but were manufactured in China.
This collaboration between Cummins Westport and Chinese OEMs has resulted in wider access to Chinese transit markets as well as China's export markets. This quarter, Cummins Westport entered the Bangladesh transit market with an order for 30 engines, plus options to purchase a total of 120 engines by the end of the year.
In addition to the growth of the market potential in Asia and CWI's efforts to develop markets as opportunities present themselves, Cummins Westport continues to maintain established leadership in the North American alternative fuel transit market. The company had a strong quarter in North America, delivering its low-emissions engines to several large customers including Los Angeles and San Diego.
Cummins Westport's leadership in alternative fuel engine development and deployment was recently recognized by the US Department of Energy (DOE) Clean Cities Program, and the company was presented a National Partner of the Year Award.
Westport Program Highlights
The Clean Air Corridor project, a heavy-duty truck technology demonstration along Highway 401 between Windsor, Ontario and Detroit, Michigan, was launched in May to showcase Westport's next-generation high pressure direct injection technology. It is the first demonstration of this type on Canadian soil. The Westport-led consortium participating in the project includes Challenger Motor Freight Inc., Enbridge Gas Distribution Inc., Natural Resources Canada, and Transport Canada. The total project value is $3 million, with funding from Sustainable Development Technology Canada as well as investment from the participating partners.
Westport's demonstration capabilities and efforts also include participation in a planned natural gas and hydrogen-enriched natural gas (HCNG) project led by Sacre-Davey Innovations Inc. In April, Westport and its consortium partners announced new funding of $6 million by the Government of Canada for the Vancouver-based demonstration of transit buses.
In June, Westport was presented the 2005 Leadership in Social Responsibility Award at the Technology Impact Awards in Vancouver. Westport was recognized for its outstanding performance in integrating Corporate Social Responsibility (CSR) principles into corporate culture and operations. The awards are sponsored by the British Columbia Technology Industries Association.
In British Columbia, Westport and Cummins Westport's home province, the Greater Vancouver Transit Authority (TransLink), made a decision July 20 to focus on natural gas engines in upcoming transit bus purchases.
Results Conference Call
Westport has scheduled a conference call for Thursday, July 28, 2005 at 8:00 am (Pacific Time) to discuss the quarterly 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 www.westport.com by selecting "Our Investors", and then selecting "Conference Calls & AGMs" from the top menu. Replays will be available in streaming audio on the same website shortly after the conclusion of the conference call.
To view Westport's first quarter financials, please point your browser to the following link: www.westport.com/investor/financial.php.
About Westport Innovations Inc.
Westport Innovations Inc. is the leading developer of environmental technologies that allow engines to operate on clean-burning fuels such as natural gas, hydrogen, and hydrogen-enriched 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. Cummins Westport Inc., Westport's 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)
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June 30, March 31,
2005 2005
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(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 421,178 $ 319,806
Short-term investments 14,169,439 19,970,877
Accounts receivable 7,074,885 6,040,026
Inventory 1,314,729 1,481,513
Prepaid expenses 393,215 552,231
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23,373,446 28,364,453
Long-term investments 9,133,876 9,133,876
Equipment, furniture and
leasehold improvements 33,609,941 33,525,179
Accumulated depreciation (28,627,526) (27,750,304)
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4,982,415 5,774,875
Intellectual property 4,321,394 4,321,394
Accumulated amortisation (3,350,154) (3,152,978)
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971,240 1,168,416
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$ 38,460,977 $ 44,441,620
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Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 2,745,289 $ 4,466,661
Deferred revenue 2,539,214 2,639,316
Demand instalment loan 2,014,211 2,252,720
Current portion of long-term
debt obligations 99,422 104,975
Current portion of warranty
liability 3,722,460 3,665,175
Current portion of financial
instruments 335,745 335,745
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11,456,341 13,464,592
Long-term debt and other
long-term obligations 1,480,685 1,545,064
Warranty liability 3,217,813 3,063,678
Joint Venture Partner's share of
income from joint venture 135,305 68,870
Financial instruments 2,907,173 2,621,458
Shareholders' equity:
Share capital:
Authorised:
Unlimited common shares, no
par value
Unlimited preferred shares
in series, no par value
Issued:
74,272,651 (2005 -
73,964,088) common shares 230,979,873 230,378,934
Other equity instruments 1,708,309 2,078,460
Additional paid in capital 4,486,065 2,918,568
Deficit (217,910,587) (211,698,004)
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19,263,660 23,677,958
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$ 38,460,977 $ 44,441,620
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WESTPORT INNOVATIONS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
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Three months ended June 30
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2005 2004
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(Unaudited) (Unaudited)
Product revenue $ 7,006,265 $ 6,481,235
Parts revenue 3,507,517 2,342,912
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10,513,782 8,824,147
Cost of revenues and expenses:
Cost of revenues 7,804,192 6,524,797
Research and development 4,927,170 5,033,612
General and administrative 1,541,931 1,524,872
Sales and marketing 1,298,160 942,672
Foreign exchange loss 80,473 66,913
Depreciation and amortisation 1,074,398 1,658,478
Bank charges and interest 49,468 71,564
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16,775,792 15,822,908
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Loss before undernoted (6,262,010) (6,998,761)
Interest and investment income 115,862 90,186
Joint Venture Partner's share of
income from joint venture (66,435) -
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Loss for the period (6,212,583) (6,908,575)
Deficit, beginning of period
as reported (211,698,004) (182,996,238)
Cumulative adjustment for
change in accounting for
stock-based compensation - (2,493,153)
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Deficit, beginning of period
as adjusted (211,698,004) (185,489,391)
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Deficit, end of period $ (217,910,587) $ (192,397,966)
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Basic and diluted loss per share $ 0.08 $ 0.11
Weighted average common
shares outstanding 74,036,488 64,670,568
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WESTPORT INNOVATIONS INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
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Three months ended June 30
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2005 2004
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(Unaudited) (Unaudited)
Cash provided by (used in):
Operations:
Loss for the period $ (6,212,583) $ (6,908,575)
Items not involving cash:
Depreciation and amortisation 1,074,398 1,658,478
Stock-based compensation expense 1,798,286 257,045
Accretion of TPC warrants 285,714 285,714
Change in deferred lease
inducements (30,913) 54,516
Joint Venture Partner's share of
income from joint venture 66,435 -
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(3,018,663) (4,652,822)
Change in non-cash operating
working capital:
Accounts receivable (1,034,859) 1,257,723
Inventory 166,784 -
Prepaid expenses 159,016 57,918
Accounts payable and accrued
liabilities (1,721,372) (782,376)
Deferred revenue (100,102) -
Warranty liability 211,420 289,114
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(5,337,776) (3,830,443)
Investments:
Purchase of equipment, furniture
and leasehold improvements (84,762) (124,612)
Proceeds on sale of
short-term investments, net 5,801,438 3,558,859
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5,716,676 3,434,247
Financing:
Issue of common shares, net
of issuance costs - 125,681
Repayment of demand
instalment loan (238,509) (238,509)
Repayment of long term-debt
and other long-term obligations (39,019) (61,152)
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(277,528) (173,980)
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Increase (decrease) in cash
and cash equivalents 101,372 (570,176)
Cash and cash equivalents,
beginning of period 319,806 1,436,638
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Cash and cash equivalents,
end of period $ 421,178 $ 866,462
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Supplementary information
Interest paid $ 26,206 $ 49,524
Non-cash transactions:
Shares issued on exercise of
performance share units 600,939 1,003,629
Shares to be issued on
acquisition of intellectual
property - 1,551,426
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Westport Innovations Inc. (TSX:WPT)