Westport Fuel Systems (NASDAQ:WPRT) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.

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Summary

Westport Fuel Systems reported a 33% year-over-year increase in revenue for Q1 2026, largely driven by its Suspira joint venture and broader market adoption of HPDI technology.

The company's high pressure controls business showed a 21% increase in revenue, supported by the expansion of its manufacturing facilities in Canada and China.

Westport Fuel Systems maintained a strong cash position with $24.5 million as of March 31, 2026, and reduced its outstanding debt to $1.9 million.

Management highlighted the successful showcase of its technology at the ACT conference, which garnered significant interest from OEMs and fleets, indicating potential for growth in North America.

Future outlook is positive with expectations of continued revenue growth and reduced capital contributions to the Suspira joint venture, alongside expanding market opportunities in India and Brazil.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the West Ports Q1 2026 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ashley Newell. Please go ahead.

Ashley Newell

Good morning everyone. Welcome to Westport Fuel Systems's conference call regarding the first quarter 2026 financial and operational results. This call is being held to coincide with a press release containing our financial results that was issued yesterday after market close. On today's call, speaking on behalf of Westport Fuel Systems will be our Chief Executive Officer and Director Dan Selai and our Chief Financial Officer Elizabeth Owens. Attendance on this call is open to the public, but questions will be restricted to the analyst community. You are reminded that certain statements made on the conference call and our responses to certain questions may constitute forward looking statements within the meaning of U.S. and applicable Canadian securities laws and as such, forward looking statements are made based on our current expectations and involve certain risks and uncertainties. With that, I will turn the call over to you Dan.

Dan Selai (Chief Executive Officer and Director)

Thank you Ashley and good morning everyone. I'll turn to our financial results. Saspira's momentum continues to build with revenue up 33% year over year in the first quarter. That growth is increasingly material to Westport, reflecting stronger volumes, broader market adoption of HPDI and progress with a second OEM. Importantly, we expect this momentum to continue through 2026, supported by favorable fuel economics, tightening emissions regulations and growing OEM and fleet interest in practical low carbon solutions. The significance for our investors is not only top line growth but the financial read through. As Suspira continues to scale and improve operating performance, we expect our funding requirements for the joint venture to continue to decline. That creates a more direct link between commercial execution at Suspira and improved capital efficiency at Westport. The broader market backdrop also remains supportive. Volvo Trucks recently announced it has delivered more than 10,000 gas powered trucks globally, highlighting growing adoption in key European markets. While Cognitive Market Research projects the European LNG heavy truck market to grow at a 12.5% growth rate through 2030. Together, those indicators reinforced our view that Saspira is participating in a market with both near term momentum and multi year growth potential. Our high pressure controls business has also reflected improved results in Q1 2026 with a 21% increase in revenue compared with the same period last year. What makes it truly meaningful is how we delivered it. Our brand GFI Control Systems provides critical components that make this system viable, while AFS ensures that the technologies come together as a complete real world solution, enabling the performance, reliability and control our customers expect. Adding to this result, we commenced production at the expanded Product Development Manufacturing facility in Cambridge, Ontario and GFI's new China hydrogen Innovation center and manufacturing facility in Jiangsu, China. With production underway at all facilities, combined with strong demand from large industrial companies, we remain optimistic about its performance this year. Building off this strong start Moving on to some recent excitement at the ACT conference in Las Vegas. It provides some key insights into our experience. Getting this truck to Las Vegas on time, show ready and performing was a complex high pressure effort and the fACT Expo that we delivered speaks volumes at ACT Expo. From the moment the show floor opened, we saw strong interest. Other exhibitors, fleets and OEMs stopping to take a closer look and excited by what they saw because this is not a concept, it's a fully integrated platform that proves we can deliver diesel performance with cleaner, more cost effective fuel. Today a focused team brought this to life, but their success reflects something bigger our ability to execute, to integrate and to lead. As we showcased this platform, we demonstrated what sets us apart. Not just innovation, but the ability to bring it to market where it matters most. And fleets and OEMs are starting to notice. It was clear from the volume of interactions this year compared to previous years that this is an exciting time for Westport. We are making clear steps forward in expanding our technology reach. What we see Growing demand for high performance lower emission alternatives. The conference success was a clear signal that we are advancing our high pressure CNG storage solution and into a North American market with real momentum positioning Westport to capture long term growth opportunities in the global heavy duty transportation market. Now I'll have Elizabeth run through some

Elizabeth Owens (Chief Financial Officer)

financial details and then we'll come back. Elizabeth thank you Dan and good morning everyone. I'll highlight a few key milestones that Westport Fuel Systems has achieved, the first of which remains our strong cash position through the first quarter of 2026. As of March 31, 2026, our cash and cash equivalents position stood at $24.5 million compared to $27.2 million at December 31, 2025. Net cash used in operating activities from continuing operations was $3.4 million for the quarter ended March 31, 2026 compared to 8.6 million in the prior year an improvement of 5.2 million as a result of changes in working capital. Our capital contributions to the Suspira joint venture decreased from 4.7 million in the first quarter of 2025 to 2.9 million in Q1 of 2026, reflective of the improvement of Suspira's financial performance. Our total outstanding Debt sits at 1.9 million, a reduction of 1 million from the 2.9 million reported at year end 2025. This debt will be retired in the third quarter of 2026. Our high pressure controls business segments on meaningful growth, with revenue for Q1 2026 increasing 21% to $2.3 million from 1.9 million reported in Q1 2025. Higher year over year sales volumes drove the revenue increase with Gross profit of 0.5 million consistent with the prior period. As Dan highlighted, Suspira's revenue growth is accelerating as we enter 2026. In Q1 2026, total revenue generated was 22.2 million compared to 16.7 million in the same period last year, representing an increase of 33% driven by higher sales volumes. Suspira product revenue of 19.5 million increased 48% compared to 13.2 million in Q1 2025. Suspira gross profit improved to 1.6 million compared to 0.4 million one year ago. Gross margin improved in Q1 2026 to 7% from 3% in Q1 2025. CespirA also significantly improved the bottom line with a Net loss in Q1 2026 of 2.5 million, a 65% reduction from the 7.1 million net loss reported in the prior year quarter. This progress is supported by strong market adoption, including Volvo reaching the milestone of more than 10,000 natural gas trucks on the road equipped with Suspira's HPDI fuel system. We are also encouraged by the continued progress of a second OEM that is currently conducting truck trials. We're excited about the opportunities ahead as we target an improvement in sustainability capital requirements. With that, I'll pass the call back to Dan.

Dan Selai (Chief Executive Officer and Director)

Thank you Elizabeth. We are operating where the fundamentals continue to strengthen. We are seeing strong year-over-year growth in our Suspira joint venture with Volvo Group supported by increasing demand for LNG powered heavy duty trucks in Europe and other parts of the world and favorable fuel economics that are driving adoption. At the same time, tightening emissions regulations and the need for practical lower emission solutions are reinforcing the role of technologies like ours in the transition of the heavy duty sector against this backdrop, Westport is well positioned to capitalize on these trends. Suspira's HPDI fuel system technology delivers diesel-like performance with lower emissions. And we are seeing growing validation through increased volumes with both Volvo and an additional OEM undergoing testing as we speak. The momentum we demonstrated at ACT Expo highlights our ability to bring fully integrated solutions to market. And we are now focused on execution, scaling commercial volumes, advancing our high pressure CNG solutions into North America and expanding into new regions and applications. Together, these efforts position us to build meaningful scale and capture long-term growth opportunities across the global heavy duty transportation market. Thank you.

OPERATOR

That concludes the discussion. As a reminder to ask a question, please press star11 on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. And our first question will come from the line of Eric Stein of Craig Hallam Capital Group. Your line is open, Eric.

Dan Selai (Chief Executive Officer and Director)

Good morning everyone. Hey, good morning, Eric.

Eric Stein (Equity Analyst)

Hey. Maybe just starting with Suspira. So the second truck trial, I mean it does, I know we just connected, what, couple weeks ago, but it does feel like you're given a more optimistic tone about that trial. So curious. Am I reading that right? And with that in mind, can you remind us of next steps for that or the timeline we should look for over the remainder of 26 and into 27?

Dan Selai (Chief Executive Officer and Director)

Sure, yeah. I do feel more optimistic. I mean the truck trial is going really well. So discussions, negotiations continue for the next phase of this, which is a higher volume. The initial truck trial I think was around 200 trucks. But moving on to larger volumes and commercializing, this discussion is ongoing now.

Eric Stein (Equity Analyst)

Okay. And timeline in terms of, I think last time you'd said that you expected a decision and maybe it's a decision as part of the negotiations you mentioned later this year, does that still hold?

Dan Selai (Chief Executive Officer and Director)

It does, yeah. A decision on this project before year end.

Eric Stein (Equity Analyst)

Okay. And then maybe you know, anything you talked, you gave a lot of detail about Q4 and the end of 25 in terms of some of the new markets that Volvo and Suspira is seeing momentum on a global basis, obviously North America, a big focus. But just curious, are there any other contributors to Q1 that are worth highlighting as awareness of that product expands?

Dan Selai (Chief Executive Officer and Director)

We do see beachheads opening up in India and Brazil. There's already trucks in Peru and Chile. India and Brazil are two massive markets and we're seeing strong interest in those markets to move to alternative fuel. So we're very excited about that opportunity coming to us.

Eric Stein (Equity Analyst)

Got it. All right. Maybe Last one for me, just because of how things are trending with the joint venture and expectations that that momentum continues, can you just update us on maybe current thoughts on contributions needed to the joint venture here going forward?

Dan Selai (Chief Executive Officer and Director)

Yeah, so obviously you saw that. We've been putting in contributions, the contributions are going down at a steady rate simply because volumes are going up at a steady rate in the product revenue alone. Expecting it to continue. And you know, as we approach, you know, 2027, mid-2027, contribution will reduce significantly.

Eric Stein (Equity Analyst)

Okay, you were, you were cutting in and out there, but I guess I'll take that, clarify some stuff offline. Thank you.

Dan Selai (Chief Executive Officer and Director)

Okay, thanks, Eric.

OPERATOR

And our next question will be coming from the line of Chris Dendrinos of RBC Capital Markets. Your line is open.

Chris Dendrinos (Equity Analyst)

Yeah, good morning. Thank you. Maybe just to follow up here a bit on Suspira here, a good quarter with some solid gross margin there. How are you thinking about gross margin for the remainder of the year? And I guess what I'm kind of curious about is you highlighted some deliveries to the test OEM and I'm curious what that volume looks like maybe for the rest of the year and how that's playing out in terms of gross margin. Thanks.

Dan Selai (Chief Executive Officer and Director)

Yeah, sure. So I mean, as we've been talking about, you know, for the last year's margins are going to continue to grow just simply based on volume. You know, we built out this, this business completely to be a tier one to a automotive OEM like Volvo, you need to have a completely built out and certified business. So that was, you know, day one, almost two years ago. You know, all disciplines, all departments, full certifications in ietf, all that. So the expense of building out the business was laid down. We're now in that phase.

Chris Dendrinos (Equity Analyst)

Got it. Thanks. And then maybe just as a follow up here, there is the service segment and I think that project rolls off at the end of this year. Is there anything that would potentially come in and replace that?

Dan Selai (Chief Executive Officer and Director)

Thanks. Yeah, I mean that Service is really two major projects. HPDI 3.0 which is in conjunction with Volvo, launching its at the end of this year. And you know, it's an advanced HPDI system. It's an advanced Volvo engine. That's the first part that we'll be wrapping up. The second is we are still doing the development work for Volvo's hydrogen project, and they've recently announced on the road we are doing that development work over the next couple of years. So that service work is going to continue. We're looking at additional service work, which engineering Development work on a couple of other projects that we're not allowed to talk about yet, as you can understand, and we hope that we can

Chris Dendrinos (Equity Analyst)

Got it. Thank you very much.

OPERATOR

As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our next question will be coming from the line of Rob Brown of Lake Street Capital Markets. Your line is open.

Rob Brown (Equity Analyst)

Good morning.

Dan Selai (Chief Executive Officer and Director)

Good morning.

Rob Brown (Equity Analyst)

Just kind of at a high level. What are the next steps in the North American market? You got kind of a good showing at the ACT Expo in good interest. What's. What sort of the next steps in the, in the North American market development.

Dan Selai (Chief Executive Officer and Director)

Yeah, Ron, I got to tell you, it was more than, you know, overwhelmingly successful. It was overwhelming the, the excitement, the interest that we got at the ACT show. You know, we, we built out a truck. Volvo got us a truck and an engine. We built it out and drove it down from Vancouver to, to Las Vegas. The funny thing was we had a chase car. The truck spent $280 on gas getting there, more than the chase or less than the chase car. And, and the interest is just overwhelming. So there's an awful lot of discussion right now between fleets dealers and the OEM on what's next. And certainly we are planning to do more demos, fleet driven demos. There's planning to be done for the EPA certification to launch this. So that's all activity that is picking up pace just coming out of the actual. Because of the interest from multiple fleets, multiple very large fleets. So we're very excited about that.

Rob Brown (Equity Analyst)

And then in the high pressure controls business you had a good step up in gross margin. I assume that has a lot to do with getting China production running. How is the gross margin trend in the controls business going forward?

Dan Selai (Chief Executive Officer and Director)

Yeah, we expect, you know, down the road is the volumes. The volume. to move that manufacturing equipment out of Italy and move it to. Between Cambridge and China facilities. The China piece was, was really built out to focus on the China market only for localized cost, localized managing geopolitics. And of course we're going to be, you know, localizing some of the components. So we expect the margins to grow there, but we need the volume to pick up. There is still the pause in hydrogen. You know, we're hearing from the Chinese government that's going to get, get pushed forward again. So the underlying product is a very high ground product that we can get good margins on. What we need right now is volume and that volume is starting to come and, you know, we're seeing already this year. You know, one of our I'm sure you follow them as well. Their call earlier this week, Volume is starting to go up for higher. And as that volume are going to be there.

OPERATOR

And I'm showing no further questions, I would now like to turn the call to Dan for closing remarks.

Dan Selai (Chief Executive Officer and Director)

Thank you for your time today. We have lots of positive trends to look forward to.

OPERATOR

And this concludes today's conference. Thank you for participating. You may now disconnect.

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