Westport Fuel Systems Inc (WPRT) Q2 2025 Earnings Call Highlights: Strategic Divestitures and ...
Consolidated Revenue: $88.8 million, including discontinued operations, compared to $83.4 million in the same period of 2024.
Cespira Revenue: $12 million during the quarter.
Adjusted EBITDA: Negative $1 million, improved from negative $2 million in the same quarter last year.
Operating Expenses: $15.5 million, down from $21.6 million in Q2 2024.
High Pressure Controls and Systems Revenue: $2.9 million, down from $3.6 million in Q2 2024.
Gross Margin: 3% of revenue, down from 31% in Q2 2024.
Heavy Duty OEM Revenue: $9.6 million, a decrease of $900,000 from the same period last year.
Cash and Cash Equivalents: $21.4 million as of June 30, 2025.
Net Cash Used in Operating Activities: $5.6 million for Q2 2025.
Net Cash Used in Investing Activities: $5 million for Q2 2025.
Light Duty Business Revenue: $76.4 million with a gross profit of $15.1 million or 20% of revenue.
Proceeds from Light Duty Business Sale: $62.5 million in net proceeds.
Warning! GuruFocus has detected 4 Warning Signs with WPRT.
Release Date: August 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Westport Fuel Systems Inc (NASDAQ:WPRT) successfully divested its light duty segment, strengthening its balance sheet and sharpening its strategic focus on high-impact opportunities in commercial transportation and industrial applications.
The company reported consolidated revenue of $88.8 million for Q2 2025, an increase from $83.4 million in the same period of 2024, indicating growth in its continuing operations.
Westport Fuel Systems Inc (NASDAQ:WPRT) is well-positioned with fuel-agnostic technologies that offer performance, cost efficiency, and environmental benefits, providing a pathway to hydrogen adoption as its availability increases.
The company is actively pursuing multiple growth opportunities in the renewable natural gas (RNG) sector, which represents a significant opportunity to reduce emissions in heavy-duty and off-road applications.
Westport Fuel Systems Inc (NASDAQ:WPRT) is opening a state-of-the-art hydrogen innovation center and manufacturing facility in China, which will serve as a hub for research, development, and collaboration to meet the increasing demand for hydrogen transportation solutions in the region.
Negative Points
Westport Fuel Systems Inc (NASDAQ:WPRT) reported a decrease in consolidated revenue from continuing operations, with $12.5 million for Q2 2025 compared to $14.1 million in the same period last year, primarily due to decreased sales in high-pressure controls and systems and heavy-duty OEM business segments.
The company experienced a decrease in gross margin, which fell to 3% of revenue in Q2 2025 from 31% in Q2 2024, driven by lower revenue and increased material costs.
Westport Fuel Systems Inc (NASDAQ:WPRT) continues to face challenges in generating positive cash flow, with adjusted EBITDA reported as negative $1 million for the quarter.
The company anticipates significant costs in Q3 2025, including incremental funding for the Cespira joint venture, transaction costs related to the light duty sale, and relocation costs for its high-pressure controls and systems operations.
Westport Fuel Systems Inc (NASDAQ:WPRT) is experiencing a slowdown in the hydrogen industry outside of China, impacting its high-pressure controls and systems revenue, which decreased to $2.9 million in Q2 2025 from $3.6 million in Q2 2024.
Q & A Highlights
Q: Can you provide more details on HPDI activity outside of Europe, specifically in India, South America, and Asia? Are these trials or volumes from Volvo in new markets? A: Daniel Sceli, CEO: Volvo is establishing HPDI in Europe and expanding to other markets like Chile, Peru, and India to build market acceptance. This is part of their strategy to grow HPDI globally.
Q: Is the development of the CNG HPDI version a Westport-only initiative or part of the joint venture with Cespira? A: Daniel Sceli, CEO: HPDI on engine is part of Cespira, while Westport is developing the off-engine side, including storage and material handling for CNG, which is significant in North America.
Q: How does the current run rate for the high-pressure controls business look, and do you expect growth or fluctuations this year? A: Daniel Sceli, CEO: The market is currently experiencing a pause due to new policies and regulations in North America. However, opportunities in China continue to grow, driven by government initiatives.
Q: What is the expected operational expenditure (OpEx) run rate after the divestiture of the light-duty business? A: William Larkin, CFO: OpEx will decrease as we right-size the business and focus on R&D for growing natural gas markets. Full reductions will be seen in 2026 after completing audits and reducing costs.
Q: Regarding the $12.8 million in escrow from the transaction, is there any conditionality, or is it a timed disbursement? A: William Larkin, CFO: The escrow covers potential undisclosed liabilities. A significant portion will be released by January 2026, with the remainder following customary conditions.
Q: Are there additional funding commitments for Cespira beyond Q3, and how should we view this going forward? A: Daniel Sceli, CEO: Cespira requires ongoing funding from parent companies for a three-year build-out, which will continue as planned.
Q: How do tariffs and trade uncertainties between North America and China impact Westport? A: Daniel Sceli, CEO: There is no direct impact from tariffs due to our localization strategy in China. Indirect effects may occur due to overall economic adjustments, but no direct tariff impacts are expected.
Q: Is the heavy-duty OEM revenue expected to roll off after the transition to Cespira? A: William Larkin, CFO: The transition to Cespira is substantially complete, and there will be minimal revenue from the heavy-duty OEM business going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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