~Matching Investment and Revenue Outlook with Pace of Market Adoption,
while Second Generation HPDI Technology Draws Support~
VANCOUVER, Sept. 30, 2014 /CNW/ - Westport Innovations Inc. (TSX:WPT /
NASDAQ:WPRT), engineering the world's most advanced natural gas engines
and vehicles, announced today an update to its Westport high pressure
direct injection (Westport™ HPDI) second generation or "HPDI 2.0"
development program and identified plans to further refine investment
programs to align with its original equipment manufacturer (OEM)
customers and the global pace of natural gas vehicle adoption and
related infrastructure build out. In line with the pace of market
adoption, Westport has updated its near term revenue outlook for the
year ended December 31, 2014.
Westport currently has several engine development programs underway with
multiple OEMs who are attracted to the unique Westport™ HPDI
"diesel-like" power, torque and fuel economy benefits of a true
compression ignition engine powered by natural gas. The introduction of
Westport™ HPDI 2.0 is expected to provide dramatically better system
costs and better compatibility with advanced diesel engine platforms
compared to earlier generation systems.
A key component of the HPDI 2.0 system is a brand new family of high
pressure fuel injectors, co-developed with Delphi Automotive PLC
(Delphi), designed to provide better cost, smaller size and improved
packaging compared to prior generation Westport™ HPDI injector
designs. The new generation injectors are running in engine
tests today and are on display at the Delphi booth at the IAA
Commercial Vehicles Show in Hanover, Germany. [Link: www.press-live.com/gb/mediaPresent.php?id=2410]. The HPDI 2.0 fuel system is expected to further increase OEM interest
in natural gas products with industry-leading performance, fuel economy
and flexibility. It is designed to provide stronger economics to truck
customers across a broad range of engine displacements and applications
compared to traditional natural gas engine technology.
The other major element of the HPDI 2.0 system is an upgraded liquefied
natural gas (LNG) fuel storage and supply system, which includes the
next generation Westport LNG tank with an integrated second generation
cryogenic LNG fuel pump. Significant reduction in costs combined with
major enhancements in reliability, durability, and serviceability
deliver substantial improvements in customer operating uptime and
return on investment. In addition, with the system's unique
capabilities to exploit cold (unsaturated) LNG, station complexity is
reduced and range is improved. The HPDI 2.0 LNG components will also be
incorporated into the Westport iCE PACK™ LNG Tank System product for
spark ignited engines, including the Cummins Westport ISX12 G.
As previously disclosed, Westport's OEM customers are testing trucks
with some HPDI 2.0 components in China and Europe. The Weichai Westport
HPDI 12-litre engine has recently received China V emissions
certification from the National Passenger Car Quality Supervision &
Inspection Center (Tianjin Automotive Test Center), opening the door
for delivery of the first customer test trucks while OEM customers are
testing trucks using Westport™ HPDI in Europe. Products will be
available for controlled customer fleet deployment in 2015 in
pre-production volumes. However, Westport is working with OEMs to
incorporate of the next generation injector to take advantage of the
new performance and cost benefits. Westport has calculated that
heavy-duty trucks in China incorporating the full HPDI 2.0 system could
be delivered with a typical 18 month payback.
Market development in both regions requires alignment with
infrastructure investment, experience and training with these new high
performance vehicles. Shifting Westport's focus to the new injector and
related fuel system may delay the volume launch in the short term, but
it is expected to result in materially better component costs, more
efficient product investment, and improved customer economics compared
to both diesel engines and other natural gas engine technologies in the
future. In the near term, Westport expects fleets with high performance
requirements to see HPDI trucks as offering unique capabilities and be
encouraged to commit to adopting LNG with a clear path to upgraded and
continued development of this technology.
The needs of customers in the primary markets for natural gas powered
trucks-regional haul and dedicated routes-in North America are being
met with currently available natural gas engines from Cummins Westport
Inc. (CWI), Westport's joint venture with Cummins Inc. Today CWI is
supplying virtually all natural gas engines in the U.S. commercial
vehicle space. The development of natural gas infrastructure in the
U.S. to support long-haul trucking has been steady but localized in a
few regions over the last year. However, the new Cummins Westport ISX12
G spark ignited natural gas engine, introduced in 2013, which has
established itself as a strong performer in regional trucking
applications, is encouraging the development of both LNG and CNG
infrastructure. It is clear that to meet the needs of the trucking
community, the industry will need a broad range of engines and truck
chassis, as well as investment in new infrastructure. Westport,
together with its OEM customers, will pace investments in new products
in order to match availability of refueling infrastructure and other
market conditions.
"Westport is developing high performance natural gas engines that will
be produced on the same production lines as the most advanced diesel
engines, and will set the technology standard as natural gas penetrates
global markets in Asia, Europe and North America," said David Demers,
CEO of Westport. "Our OEM partners have a successful and long-term view
of the industry and so do we, and we are pleased to see continuing
interest in our latest generation of HPDI technology from an
ever-increasing list of leading OEMs. While these new relationships are
important, we are committed to balancing our technology investment
portfolio to maximize future product growth and hitting our stated
financial goal of company-wide positive adjusted EBITDA by the end of
2015. It is imperative that we take a long-term view on product
development and make the appropriate decisions."
Financial Outlook
Westport is changing its revenue outlook for the year ended December 31,
2014 based on three primary factors. First, continued market
uncertainty in Westport's primary markets—Europe, Russia and China—have
impacted revenue in the Applied Technologies business in the second
half of 2014. Second, key OEM development partners are moving to the
newly co-developed Westport™ HPDI 2.0 injectors, which are expected to
lower the cost of the system and provide benefits noted above, but the
revised development schedule will defer related service revenue
milestone payments in the near term. Westport will, however, be able to
reduce its overall program expenses, offsetting the reduction in
service revenue; and synergies across multiple customer programs are
expected to allow better long-term returns. Third, a Westport customer
who placed a significant order for Westport iCE PACK LNG Tank Systems
has been unable to provide sufficient comfort to Westport that it will
be able to meet its obligations and requirements in respect of such
orders, and as such Westport does not intend to ship product to this
customer until such comfort has been received. As a result of these
factors, Westport has changed its forecasted 2014 revenue outlook to a
range of $130 million to $140 million and will not expect its three
operating business units combined to be positive Adjusted EBITDA for
this year. Looking ahead, the Company reiterates its stated goal of
reporting consolidated positive Adjusted EBITDA by the end of 2015,
which will be driven by matching investments and expenses with the pace
of market adoption, contributions from Westport's operating business
units, Westport's share of net income (loss) from the joint ventures,
and service revenue earned from Westport's development partners.
The foregoing financial outlook information for Westport is being
provided for the purpose of updating prior revenue disclosure and may
not be appropriate for, and should not be relied upon for, other
purposes.
About Westport Innovations Inc.
Westport engineers the world's most advanced natural gas engines and
vehicles. More than that, we are fundamentally changing the way the
world travels the roads, rails and seas. We work with original
equipment manufacturers (OEMs) worldwide from design through to
production, creating products to meet the growing demand for vehicle
technology that will reduce both emissions and fuel costs. To learn
more about our business, visit westport.com, subscribe to our RSS feed, or follow us on Twitter @WestportDotCom.
Note: This document contains forward-looking statements.
Forward-looking information is typically identified by words such as
"anticipate", "estimate", "expect", "forecast", "may", "will", "could",
"plan", "intend", "should", "believe", "outlook", "project",
"potential", "target" and similar words suggesting future events or
future performance. In particular, this press release contains
forward-looking information which includes statements regarding the
launch date, availability, manner of production, pricing and benefits
of the Westport HPDI 2.0 systems, future interest of OEMs in natural
gas products, timing for availability of OEM customer products that
incorporate HPDI 2.0 components, timing for delay of volume production
and completion of Westport iCE PACK LNG Tank System orders, the timing
for and ability of Westport to obtain its positive Adjusted EBITDA
goals, revenue and financial results, demand for our products, the
future success of our business and technology strategies, intentions
of partners and potential customers, the performance and
competitiveness of our products and expansion of product coverage and
future market opportunities. These statements are neither promises nor
guarantees, but involve known and unknown risks and uncertainties and
are based on assumptions that may cause our actual results, levels of
activity, performance or achievements to be materially different from
any future results, levels of activities, performance or achievements
expressed in or implied by these forward looking statements. These
risks and assumptions include risks and assumptions related to our
revenue growth, operating results, industry and products, the general
economy, conditions of and access to the capital and debt markets,
governmental policies and regulation, technology innovations,
fluctuations in foreign exchange rates, the availability and price of
natural gas, global government stimulus packages, the acceptance of
and shift to natural gas vehicles in fleet markets, the development of
competing technologies as well as other risk factors and assumptions
that may affect our actual results, performance or achievements or
financial position discussed in our most recent Annual Information Form
and other filings with securities regulators. Readers should not place
undue reliance on any such forward-looking statements, which speak only
as of the date they were made. We disclaim any obligation to publicly
update or revise such statements to reflect any change in our
expectations or in events, conditions or circumstances on which any
such statements may be based, or that may affect the likelihood that
actual results will differ from those set forth in the forward- looking
statements except as required by National Instrument 51-102. The
contents of any website, RSS feed or Twitter account referenced in this
press release are not incorporated by reference herein
SOURCE Westport Innovations Inc.
Image with caption: "First Generation Westport HPDI Injector and Next Generation Injector. (CNW Group/Westport Innovations Inc.)". Image available at: http://photos.newswire.ca/images/download/20140930_C9875_PHOTO_EN_42922.jpg
