Summary of Westport Fuel Systems Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: Q2 2026 revenue for the high-pressure controls business was $2.7 million, down from $2.9 million in Q2 2025. However, Cespira reported a significant revenue increase of 125% year-over-year, reaching $18.9 million compared to $8.3 million in Q2 2025.

Gross Profit: Cespira achieved a gross profit of $3.8 million, a notable improvement from a gross loss of $1.9 million in Q2 2025.

Net Loss: Cespira's net loss was $2.4 million, a 65% improvement from $6.7 million in Q2 2025.

Cash Position: Cash and cash equivalents stood at $23.9 million, slightly down from $24.5 million at the end of Q1 2026, primarily due to operating losses and costs related to financing and a prior cyber incident.

Capital Contributions: Contributions to Cespira decreased to $3.5 million, reflecting improved financial performance and anticipated further reductions as Cespira approaches breakeven in 2027.

2Strategic Updates and Business Highlights

Cespira Joint Venture: A significant milestone was the hydrogen engine development agreement with Volvo, reinforcing the relevance of HPDI technology across various low-carbon fuels.

Financing: Westport completed a $10 million offering to strengthen liquidity and support ongoing operations.

Market Context: The company noted a favorable price differential between LNG and diesel, enhancing the economic case for lower-carbon alternatives. Regulatory developments in the EU are also increasing the strategic value of emissions-reducing technologies.

High-Pressure CNG Focus: Westport is focused on promoting its high-pressure CNG fuel system in North America, with positive feedback from fleet demonstrations.

3Forward Guidance and Outlook

Breakeven Target: Cespira is on track to achieve breakeven in 2027, with continued revenue growth and operational leverage expected to support this goal.

Volume Growth: The company anticipates ramping up production and meeting customer demand in the latter half of 2026, with expectations to exceed volume plans.

Market Expansion: Westport is exploring opportunities in South America and India, alongside ongoing efforts in 37 countries with over 12,000 trucks on the road.

4Bad News, Challenges, or Points of Concern

High-Pressure Controls Revenue: The decline in revenue for the high-pressure controls segment raises concerns about sales volume and operational efficiency.

Manufacturing Bottlenecks: Transitioning equipment and ramping up production in Canada and China has led to temporary unfulfilled demand, impacting revenue growth.

Market Growth Rate: The hydrogen market is not growing as rapidly as previously anticipated, which could affect future revenue projections.

5Notable Q&A Insights

Sales Drivers: CEO Daniel Sceli highlighted the importance of regulatory changes in the EU and the proven reliability of their technology as key drivers for future growth.

Funding for Hydrogen Development: The hydrogen development contract with Volvo is customer-funded, alleviating Westport from additional financial burdens for this initiative.

Future Revenue Growth: Sceli expressed confidence that revenue growth would materialize in the second half of the year as production ramps up and backlog is addressed. Overall, Westport Fuel Systems demonstrated significant progress in its strategic initiatives, particularly with Cespira, while also facing challenges in certain segments and manufacturing transitions. The outlook remains cautiously optimistic, with a focus on achieving breakeven and expanding market presence.