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Date

Friday, May 15, 2026 at 7 a.m. ET

Call participants

  • Chief Executive Officer — Daniel Sceli
  • Chief Financial Officer — Elizabeth Owens

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Takeaways

  • Cespira Revenue Growth -- Revenue in the Cespira joint venture increased 33% to $22.2 million in Q1 2026, driven by higher sales volumes and expanding market adoption.
  • Cespira Gross Profit and Margin -- Gross profit rose to $1.6 million in Q1 2026 from $0.4 million in Q1 2025, while gross margin improved to 7% from 3%.
  • Cespira Net Loss Reduction -- Net loss narrowed by 65% to $2.5 million in Q1 2026, compared to $7.1 million in Q1 2025.
  • High Pressure Controls Segment Revenue -- Revenue increased 21% to $2.3 million, with gross profit stable at $0.5 million, reflecting volume improvements.
  • Cash Position -- Cash and cash equivalents were $24.5 million, down from $27.2 million at year end.
  • Operating Cash Flow -- Net cash used in operating activities was $3.4 million, a $5.2 million improvement over the prior year.
  • Debt Reduction -- Total outstanding debt declined to $1.9 million from $2.9 million and is expected to be fully retired in 2026.
  • Cespira Capital Contributions -- Capital contributions to Cespira fell to $2.9 million from $4.7 million, attributed to better financial performance at the joint venture.
  • Production Expansion -- New manufacturing facilities began production in Cambridge, Ontario, and Zhengzhou, China, serving demand in industrial and hydrogen segments.
  • Second OEM Progress -- A second OEM is conducting truck trials, with management affirming ongoing negotiations for potential commercialization and a decision anticipated by year end.
  • Volvo Milestone -- Volvo surpassed 10,000 natural gas trucks on the road equipped with Cespira’s HPDI fuel system.
  • North American Market Development -- Increased fleet and OEM interest in North America was noted following ACT Expo participation; further demos and EPA certification planning are underway.
  • China Hydrogen Innovation Center -- The new Zhengzhou site is focused on the Chinese market, aiming for cost and geopolitical efficiencies.

Summary

Westport Fuel Systems Inc. (WPRT 0.50%) reported significant progress in scaling its Cespira joint venture, achieving higher revenues, margin improvements, and operational efficiency. Management emphasized reduced funding needs for Cespira due to stronger performance, ongoing expansion in North America and emerging markets, and new capacity from recently launched manufacturing sites. The company highlighted industry signals of robust European adoption and continued advancement with a second OEM partner.

  • The CFO stated, "our cash and cash equivalents position stood at $24.5 million compared to $27.2 million at December 31, 2025," directly confirming current liquidity levels.
  • The CEO reported, "Volvo Trucks recently announced it has delivered more than 10 thousand gas powered trucks globally," reinforcing platform validation by a major OEM.
  • Discussions with a second OEM may yield higher-volume commitments, with management targeting a determination "before year end," suggesting a potential near-term inflection point.
  • New manufacturing assets in Canada and China are operational, positioning the company to leverage both local and global industrial demand.
  • Ongoing momentum was attributed to macro drivers such as "favorable fuel economics, tightening emissions regulations," supporting future adoption.

Industry glossary

  • HPDI: High Pressure Direct Injection; a proprietary Westport fuel system enabling diesel engines to operate primarily on natural gas while matching traditional diesel performance.
  • Cespira: The joint venture between Westport Fuel Systems Inc. and Volvo Group focused on commercializing low-emission, alternative fuel powertrains for heavy-duty trucks.

Full Conference Call Transcript

Daniel Sceli: Thank you, Ashley, and good morning, everyone. I will turn to our financial results. Our Cespira momentum continues to build with revenue up 33% year over year in the first quarter. That growth is increasingly material to West Port, reflecting stronger volumes, broader market adoption of HPDI, and progress with the 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 our Cespira 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 Cespira and improved capital efficiency at Westport. The broader market backdrop also remains supportive. Volvo Trucks recently announced it has delivered more than 10 thousand 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 2031. Together, those indicators reinforce our view that Cespira is participating in a market with both near term momentum and multiyear growth potential. Our high pressure controls business has also reflected improved results in Q1 26 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 and manufacturing facility in Cambridge, Ontario and GFI's new China Hydrogen Innovation Center and manufacturing facility in Zhengzhou, 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.

I believe 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 that we delivered speaks volumes. At ACT, 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 is a fully integrated platform, more cost-effective fuel today. That proves we can deliver diesel performance with cleaner, A focused team brought this to life. But their success reflects something bigger, our ability to execute, to integrate, and to lead.

As we showcase 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 going 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 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 will have Elizabeth run you through some financial details, and then we will come back. Elizabeth?

Elizabeth Owens: Thank you, Daniel, and good morning, everyone. I will highlight a few key milestones that Westport has achieved. The first of which remains our strong cash position through 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 Cespira joint venture decreased from $4.7 million in 2025 to $2.9 million in 2026. Reflective of the improvement of Cespira'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 2026. Our high pressure controls business segments saw meaningful growth with revenue for Q1 26 increasing 21% to $2.3 million from $1.9 million reported in Q1 25. 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, Cespira's revenue growth is accelerating. as we enter 2026. In Q1 26, 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.

Cespira product revenue of $19.5 million increased 48%. Compared to $13.2 million in Q1 25. Cespira gross profit improved to $1.6 million compared to $0.4 million 1 year ago. Gross margin improved in Q1 26 to 7% from 3% in Q1 25. Cespira also significantly improved the bottom line with a net loss in Q1 26 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 thousand natural gas trucks on the road equipped with Cespira's HPDI fuel system.

We are also encouraged by the continued progress of a second OEM that is currently conducting truck trials. We are excited about the opportunities ahead as we target an improvement in capital requirements. With that, I will pass the call back to Daniel.

Daniel Sceli: Thank you, Elizabeth. Our operating momentum continues to strengthen. We are seeing solid year over year growth in our Cespira 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.

Cespira's HPDI fuel system takes a little to deliver 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. That concludes the discussion.

Operator: As a reminder, to ask a question, please press *. And our first question will come from the line of Eric Stine of Craig Hallum Capital Group. Your line is open, Eric.

Analyst (Eric Stine): Good morning, everyone.

Daniel Sceli: Hey. Good morning, Eric.

Analyst (Eric Stine): Hey. Maybe just starting with Sispira. So the second truck trial, I mean, it does I know we just connected, what, couple weeks ago, but it does feel like you are giving a more optimistic tone about that trial. So curious. I mean, am I reading that right? And with that in mind, you know, can you remind us of next steps for that or the timeline we should look for over the remainder of 2020 and then in 2027.

Daniel Sceli: Sure. Yeah. I do feel more optimistic. I mean, the truck trial is going really well. So, you know, discussions negotiations continue for the next phase of this which is a higher volume. The initial the initial truck trial, I think, was around 200 trucks, but moving on to larger volumes and, you know, commercializing this is the discussion that is ongoing right now. Okay. And timeline in terms of, I think, time you would said, that you expected a, you know, a decision in maybe it is a decision as part of the negotiations you mentioned later this year. Is does that still hold? It does. Yeah. Okay. We do. Got it.

A determination on this project before year end. Okay.

Analyst (Eric Stine): And then maybe anything, I mean, you talked you gave a lot of detail about Q4 and 2025 in terms of some of the new markets that Volvo and Cespira are seeing momentum. On a global basis. Obviously, North America, a big focus. But just curious, I mean, are there any other contributors to Q1 that are worth highlighting as awareness of that product expands?

Daniel Sceli: We do see, you know, beachheads opening up in India and Brazil. there is already trucks in Peru and Chile. You know, India and Brazil are 2 massive markets, and, you know, we are seeing strong interest in those markets to move to alternative fuel. So we are very excited about that opportunity coming to us. Got it.

Analyst (Eric Stine): All right. Maybe last 1 for me. Just because of how things are trending with joint venture and you know, expectations that momentum continues Can you just update us on maybe current thoughts on contributions needed to the joint venture here going forward.

Elizabeth Owens: Yeah. So, obviously, you saw that we have, you know, been putting in, the contributions are going down to 60 simply because volumes are going up at a steady rate. From being the product revenue alone, which is up 48%, and in addition to that, you know, and you know, as we are throughout the, you know, 2027, mid 27, its cash contribution will be reduced a lot more. Okay.

Daniel Sceli: You were cutting in and out there, but, I guess I will take that to clarify some stuff offline.

Analyst (Eric Stine): Okay. Thank you.

Daniel Sceli: Thanks, Eric.

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

Analyst (Christopher Dendrinos): Yeah. Good morning. Thank you. I mean, maybe just to follow-up here a bit on Cespira. You had a good quarter with some solid gross margin there. You know, how are you thinking about gross margin for the remainder of the year? And I guess what I am kind of curious about is you highlighted some deliveries to the to the test OEM, and I am curious what that volume looks like maybe for the rest of the year and how that is playing out in terms of gross margin. Thanks.

Daniel Sceli: Yeah. Sure. So, I mean, as we have been talking about, you know, for the last few years, margins are going to continue to grow just simply based on volume. You know, we built out this business completely to be a Tier 1 to an automotive OEM like Volvo. You need to have a completely built out and certified, business. So that was, you know, day 1 almost 2 years ago. You know, all disciplines, all departments, full certifications in IETF, all of that. So the expenses of building up the business was laid down. We are now, you know, starting to cover the fixed cost. We are in discussions with we should be able to do. Got it.

Analyst (Christopher Dendrinos): Thanks. And then maybe just as a follow-up here, Yeah. 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? Thanks. Yeah.

Daniel Sceli: There I mean, that service is really 2 major projects. Of HPDI 3.0, which is you know, in conjunction with Volvo, launching it at the end of this year. And, you know, it is an advanced HPDI system. it is an advanced Volvo engine. that is the first project that will be wrapping up. The second is we are still doing the development work for Volvo's hydrogen project. And they have recently announced they are on the road. We are doing that development work over the next couple of years. So that service work is going to continue. We are looking at additional service work which engineering development work, on a couple of other projects.

That, we are not allowed to talk about yet just so you can understand.

Analyst: And we hope that we can talk further down the road.

Analyst (Christopher Dendrinos): Got it. Thank you very much.

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

Daniel Sceli: Hey. Good morning, Robert.

Analyst (Rob Brown): Good morning. Just kind of at a high level, what are the next steps in the North American market? You had kind of a good showing at the Act Expo and good interest. what is sort of the next steps in the in the North American market development?

Daniel Sceli: Yeah, Rob, I have got to tell you, it was more than, you know, successful. It was overwhelming. The excitement, the interest that we got at the ACT Expo. We, you know, we built out a truck. Volvo got us a truck and an engine. We built it out and drove it down from Vancouver to Las Vegas. The funny thing was we had a chase car. The truck spent $280 on gas getting there less than the chase car. And the interest is just overwhelming. So there is an awful lot of discussion right now between fleets, dealers, the OEM on what is next.

And, certainly, you know, we are planning to do more demos, fleet-to-fleet-driven demos. there is planning to be done for the EPA certification. to launch this. So that is all activity that you know, is picking up pace just coming out of the ACT Expo because of the interest from multiple fleets, multiple very large fleets. So we are very excited.

Analyst (Rob Brown): Okay. Thank you. 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?

Daniel Sceli: Yeah. We expect, you know, down the road as the volume because it is a volume issue. We shut down operations if you are going to need to move that manufacturing equipment out of Italy and move it to between Cambridge and China. The China piece was really built out to focus on the China market only. For localized cost, localized managing geopolitics. And, of course, we are 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 are hearing from the Chinese government that is going to, get pushed forward again.

So the underlying product is a very, very high-quality 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 are seeing it already this year. already this year. You know, 1 of our, I am sure you follow them as well, is Plus, 1 of our customers in that space who had their call earlier. This week. We are going to be shipping to them. So, you know, all volume starting to go up for higher pro as that volume goes up, the margin's going to be there.

Operator: And I am showing no further questions. I would now like to turn the call to Daniel for closing remarks.

Daniel Sceli: Well, thank you for your time today. Earlier in the quarter, we are very excited about where we are headed. Lots of positive trends. You know, emphasize both HPDI and our hydrogen product. And so we look forward to the next quarter.

Operator: And this concludes today's conference. Thank you for participating. May now disconnect.