o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Alberta
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3537
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N/A
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(Province or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial Classification
Code Number (if applicable))
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(I.R.S. Employer Identification Number (if applicable))
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C T Corporation System
111 Eighth Avenue
New York, NY 10011
(212) 590-9070
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Copies to:
Steven B. Stokdyk, Esq.
Lewis W. Kneib, Esq.
Latham & Watkins LLP
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071
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(Name, address (including zip code) and telephone number (including
area code) of agent for service in the United States)
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Title of Each Class:
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Trading Symbol(s)
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Name of Each Exchange On Which Registered:
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Common Shares, no par value
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WPRT
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NASDAQ Global Select Market
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x Annual Information Form
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x Audited Annual Financial Statements
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•
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our liquidity and going concern discussed in the audited consolidated financial statements of the Company filed as Exhibit 99.2 to this annual report on Form 40-F;
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•
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our ability to vertically integrate Westport High Pressure Direct Injection 2.0 ("Westport HPDI 2.0™") to into natural gas solutions with attractive pricing, performance and fuel economy;
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our ability to integrate Westport HPDI 2.0™ into original equipment manufacture ("OEM") operations and to reach scalable volume deliveries;
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•
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the future demand for Cummins Westport Inc. ("CWI") products and Company products;
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increasing penetration within our existing markets and expansion of those markets geographically;
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continuing growth in the transportation sector and in the natural gas engine market;
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our ability to successfully launch new technology and market initiatives, and integrate our products in to existing OEM products;
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the manufacture of Westport HPDI 2.0™ system components;
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CWI's focus on sales in North America with engines manufactured in Rocky Mount, North Carolina, Jamestown and New York;
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•
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our ability to exploit and protect our intellectual property;
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our capital expenditure and investment programs;
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the future desirability and use of natural gas as an alternative fuel;
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•
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commodity prices and the fuel price differential between natural gas and diesel;
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ongoing relationships between us and our business partners and the results of our development programs with such partners;
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potential disputes regarding the rights and obligations of the parties which may in the future arise under our agreements with our strategic partners;
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our ability to continue to compete with our competitors and their technologies;
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the capital and operating costs of vehicles using our technologies relative to competing technologies;
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continued growth in the transportation sector and in the natural gas engine market;
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profit margins and production costs of engines incorporating our technologies;
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the further development of infrastructure supporting the application of natural gas as an alternative fuel;
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increasing penetration of our technologies in key markets within the transportation sector and in key geographical markets;
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increasingly stringent environmental and emissions legislation and regulations in the future;
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our ability to attract and retain employees;
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demand for engines incorporating our technologies;
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the timing of commissioning of liquefied natural gas (“LNG”) refueling stations;
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the ability of our products to adapt to the use of renewable natural gas ("RNG") and manufactured fuels, including hydrogen, as fuels;
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our future growth and the expected changes to the transportation sector;
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expansion of our product offerings and markets;
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our estimates and assumptions used in our accounting policies, and accruals, including warranty accruals, and financial condition;
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our adoption, timing and ability to meet certain accounting standards;
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our ability to predict if or when we will operate profitably or generate positive cash flows;
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our compliance with environmental regulations and regulatory policies;
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our ongoing assessments of targets for improving our commitment to environment and social responsibilities;
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the strategy of our transportation segment and resulting growth in market share;
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the expansion of existing relationships with truck and engine OEMs;
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expansion of alternative fuel product offerings to develop and supply high pressure components to OEM partners; and
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expected fluctuations in our revenues and results of operations.
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risks related to our liquidity and going concern discussed in the audited consolidated financial statements of the Company filed as Exhibit 99.2 to this annual report on Form 40-F;
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risks related to our financing agreement with Cartesian Capital Group, including, but not limited to failure to realize the anticipated benefits of the agreement;
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market acceptance of our products;
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product development delays and delays in contractual commitments;
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changing environmental legislation and regulations;
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the ability to attract and retain business partners;
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the success of our business partners and OEMs, with whom we partner;
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future levels of government funding and incentives;
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competition from other technologies;
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price differential between compressed natural gas, LNG and liquefied petroleum gas relative to petroleum-based fuels;
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limitations on our ability to protect our intellectual property;
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potential claims or disputes in respect of our intellectual property;
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limitations in our ability to successfully integrate acquired businesses;
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limitations in the development of natural gas refueling infrastructure;
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the ability to provide and access the capital required for research, product development, operations and marketing;
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unforeseen claims made against us;
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exposure to factors beyond our control through our international business operations, such as currency exchange rates, changes in governmental policy, trade barriers, trade embargoes and delays in the development of international markets for our products;
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risks related to our share capital, including our common shares and the ability of the board to issue preferred shares at it's discretion;
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risk of conflict related to our directors and executive officers who may currently, or in the future, also serve as directors and/or officers of other public companies; and
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those risks discussed under the heading “Risk Factors” in the Annual Information Form (“AIF”) of the Company filed as Exhibit 99.1 to this annual report on Form 40-F.
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clarified the scope of who the Code applies to;
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strengthened descriptions of the Company's whistleblower policy and reporting mechanisms;
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the addition of non-retaliation policy description;
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expanded the sections of the code addressing safe and respectful workplace behaviours;
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better defining anti-corruption and bribery requirements and expectations;
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the addition of a human rights section; and
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the addition of a delegation of authority section.
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99.7
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Consents
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99.8
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Exhibits
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99.9*
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101.1
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XBRL Interactive Data File
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WESTPORT FUEL SYSTEMS INC.
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By:
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/s/ David M. Johnson
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Name:
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David M. Johnson
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Title:
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Chief Executive Officer
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FORWARD-LOOKING INFORMATION
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COMPANY OVERVIEW
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MERGERS, ACQUISITIONS AND DIVESTITURES
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HUMAN RESOURCES AND RELATED POLICIES
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SCHEDULE "B" FORWARD LOOKING INFORMATION
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1.
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Westport Power Inc., which is wholly-owned by Westport Fuel Systems and incorporated pursuant to the Business Corporations Act (British Columbia);
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2.
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MTM S.r.l., an Italian corporation, which is an indirect subsidiary of Westport Fuel Systems;
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3.
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Emer S.p.A, also an Italian corporation and indirect subsidiary of Westport Fuel Systems; and
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4.
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Prins Autogassystemen B.V. ("Prins"), a Netherlands corporation and indirect subsidiary of Westport Fuel Systems.
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Name(1)
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Voting Securities(2)
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Jurisdiction of Incorporation
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Westport Fuel Systems Inc.
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100%
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Canada
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Westport Power Inc.
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100%
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Canada
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Westport Luxembourg S.a.r.l.
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100%
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Luxembourg
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Fuel System Solutions Inc.
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100%
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U.S.A.
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Juniper Engines Italy S.r.l.
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100%
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Italy
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Emer S.p.A.
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100%
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Italy
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Minda Emer Technologies Limited
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50%
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India
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MTM. S.r.l.
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100%
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Italy
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Prins Autogassystemen B.V.
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100%
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Netherlands
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Rohan BRC Gas Equipment Private Limited
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100%
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India
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TA Gas Technology S.A.
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100%
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Argentina
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Westport Innovations (U.S.) Holdings Inc.
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100%
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U.S.A.
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Westport Fuel Systems (U.S.) Inc.
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100%
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U.S.A.
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Cummins Westport Inc.
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50%
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U.S.A
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Westport Dallas Inc.
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100%
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U.S.A.
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Westport Innovations (Hong Kong) Limited
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100%
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Hong Kong
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Weichai Westport Inc.
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23.33%(3)
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China
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1.
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Entities not shown represent less than 10% of our total consolidated revenues and total consolidated assets (although not all entities shown necessarily each represent more than 10% of our total consolidated assets and total consolidated sales) and, if considered in aggregate as a single entity, represent less than 20% of our total consolidated revenues and total consolidated assets.
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2.
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The figure shows the percentages of the votes attached to all voting securities, beneficially owned by us or over which control or direction is exercised by us, either directly or indirectly.
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3.
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As a result of the previous sale of a derivative economic interest in Weichai Westport Inc., this equity interest corresponds to an economic interest equal to just 4.55%.
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1.
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The terms RNG, biomethane, and renewable gas are used interchangeably. It is defined as pipeline-quality gas derived from a variety of feedstock sources that is fully blendable with conventional natural gas and can be delivered in the form of CNG or LNG. Therefore, our references to natural gas in this AIF include both geologic natural gas and renewable natural gas.
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1.
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NGV Global July 2019 and World LPG Association 2018 Annual Report, Westport Fuel Systems Analysis
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2.
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International Energy Agency 2018 (IEA), Inside EV's Global 2019 Sales, Westport Fuel Systems Analysis
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3.
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Paris Agreement, Article 2, 1(a), https://unfccc.int/files/meetings/paris_nov_2015/application/pdf/paris_agreement_english_.pdf.
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1.
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Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_chapter8.pdf
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2.
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BP Statistical Review of World Energy 2019
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3.
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Influx of California RNG Fuels Local Economy & Protects Climate. California Natural Gas Vehicle Partnership. Written by: Todd Campbell, https://www.act-news.com/news/california-rng-fuels-local-economy-protects-climate/
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OPERATING BUSINESS SEGMENT REVENUE
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|||||||||
(Expressed in millions of dollars)
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12/31/2019
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12/31/2018
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12/31/2017(1)
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||||||
Transportation (consolidated)
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$
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305.3
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$
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270.3
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$
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229.8
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CWI (non-consolidated)
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$
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361.8
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$
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319.4
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$
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317.3
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Corporate
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$
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—
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$
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—
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$
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—
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1.
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Effective January 2018, the Company restructured its business segments. The Westport HPDI 2.0TM product line and all other technology related activities previously reported under the Corporate & Technology segment were combined with the Automotive business segment and renamed Transportation. Additionally, the Company has modified information from 2017 to exclude the revenue from the CNG Compressor business which has been recoded as discontinued operations with effect from the second quarter of 2018.
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•
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The main DOEM clients are Kia, Hyundai, Nissan, Mitsubishi, Suzuki, Piaggio, and Ssangyong. The conversion of the cars is completed in our Cherasco, Italy facility. Westport Fuel Systems also provides this solution integrated within an OEM's factory. Specifically for Honda Turkey, and the conversion of the Honda Civic ECO and for Tofaş (Fiat Turkey).
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•
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As a leading developer and installer in Ford’s Qualified Vehicle Manufacturer ("QVM") North American program, Westport Fuel Systems offers the largest line-up of Ford alternative fuelled vehicles. The bi-fuel and dedicated (or mono-fuel) CNG and bi-fuel LPG systems are developed and engineered at our Dallas, Texas production facility and the systems undergo the same rigorous testing for safety and durability required for all Ford OEM products.
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The Sequent Plug & Drive system is one of the most successful LPG injection systems for port injection engines produced and sold to several other DOEM and OEM customers worldwide. SDI 2.0 and LDI systems, especially designed and developed for the latest direct injection ("DI") engines are also provided.
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Westport Fuel Systems in the Netherlands offers its bi-fuel VSI-2.0 DI LPG and CNG systems to several customers through their distributors. The Direct LiquiMax system is a bi-fuel LPG system using liquefied LPG for direct injection engines achieving highest efficiency in terms of fuel use and lowest emission exhaust including CO2 and particles. This system is sold to Ford in Poland and Hyundai in Germany.
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OPERATIONS LOCATIONS
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Geographic Region
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Locations
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North America
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4
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Europe
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5
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Asia
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3
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South America
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1
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•
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Manufacturers of on-engine and off-engine components and systems that use alternative fuels such as LPG, CNG, LNG, and hydrogen. These companies may produce only a small sub-set of components, or manufacture or assemble complete systems. They may also manufacture or assemble conversion kits that are used to convert vehicles fuelled by diesel or gasoline to an alternative fuel. In the future, the Company may also compete with traditional automotive component suppliers. The Company also competes with motor vehicle OEMs that develop fuel systems internally.
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•
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Conversion specialists that convert vehicles to run on alternative fuels by installing alternative fuel components or systems on vehicles as part of a vehicle production OEM process, a DOEM process, or by installing components and conversion kits on vehicles in the aftermarket that were originally fuelled by diesel or gasoline.
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•
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Conventional established technologies using spark-ignited or direct injection combustion technologies and related systems and components, such as engines powered by diesel fuel and gasoline. These incumbent technologies, from a fairly large number of global manufacturers, hold a very large market share in our target applications.
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•
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Alternative-fuel engines and related technologies using broadly the same technical approaches as Westport Fuel Systems products, such as HPDI combustion technology, spark-ignited natural gas and dual-fuel engines, LNG tanks, and new and aftermarket fuel system components. These Westport Fuel Systems products compete head-to-head with conceptually-similar products from other companies.
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•
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Westport Fuel Systems will provide a safe workplace and ensure that its operations comply with all applicable health, safety, and environmental legislation, industry codes, and standards;
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•
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Westport Fuel Systems will collaborate with partners and industry stakeholders in the protection of the environment, the efficient use of resources, and the implementation of pollution mitigating practices;
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•
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Westport Fuel Systems will research, design, and develop alternative fuel engine technologies that are safe for their intended use, efficient in their use of energy, preserve environmental health, and safeguard employees, customers, and the general public from injuries or health hazards;
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•
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Westport Fuel Systems will determine, evaluate, and strive to mitigate the environmental impacts of our operations. We will assess our environmental impact and set internal targets for improvement;
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•
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Westport Fuel Systems will ensure the responsible use of energy and other resources in its operations;
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•
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Westport Fuel Systems will be an environmentally responsible neighbour in the communities where we operate and will act promptly and responsibly to correct incidents or conditions that endanger health, safety, or the environment;
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•
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Westport Fuel Systems will fully investigate all environmental incidents or unplanned releases and communicate findings as necessary to all affected parties;
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•
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Westport Fuel Systems will train employees on their individual responsibility to protect the environment, to adhere to this Environmental Policy Statement, and to cooperate with company efforts in this regard. On-site contractors and others acting on behalf of Westport Fuel Systems are expected to abide by the same environmental code of conduct;
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•
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Westport Fuel Systems will evaluate its environmental performance through regular auditing and assessment of its regulatory compliance and adherence to this policy. We will communicate the appropriate information to our stakeholders including our Board, employees, shareholders, governmental agencies, and the general public; and
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•
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Westport Fuel Systems will strive to continuously improve our environmental management system. Westport Fuel Systems will implement this policy through a comprehensive plan with measurable goals/targets and a rigorous assessment of performance. Westport Fuel Systems will work to provide a candid discussion of our environmental achievements and challenges in its annual sustainability report published on its website at wfsinc.com/about/sustainability/.
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TSX (WPRT) in Canadian Dollars
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||||||||
Period
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High (C$)
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Low (C$)
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Close (C$)
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Volume
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||||
January 2019
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2.42
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1.82
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2.00
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976,640
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February 2019
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2.09
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1.55
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|
1.79
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1,267,740
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March 2019
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2.25
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1.63
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2.08
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1,345,810
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April 2019
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2.65
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2.02
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2.33
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1,136,291
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May 2019
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3.95
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2.13
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3.70
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2,462,880
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June 2019
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3.92
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3.11
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3.55
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1,202,660
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July 2019
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4.19
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3.48
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3.90
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1,483,790
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August 2019
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4.31
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3.39
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3.55
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1,313,040
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September 2019
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4.11
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3.39
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3.58
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989,100
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October 2019
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3.68
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3.14
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3.62
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923,487
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November 2019
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4.48
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3.21
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3.26
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1,168,480
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December 2019
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3.44
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2.96
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3.07
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904,860
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NASDAQ GLOBAL SELECT MARKET (WPRT)
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||||||||
Period
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High ($)
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Low ($)
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Close ($)
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Volume
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||||
January 2019
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1.83
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1.33
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1.52
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11,042,755
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February 2019
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1.60
|
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1.17
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1.35
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19,271,661
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March 2019
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1.69
|
|
1.21
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|
1.55
|
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13,318,543
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|
April 2019
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1.99
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1.52
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|
1.74
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7,209,298
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|
May 2019
|
2.94
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|
1.57
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|
2.74
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21,741,031
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|
June 2019
|
2.97
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|
2.35
|
|
2.71
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|
9,192,708
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|
July 2019
|
3.20
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|
2.74
|
|
2.97
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|
11,992,700
|
|
August 2019
|
3.27
|
|
2.54
|
|
2.66
|
|
15,001,945
|
|
September 2019
|
3.12
|
|
2.55
|
|
2.72
|
|
10,089,370
|
|
October 2019
|
2.79
|
|
2.35
|
|
2.75
|
|
8,443,648
|
|
November 2019
|
3.39
|
|
2.43
|
|
2.44
|
|
12,072,970
|
|
December 2019
|
2.63
|
|
2.23
|
|
2.37
|
|
8,625,217
|
|
Brenda J. Eprile
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CHAIR
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||
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Citizenship: Canada
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Brenda J. Eprile (65) was appointed as Chair of Westport Fuel Systems' Board of Directors in February of 2017. Ms. Eprile joined the Board of Directors in October 2013. From 2000 to 2012, Ms. Eprile was a Senior Partner at PricewaterhouseCoopers and led the Risk Advisory Services practice. From 1998-2000 she led the Regulatory Risk practice at Deloitte LLP. From 1985 to 1997, Ms. Eprile had a distinguished career as a securities regulator in Canada, having held the positions of both Executive Director and Chief Accountant at the Ontario Securities Commission. Ms. Eprile is a Fellow Certified Professional Accountant (FCPA), and holds the ICD.D designation. She has a MBA from Schulich School of Business, York University. She is the former chair of the board of Home Capital Group, a TSX listed mortgage lending company and led the board through a severe liquidity crisis in April 2017. She is a member of the board of Olympia Trust Company and Olympia Financial Group, Canadian-based financial institutions and Canvas GFX a leading graphic illustration and technical documentation software company to Fortune 500 companies.
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Resides in:
Toronto, ON,
Canada
|
|||
Director since:
October 2013
|
|||
Common Shares:
120,173
|
|||
Share Units:
27,456
|
|||
Principal Occupation for Last 5 years:
Corporate Director
|
|||
Committee Membership:
Audit Committee, Nominating and Corporate Governance Committee
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Michele J. Buchignani
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DIRECTOR
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||
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Citizenship: Canada
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Michele J. Buchignani (56) was appointed a member of the Westport Fuel Systems Board in March of 2018, having previously served on the Advisory Board since September 2017. Ms. Buchignani brings experience as a strategic business leader with extensive senior level experience in law, finance, private equity, strategy, governance and compensation. Ms. Buchignani is currently CEO of McLean Drive Consulting Ltd., a consulting firm to private equity owned and growth companies and also serves as Managing Partner of McLane Drive Holdings LP., a U.S. real estate holding company. Ms. Buchignani also sits on the board of directors of Copper Mountain Mining Corporation, a TSX listed company. Previously, Ms. Buchignani held executive positions including as a Director with Teachers’ Private Capital, the private equity arm of the Ontario Teachers’ Pension Plan in Toronto from 2005 to 2009; Managing Director and Head of the Private Equity Funds Group at CIBC Capital Partners in Toronto and New York from 1999 to 2003; and Managing Director and Canadian General Counsel for CIBC World Markets from 1996 to 1999. From 1989 to 1996, she practiced corporate law in Toronto and London at Stikeman Elliott and was elected as a partner in 1995. Ms. Buchignani holds the ICD.D designation from the Institute of Corporate Directors. She serves in board and advisory positions with several corporate and not-for-profit organizations including TSX Trust Company, CAI Capital Partners V L.P., White House Design Company Inc., and The Fraser Institute. Ms. Buchignani holds a Bachelor of Arts degree with Honours in English from the University of British Columbia and a JD from the University of Toronto. She also completed the Stanford Executive Program at the Graduate School of Business at Stanford University.
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Resides in:
Vancouver, BC, Canada
|
|||
Director since:
March 2018
|
|||
Common Shares: 20,291
|
|||
Share Units: 18,786
|
|||
Principal Occupation for Last 5 years:
CEO of McLean Drive Consulting Ltd since 2010; Managing Partner of McLean Drive Holdings LP since 2012 and Corporate Director.
|
|||
Committee Membership:
Audit Committee, Human Resources and Compensation Committee.
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Daniel M. Hancock
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DIRECTOR
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||
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Citizenship: U.S.
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Daniel M. Hancock (69) was appointed to the Board in July 2017, having previously joined the Corporation's Advisory Board in March of 2017. Mr. Hancock is currently President of DMH Strategic Consulting LLC and also serves on the board of directors of Cryoport Systems, Inc., a U.S. headquartered company listed on the NASDAQ. Mr. Hancock retired from GM in 2011, after 43 years of service in GM's powertrain engineering and general management functions. His last position with GM was Vice President, Global Strategic Product Alliances. During this period he served as Chairman of GM's DMAX and VM Motori diesel engine joint ventures with Isuzu and Fiat, respectively. Mr. Hancock's previous appointments at GM included: Vice President, Global Powertrain Engineering; CEO, Fiat-GM Powertrain; and President, Allison Transmission Division. He now serves in board and advisory positions with several organizations focusing on new powertrain technologies and STEM (Science, Technology, Engineering, and Mathematics) education. He was President of SAE International in 2014 and is a member of the National Academy of Engineering. He received a master's degree in mechanical engineering from Massachusetts Institute of Technology and a bachelor's degree also in mechanical engineering from General Motors Institute (now Kettering University), Michigan.
|
|
Resides in: Indianapolis, IN, U.S.A.
|
|||
Director since:
July 2017
|
|||
Common Shares:
48,406
|
|||
Share Units:
18,786
|
|||
Principal Occupation for Last 5 years:
President of DMH Strategic Consulting since 2011.
|
|||
Committee Membership:
Human Resources and Compensation Committee (Chair), Nominating and Corporate Governance Committee. |
David M. Johnson
|
DIRECTOR
|
||
|
Citizenship: U.S.
|
David M. Johnson (53), was appointed CEO in January 2019 and is a member of the Westport Fuel Systems Board of Directors. Mr. Johnson is an industry veteran with 30 years of experience leading engine and vehicle development for automotive and commercial vehicle industries around the world. Prior to his appointment, Mr. Johnson served for ten years as President and CEO of Achates Power Inc. leading technical, commercial and corporate development to establish the organization as a leading developer of opposed-piston engines. Mr. Johnson’s distinguished career began in 1990 with Ford Motor Company in Truck Powertrain Planning. He subsequently held a variety of roles in engineering, product planning, program management, and strategic development with increasing responsibility. Since then Mr. Johnson has served in a variety of roles with leading automotive companies including senior roles at Navistar and GM. Mr. Johnson combines deep technical expertise with a decades-long career in international markets. He earned a Master of Business Administration and a Bachelor of Science in Mechanical Engineering from Cornell University.
|
|
Resides in:
Scottsdale, AZ, U.S.A.
|
|||
Director since:
January 2019
|
|||
Common Shares:
64,722
|
|||
Share Units:
454,583
|
|||
Principal Occupation for Last 5 years:
CEO of Westport Fuel Systems since January of 2019; CEO for Achates Power Inc. from 2008 to 2018.
|
|||
Committee Membership:
None. |
Rodney (Rod) Nunn
|
DIRECTOR
|
||
|
Citizenship: Canada
|
Rodney Nunn (75), joined the Board of Directors in March 2016. Mr. Nunn served as President and CEO of KSR International Co. from 1976 to 2011 and from November 2015 until January 2020. KSR is an industry leader in the design, engineering and manufacture of an array of automotive products, including sensors, electronic throttle controls, steering system control modules, MOSFET power modules and adjustable & fixed pedals. KSR's production facilities are strategically located globally on four continents. KSR is a vertically integrated manufacturing company located near its customers to provide quick response, cost containment and local expertise. Executive and engineering offices are headquartered in Ridgetown, Ontario (Canada) and sales are in Southfield, Michigan, USA. Rod graduated from Technical College in England in 1963 with a U.E.I. and City of Guilds Certificate in Industrial Engineering. |
|
Resides in: Chatham, ON, Canada
|
|||
Director since:
March 2016
|
|||
Common Shares:
18,616
|
|||
Share Units:
18,786
|
|||
Principal Occupation for Last 5 years:
President and CEO of KSR International Co. from November 2015 to January 2020.
|
|||
Committee Membership:
Human Resources and Compensation Committee |
Peter Yu
|
DIRECTOR
|
||
|
Citizenship: U.S.
|
Peter Yu (58), joined the Board of Directors in January 2016. Mr. Yu is Founder and Managing Partner of Cartesian Capital Group ("Cartesian"), a global private equity firm with more than $2.5 billion under management. Prior to founding Cartesian, Mr. Yu founded and served as President and CEO of AIG Capital Partners. He built AIG Capital Partners into a leading global private equity firm with $4.5 billion under management. Over his career, Mr. Yu has initiated, negotiated and executed numerous innovative and successful investments across a wide range of industries and geographies. He has served as a director and advisor to more than two dozen industry-leading companies. Prior to founding AIG Capital Partners, Mr. Yu served President Bill Clinton as Director to the National Economic Council in the White House. In that capacity, he managed a number of domestic and international economic policy initiatives and priorities. Mr. Yu graduated magna cum laude from Harvard Law School, where he served as President of the Harvard Law Review. Mr. Yu served as a law clerk to Justice John Paul Stevens of the U.S. Supreme Court and to Chief Judge Patricia Wald of the U.S. Court of Appeals for the D.C. Circuit. Mr. Yu received his B.A. degree from the Woodrow Wilson School at Princeton University.
|
|
Resides in:
New York City, NY, U.S.A.
|
|||
Director since:
January 2016
|
|||
Common Shares:
-
|
|||
Share Units:(1)
24,715
|
|||
Principal Occupation for Last 5 years:
Founder and Managing Partner of Cartesian Capital Group since 2006.
|
|||
Committee Membership:
None. |
1.
|
Mr. Yu is the director nominee of Cartesian and pursuant to Cartesian’s policies any director compensation otherwise issuable to Mr. Yu is required instead to be issued to Cartesian.
|
Richard Orazietti
|
CHIEF FINANCIAL OFFICER
|
||
|
Citizenship: Canada
|
Richard Orazietti (51) was appointed CFO September 3, 2019. Mr. Orazietti has had a distinguished career as a finance leader with expertise across multiple finance disciplines and extensive experience working with business and operational management to drive change and improve performance. Prior to joining Westport Fuel Systems, he served as Senior Vice President, Treasurer of Goldcorp, Inc., a former NYSE and TSX listed senior gold producer, where he was responsible for financing the company’s strategic and operating objectives and managing risk exposure. Previously, he also held roles as Senior Vice President, Controller and Vice President, Internal Audit. Prior to Goldcorp, Mr. Orazietti served as Vice President, Finance at BCE Inc., Canada’s largest communications company, where he led the financial management of various operating divisions during a period of significant change in the industry. He brings extensive experience in corporate finance, risk management, financial reporting and control, operational management, strategic planning and in leading change. He is a Chartered Professional Accountant (“CPA”) in British Columbia and holds a Global Executive MBA from the IESE Business School at the University of Navarra and a Bachelor of Business Administration from Simon Fraser University. Mr. Orazietti is also fluent in French, Italian, and Spanish. |
|
Resides in:
Burnaby, British Columbia
|
|||
Westport Fuel Systems since:
September 2019 |
|||
Common Shares:
30,000 |
|||
Share Units:
256,600 |
|||
Principal Occupation for Last 5 years:
CFO since September 2019, Senior Vice President, Treasurer of Goldcorp, Inc. and Senior Vice President, Controller of Goldcorp Inc.
|
James (Jim) Arthurs
|
EXECUTIVE VICE PRESIDENT
|
||
|
Citizenship: Canada
|
Jim Arthurs (61) is Executive Vice President at Westport Fuel Systems. Mr. Arthurs joined Westport Fuel Systems in 2011 and has overseen the development of Westport’s heavy duty engine and fuel system technologies, including the HPDI system. Mr. Arthurs also sits on the board of directors of Western Forest Products Inc., a TSX listed company. In November 2016, Jim took responsibility for the newly formed Electronics Group, with oversight of Electronic Control Unit hardware and software across Westport Fuel Systems. Jim is a Director of CWI, a joint venture company owned equally by Cummins and Westport Fuel Systems that designs, engineers and markets spark-ignited natural gas engines for medium- and heavy-duty transportation applications such as trucks and buses. Previously, Jim was President of CWI from 2012 to 2013 and led the development of the Cummins Westport ISX12 G natural gas engine. Prior to that, Jim was Vice President, Cryogenic Systems and Vice President, Operations for Westport. Prior to joining Westport, Jim was a Managing Partner and Co-Founder of i3 Transition Partners LLP, a management consulting firm that specialized in business assessments and helping companies plan for and implement strategic change. Over his career, Jim has held senior sales, operating and executive management positions at several companies including IBM and Weyerhaeuser. Jim holds a BSc degree in Computer Science from the University of Calgary.
|
|
Resides in:
North Vancouver
BC, Canada
|
|||
Westport Fuel Systems since:
May 2011
|
|||
Common Shares:
134,037
|
|||
Share units:
52,250
|
|||
Principal Occupation for Last 5 years:
Executive Vice President of Westport Fuel Systems since November 2016; Executive Vice President, Heavy Duty Systems of Westport Fuel Systems since January 2014.
|
Massimiliano Fissore
|
SENIOR VICE PRESIDENT, INDEPENDENT AFTERMARKET & DOEM
|
||
|
Citizenship: Italy
|
Massimiliano Fissore (48) is Senior Vice President, Independent Aftermarket & DOEM at Westport Fuel Systems. Mr. Fissore joined Westport Fuel Systems in 2016 as part of the Fuel System Solutions and Westport merger. Since 2016, Mr. Fissore has served as CEO of the M.T.M. Srl subsidiary, responsible for the full management of the different businesses and divisions, including the subsidiaries located in South America and Asia. Previously he served in the role of General Manager, M.T.M. Srl from October 2014 to July 2016. He has spent most of his career in the alternative fuel industry, developing LPG and CNG products, technologies, and markets. He has spent a significant amount of time with BRC Gas Equipment and Zavoli, which are well established brands now owned by Westport Fuel Systems. From 2010 to 2014, Mr. Fissore was General Manager of the CNG Refueling Division of M.T.M. Srl, responsible for the development of the business of CNG compressor and refueling equipment branded Cubogas. In 2007, Mr. Fissore joined Zavoli and became CEO of Zavoli from 2007 to 2010. In 2003, Mr. Fissore joined McCormick Mexico, a subsidiary of Argo Tractors-an Italian company that produces agricultural tractors-and became CEO of McCormick Mexico from 2003 to 2007. From 1997 to 2003, Mr. Fissore was CEO of BRC Argentina and WMTM Brazil. He has a law degree from the University of Turin in Italy and currently also serves as Chairman of M.T.M. Srl (a Westport Fuel Systems company).
|
|
Resides in:
Cherasco, Italy
|
|||
Westport Fuel Systems since:
June 2016
|
|||
Common Shares:
-
|
|||
Share units:
100,833
|
|||
Principal Occupation for Last 5 years:
Sr. Vice President, Independent Aftermarket and DOEM since 2018; CEO of M.T.M Srl. since 2016; Managing Director of M.T.M Srl.; from July 2016 to August 2018; General Manager of M.T.M. Srl. from October 2014 to July 2016 ; General Manager of the CNG Refueling Division of M.T.M. Srl. from April 2010 to September 2014.
|
Bart van Aerle
|
VICE PRESIDENT, PRINS
|
||
|
Citizenship: Dutch
|
Bart van Aerle (47) is Vice President Prins, one of the Corporation’s material subsidiaries and key brand of Westport Fuel Systems in the Netherlands. In this new role, Mr. van Aerle is responsible for strategic planning, the development of the Corporation’s technology and product roadmaps, and identifying new market and industry partnerships. As Vice President Prins, Mr. van Aerle led the strategy and operations of the Corporation’s Eindhoven operations and the Prins brand, expanding sales of high quality LPG, CNG and LNG aftermarket systems and components for automotive and transportation vehicles worldwide. Previously Mr. van Aerle served as President Cummins Westport from January 2018 to July 2019 where he oversaw the Corporation’s joint venture launch of the first heavy-duty Class 8 truck with near-zero emissions. With almost 25 years of automotive industry experience he has held various leadership positions including sales management, operations, and quality at Ecological Engine Company Ltd. in the United Kingdom and with Prins Autogassystemen in Eindhoven. Mr. van Aerle holds a Bachelor in Business Administration and Engineering from Fontys University in Eindhoven.
|
|
Resides in:
Eindhoven, Netherlands
|
|||
Westport Fuel Systems since:
December 2014
|
|||
Common Shares:
6,656
|
|||
Share units:
35,092
|
|||
Principal Occupation for Last 5 years:
Vice President Prins since December 2014, President Cummins Westport from January 2018 until June 2019.
|
EXTERNAL AUDITOR FEES & SERVICES in Canadian Dollars
|
||||||
|
12/31/2019
|
12/31/2018
|
||||
Audit Fees
|
$
|
1,816,637
|
|
$
|
1,767,750
|
|
Audit-Related Fees
|
8,802
|
|
—
|
|
||
Tax fees
|
—
|
|
6,860
|
|
||
All Other Fees
|
—
|
|
—
|
|
||
Total
|
$
|
1,825,439
|
|
$
|
1,774,610
|
|
•
|
WFS’s accounting and financial reporting processes and audits of its financial statements;
|
•
|
the integrity of WFS’s financial statements, management’s discussion and analysis (“MD&A”) and other information provided to shareholders and others;
|
•
|
WFS’s risk assessment and risk management processes, including assessment of significant financial and accounting risk exposures and actions taken to mitigate these risks;
|
•
|
the effectiveness of systems implemented and maintained by WFS management (“Management”) to manage those risks, in particular with regard to internal controls and critical information systems pertaining to financial reporting;
|
•
|
compliance with legal and regulatory requirements and the promotion of legal and ethical conduct;
|
•
|
the independence and qualifications of the external auditors; and
|
•
|
the performance of WFS’s internal audit function and external auditors.
|
•
|
the selection of an independent, registered, external audit firm for the purpose of auditing WFS’s annual financial statements and internal controls over financial reporting;
|
•
|
the retention of such external auditors;
|
•
|
the compensation of the external auditors; and
|
•
|
the selection, retention, compensation and oversight of any other registered public accounting firm engaged for the purpose of preparing or issuing audit reports or performing any other audit, review, or attest services for WFS.
|
•
|
approving the audit scope and engagement fees;
|
•
|
reviewing the results of their work;
|
•
|
establishing policies and procedures for the Committee’s pre-approval of permitted services on an on-going basis;
|
•
|
pre-approving any permitted non-audit services or delegating such authority to the Committee Chair;
|
•
|
evaluating their performance and at least annually, receiving input from WFS’s CEO and/or the CFO on audit quality, quality of engagement team, and relationship with the auditors; and
|
•
|
resolving any disagreements between Management and external auditors regarding financial reporting.
|
•
|
have the primary oversight role with respect to processes in place for identifying and monitoring the management of the principal risks that could impact the financial reporting of WFS; and
|
•
|
assess, as part of its oversight of the system of internal controls and critical information systems pertaining to financial reporting, the effectiveness of the overall process for identifying business and financial risks impacting WFS and provide its views to the Board.
|
•
|
the draft and final quarterly and annual financial statements, MD&A and earnings press releases to ensure that all disclosures are in compliance with regulatory requirements, public financing documents or prospectuses; and
|
•
|
other draft timely disclosure documents containing financial information that would likely be material to either the quarterly or annual financial statements.
|
•
|
all critical accounting policies and practices used or to be used by WFS and changes in the selection and application of accounting principles;
|
•
|
significant financial reporting issues that have arisen in connection with the preparation of such audited financial statements;
|
•
|
analyses prepared by Management, and/or the external auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements;
|
•
|
matters considered by Management’s Disclosure Committee in its review of quarterly, annual and other timely disclosure documents before submission; and
|
•
|
the effect of emerging regulatory and accounting initiatives.
|
•
|
review and approve WFS’s internal audit department’s annual audit plan and all major changes in the plan;
|
•
|
review and discuss with the internal auditors the scope, progress and results of executing the internal audit plan;
|
•
|
receive reports on the status of significant findings, recommendations and Management’s responses;
|
•
|
review the reporting relationship, activities, staffing, organizational structure and credentials of the Internal Audit Department;
|
•
|
review and concur in the appointment, replacement, reassignment, or dismissal of the Internal Audit Director, who shall have direct access to the Committee; and
|
•
|
review the annual performance of the internal audit function.
|
A.
|
Review of Charter. The Committee shall review and reassess the adequacy of this Charter at least annually and recommend to the Board any amendments or modifications to its Charter that the Committee deems appropriate. The Committee shall also prepare and disclose a summary of its mandate to shareholders.
|
B.
|
Annual Performance Evaluation. At least annually, as part of the Board’s and its committee self-assessment process, the Committee shall evaluate its own performance and report the results of such evaluation to WFS’s Nominating and Corporate Governance Committee.
|
C.
|
Audit Committee Information in the AIF. The Committee shall review and recommend for Board approval the Audit Committee information required to be included in WFS’s Annual Information Form (“AIF”)/Form 40F, in compliance with applicable regulations.
|
D.
|
Annual Review of Transactions Involving Directors and Officers. The Committee shall annually review a summary of the Directors’ and Executive Officers’ travel and entertainment expenses, related party transactions and any conflicts of interest.
|
E.
|
Other Activities. The Committee shall perform any other activities consistent with this Charter, WFS’s bylaws, and governing laws that the Board or Committee determines are necessary or appropriate.
|
•
|
Westport HPDI 2.0™ providing OEMs with vertically integrated natural gas solutions with attractive price, performance and fuel economy (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" , "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - TRANSPORTATION" and "PRODUCTS - WESTPORT HPDI 2.0™);
|
•
|
Westport HPDI 2.0™ providing integration into OEM operations and providing an attractive way to reach scalable volume deliveries (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY", "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - TRANSPORTATION", and "RISK FACTORS");
|
•
|
the future demand for CWI products and Westport Fuel Systems products, increasing penetration within our existing markets and expansion of those markets geographically, and continuing growth in the transportation sector and in the natural gas engine market (set out, for example, under the heading "GENERAL DEVELOPMENTS - STRATEGY");
|
•
|
our ability to successfully launch new technology and market initiatives and integrate our products into existing engine OEM products, including: (set out, for example, under the headings "GENERAL DEVELOPMENTS - COMPANY OVERVIEW", "GENERAL DEVELOPMENTS - STRATEGY", "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS", and "RISK FACTORS");
|
•
|
the manufacture of Westport HPDI 2.0™ system components (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY", "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - TRANSPORTATION");
|
•
|
CWI's focus on sales in North America with engines manufactured in Rocky Mount, North Carolina and Jamestown, New York (set out, for example under the heading "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - CUMMINS WESTPORT JOINT VENTURE");
|
•
|
our ability to expand, exploit and protect our intellectual property (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY", "BUSINESS OVERVIEW - INTELLECTUAL PROPERTY", and "RISK FACTORS", particularly under the subheadings, "We depend on our intellectual property and our failure to protect that intellectual property could adversely affect our future growth and success" and "We could become engaged in intellectual property litigation or disputes that may negatively affect our business");
|
•
|
our capital expenditure and investment programs (set out, for example, under the heading, "RISK FACTORS", particularly under the subheadings "We may not realize the anticipated benefits from joint ventures, investments or acquisitions");
|
•
|
the future desirability and use of alternative fuel sources within the transportation industry and commodity prices and the fuel price differential between natural gas or LPG with diesel (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS", particularly under the subheadings "Sustained negative economic factors could negatively impact our business" and "Our growth is dependent on available refuelling infrastructure, fuel price differentials and environmental regulations, policies and government incentives which may not persist or develop as we anticipate."
|
•
|
ongoing relationships between us and our business partners and the results of our development programs with such partners (set out, for example, under the heading "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - TRANSPORTATION", we make statements throughout these sections regarding such relationships, and under the heading "RISK FACTORS", particularly under the subheading "We are dependent on relationships with strategic partners", and future development program expectations under the heading "BUSINESS OVERVIEW - OPERATING BUSINESS UNITS - TRANSPORTATION");
|
•
|
potential disputes regarding the rights and obligations of the parties and which may in the future arise under our agreements with our strategic partners (set out, for example, under the heading "RISK FACTORS", particularly under the subheading "We are dependent on relationships with strategic partners");
|
•
|
our ability to continue to compete with our competitors and their technologies, and the capital and operating costs of vehicles using our technologies relative to competing technologies (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY", "BUSINESS OVERVIEW - COMPETITIVE CONDITIONS" and "RISK FACTORS", particularly, under the subheading "We currently face, and will continue to face, significant competition");
|
•
|
continuing growth in the transportation sector and in the natural gas engine market (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS", particularly under the subheading "A market for engines with our fuel systems may be limited or may take longer to develop than we anticipate");
|
•
|
profit margins and production costs of engines incorporating our technologies (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS", particularly under the subheadings "Warranty claims could be higher than forecasted" and "We have foreign currency risk");
|
•
|
the further development of infrastructure supporting the application of natural gas as an alternative fuel (set out, for example, under the headings, "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS");
|
•
|
increasing penetration of our technologies in key markets within the transportation sector and in key geographic markets (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS");
|
•
|
increasingly stringent environmental and emissions legislation and regulations in the future (set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS");
|
•
|
our ability to attract and retain employees (as set out, for example, under the heading "HUMAN RESOURCES AND POLICIES" and "RISK FACTORS", particularly under the subheading "We could lose or fail to attract the human capital necessary to run our business");
|
•
|
demand for engines incorporating our technologies (as set out, for example, under the headings "GENERAL DEVELOPMENTS - STRATEGY" and "RISK FACTORS", particularly under the subheading, "A market for engines with our fuel systems may be limited or may take longer to develop than we anticipate");
|
•
|
the timing of commissioning of LNG refuelling stations (as set out, for example, under the heading "RISK FACTORS");
|
•
|
our estimates and assumptions used in our accounting policies, accruals, including warranty accruals, and financial condition, and our adoption, timing and ability to meet certain accounting standards (as set out, for example, "RISK FACTORS", particularly under "Warranty claims could be higher than forecasted" and in our quarterly and annual financial statements);
|
•
|
the ability of our products to adapt to the use of RNG and manufactured fuels, including hydrogen, as fuels and our ability to offer and develop related technologies (as set out, for example, under the heading "GENERAL DEVELOPMENTS - STRATEGY" and " PRODUCTS OEM");
|
•
|
our future growth and the expected changes to the transportation sector (as set out, for example, under the headings "GENERAL DEVELOPMENTS - COMPANY OVERVIEW", "GENERAL DEVELOPMENTS - STRATEGY", "GENERAL DEVELOPMENTS - MARKET OVERVIEW" and "BUSINESS OVERVIEW - COMPETITIVE CONDITIONS");
|
•
|
our ability to predict if or when we will operate profitably or generate positive cash flows as set out for example, under the subheading "We may need or want to raise additional funds to grow our business and meet our financial obligations. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected."
|
•
|
our compliance with environmental regulations and regulatory policies and our ongoing assessments of targets for improving our commitment to environmental and social responsibilities (as set out, for example, under the headings "BUSINESS OVERVIEW - SOCIAL AND ENVIRONMENTAL POLICIES" and "RISK FACTORS", particularly, under the subheading, "We could become liable for environmental damages resulting from our research, development or manufacturing activities");
|
•
|
the strategy of our Transportation segment and resulting growth in market share (as set out, for example, under the heading "GENERAL DEVELOPMENTS - COMPANY OVERVIEW");
|
•
|
the expansion of existing relationships with truck and engine OEM (as set out, for example, under the heading "GENERAL DEVELOPMENTS - STRATEGY");
|
•
|
expansion of alternative fuel product offerings to develop and supply high pressure components to OEM partners (as set out, for example, under the heading BUSINESS OVERVIEW - OPERATING BUSINESS UNITS");
|
•
|
expected fluctuations in our revenues and results of operations (as set out, for example, under the heading "RISK FACTORS", particularly under the subheadings "We may need or want to raise additional funds to grow our business and meet our financial obligations. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected." and "Warranty claims could be higher than forecasted."
|
•
|
market acceptance of our products (as set out, for example, under "RISK FACTORS", particularly, under the subheadings "Sustained negative economic factors could negatively impact our business" and "The market for engines with our fuel systems may be limited or may take longer to develop than we anticipate and/or certain products may not achieve widespread adoption.");
|
•
|
product development delays and delays in contractual commitments (as set out, for example, under "RISK FACTORS", particularly, under the subheadings "We are dependent on relationships with strategic partners", "We are dependent on relationships with our suppliers" and "Our limited production trials, commercial launch activities and field tests could encounter problems");
|
•
|
changing environmental legislation and regulations (as set out, for example, under "RISK FACTORS", particularly, under the subheading "Changes in environmental and regulatory policies could hurt the market for our products");
|
•
|
the ability to attract and retain business partners (as set out, for example, under the heading "RISK FACTORS", particularly under the subheadings "We are dependent on relationships with strategic partners" and "We may need or want to raise additional funds to grow our business and meet our financial obligations. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected");
|
•
|
the success of our business partners and OEM with whom we partner (as set out, for example, under the heading "RISK FACTORS", in particular under the subheading "We are dependent on relationships with strategic partners");
|
•
|
future levels of government funding and incentives (as set out, for example, under the heading "RISK FACTORS", particularly, under the subheadings "We may need or want to raise additional funds to grow our business and meet our financial obligations. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected." and "Warranty claims could be higher than forecasted." and "Our growth is dependent on available refuelling infrastructure, fuel price differentials and environmental regulations, policies and government incentives which may not persist or develop as we anticipate.";
|
•
|
competition from other technologies (as set out, for example, under the heading, "RISK FACTORS", particularly under the subheading "We currently face, and will continue to face, significant competition");
|
•
|
price differential between CNG, LNG and LPG relative to petroleum-based fuels (as set out, for example, under the heading "RISK FACTORS", in particular under the subheading "Our growth is dependent on available refuelling infrastructure, fuel price differentials and environmental regulations, policies and government incentives which may not persist or develop as we anticipate.");
|
•
|
limitations on our ability to protect our intellectual property (as set out, for example, under the heading "RISK FACTORS", in particular under the subheading "We depend on our intellectual property and our failure to protect that intellectual property could adversely affect our future growth and success");
|
•
|
potential claims or disputes in respect of our intellectual property (as set out, for example, under the heading "RISK FACTORS", in particular under the subheadings "We depend on our intellectual property and our failure to protect that intellectual property could adversely affect our future growth and success" and "We could become engaged in intellectual property litigation or disputes that may negatively affect our business"); limitations in our ability to successfully integrate acquired businesses (as set out, for example, under the heading "RISK FACTORS", in particular under the subheadings "We may not realize the anticipated benefits from joint ventures, investments or acquisitions" and "We could be adversely affected by risks associated with acquisitions");
|
•
|
limitations in the development of natural gas refuelling infrastructure (as set out, for example, under the heading "RISK FACTORS", in particular under the subheading "Our growth is dependent on available refuelling infrastructure, fuel price differentials and environmental regulations, policies and government incentives which may not persist or develop as we anticipate.");
|
•
|
the ability to provide and access the capital required for research, product development, operations and marketing (as set out, for example, under the heading "RISK FACTORS");
|
•
|
there could be unforeseen claims made against us (as set out, for example, under the heading "RISK FACTORS", particularly under the subheadings "We could become subject to product liability claims", "We could become liable for environmental damages resulting from our research, development or manufacturing activities", "We could become engaged in intellectual property litigation or disputes that may
|
•
|
our international business operations could expose us to factors beyond our control such as currency exchange rates, changes in government policy, trade barriers, trade embargoes, and delays in the development of international markets for our products (as set out, for example, under the heading "RISK FACTORS", particularly under the subheadings "Our growth is dependent on available refuelling infrastructure, fuel price differentials and environmental regulations, policies and government incentives which may not persist or develop as we anticipate.", "We could be adversely affected by the operations of our joint ventures and joint venture partners", "Our failure to strictly comply with anti-corruption laws could have a material adverse effect on our reputation and results of operations.", "Sustained negative economic factors could negatively impact our business" and "Economic Sanctions may Impact on the Business of Certain of our Foreign Subsidiaries and Joint Ventures.");
|
•
|
other risks relating to our common shares ("Common Shares") including the ability of the Board to issue Preferred Shares at its discretion discussed in more detail in this AIF under the heading "Description of Capital Structure", under the heading "RISK FACTORS" particularly under the subheadings "Our Common Share price may fluctuate", "We do not currently pay and do not anticipate to pay any cash dividends on our Common Shares in the foreseeable future; therefore, our shareholders may not be able to receive a return on their Common Shares until they sell them.", "If we are characterized as a Passive Foreign Investment Company ("PFIC"), U.S. holders may be subject to adverse U.S. federal income tax consequences.", "As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our U.S. shareholders", "We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us," and "U.S. investors may not be able to obtain enforcement of civil liabilities against us" and;
|
•
|
risk of conflict related to directors and officers of Westport Fuel Systems who may currently, or in the future, also serve as directors and/or officers of other public companies that may be involved in the same industry as Westport Fuel Systems, as discussed in more detail in this AIF under the heading "Conflict of Interests"
|
|
KPMG LLP
PO Box 10426 777 Dunsmuir Street
Vancouver, BC V7Y 1K3
Canada
|
Telephone:(604) 691-3000
Fax: (604) 691-3031
Internet: www.kpmg.ca
|
WESTPORT FUEL SYSTEMS INC.
|
Consolidated Balance Sheets
|
(Expressed in thousands of United States dollars, except share amounts)
|
December 31, 2019 and 2018
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Assets
|
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents (including restricted cash, note 3(c) and 14)
|
|
$
|
46,012
|
|
|
$
|
61,119
|
|
Accounts receivable (note 6)
|
|
66,950
|
|
|
57,118
|
|
||
Inventories (note 7)
|
|
47,806
|
|
|
46,011
|
|
||
Prepaid expenses
|
|
7,417
|
|
|
4,835
|
|
||
Total current assets
|
|
168,185
|
|
|
169,083
|
|
||
Long-term investments (note 8)
|
|
10,587
|
|
|
8,818
|
|
||
Property, plant and equipment (note 9)
|
|
58,856
|
|
|
63,431
|
|
||
Operating lease right-of-use assets (note 13)
|
|
17,524
|
|
|
—
|
|
||
Intangible assets (note 10)
|
|
13,075
|
|
|
16,829
|
|
||
Deferred income tax assets (note 18(b))
|
|
1,929
|
|
|
1,664
|
|
||
Goodwill (note 11)
|
|
3,110
|
|
|
3,170
|
|
||
Other long-term assets
|
|
6,660
|
|
|
6,933
|
|
||
Total assets
|
|
$
|
279,926
|
|
|
$
|
269,928
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable and accrued liabilities (note 12)
|
|
$
|
86,180
|
|
|
$
|
85,429
|
|
Current portion of operating lease liabilities (note 13)
|
|
4,406
|
|
|
—
|
|
||
Current portion of long-term debt (note 14)
|
|
13,567
|
|
|
10,327
|
|
||
Current portion of long-term royalty payable (note 15)
|
|
5,936
|
|
|
6,091
|
|
||
Current portion of warranty liability (note 16)
|
|
4,505
|
|
|
2,800
|
|
||
Total current liabilities
|
|
114,594
|
|
|
104,647
|
|
||
Long-term operating lease liabilities (note 13)
|
|
13,118
|
|
|
—
|
|
||
Long-term debt (note 14)
|
|
35,312
|
|
|
44,983
|
|
||
Long-term royalty payable (note 15)
|
|
12,322
|
|
|
14,844
|
|
||
Warranty liability (note 16)
|
|
4,396
|
|
|
2,141
|
|
||
Deferred income tax liabilities (note 18(b))
|
|
4,445
|
|
|
5,521
|
|
||
Other long-term liabilities
|
|
6,380
|
|
|
7,116
|
|
||
Total long-term liabilities
|
|
190,567
|
|
|
179,252
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
|
||
Share capital (Unlimited common and preferred shares, no par value) (note 17):
|
|
|
|
|
|
|
||
136,416,981 (2018 - 133,380,899) common shares issued
|
|
1,094,633
|
|
|
1,087,068
|
|
||
Other equity instruments
|
|
6,857
|
|
|
12,948
|
|
||
Additional paid in capital
|
|
10,079
|
|
|
10,079
|
|
||
Accumulated deficit
|
|
(998,320
|
)
|
|
(998,361
|
)
|
||
Accumulated other comprehensive loss
|
|
(23,890
|
)
|
|
(21,058
|
)
|
||
Total shareholders' equity
|
|
89,359
|
|
|
90,676
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
279,926
|
|
|
$
|
269,928
|
|
Commitments and contingencies (note 20)
|
|
|
|
|
|
|
Approved on behalf of the Board
|
Brenda J. Eprile
|
Director
|
|
Colin Johnston
|
Director
|
WESTPORT FUEL SYSTEMS INC.
|
|
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
|
(Expressed in thousands of United States dollars, except share and per share amounts)
|
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Revenue
|
|
$
|
305,338
|
|
|
$
|
270,283
|
|
|
$
|
229,833
|
|
Cost of revenue and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Cost of revenue
|
|
237,086
|
|
|
206,059
|
|
|
169,552
|
|
|||
Research and development
|
|
25,172
|
|
|
30,619
|
|
|
50,133
|
|
|||
General and administrative
|
|
41,339
|
|
|
51,075
|
|
|
47,399
|
|
|||
Sales and marketing
|
|
16,380
|
|
|
15,923
|
|
|
15,817
|
|
|||
Restructuring costs
|
|
825
|
|
|
808
|
|
|
1,682
|
|
|||
Foreign exchange (gain) loss
|
|
(2,537
|
)
|
|
8,957
|
|
|
562
|
|
|||
Depreciation and amortization (notes 9 and 10)
|
|
7,778
|
|
|
8,824
|
|
|
9,826
|
|
|||
Impairments on long lived assets, net (note 9 and 10)
|
|
688
|
|
|
736
|
|
|
1,550
|
|
|||
|
|
326,731
|
|
|
323,001
|
|
|
296,521
|
|
|||
Loss from continuing operations
|
|
(21,393
|
)
|
|
(52,718
|
)
|
|
(66,688
|
)
|
|||
Income from investments accounted for by the equity method
|
|
26,741
|
|
|
22,728
|
|
|
12,514
|
|
|||
Interest on long-term debt and accretion on royalty payable
|
|
(7,265
|
)
|
|
(9,133
|
)
|
|
(14,487
|
)
|
|||
Interest and other income (note 12)
|
|
4,065
|
|
|
465
|
|
|
1,377
|
|
|||
Income (loss) from continuing operations before income taxes
|
|
2,148
|
|
|
(38,658
|
)
|
|
(67,284
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax expense (recovery) (note 18):
|
|
|
|
|
|
|
|
|
|
|||
Current
|
|
3,607
|
|
|
3,950
|
|
|
(2,780
|
)
|
|||
Deferred
|
|
(1,647
|
)
|
|
(1,838
|
)
|
|
(1,644
|
)
|
|||
|
|
1,960
|
|
|
2,112
|
|
|
(4,424
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
|
188
|
|
|
(40,770
|
)
|
|
(62,860
|
)
|
|||
Net income (loss) from discontinued operations (note 5)
|
|
(147
|
)
|
|
9,278
|
|
|
52,881
|
|
|||
Net income (loss) for the year
|
|
41
|
|
|
(31,492
|
)
|
|
(9,979
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Cumulative translation adjustment
|
|
(2,832
|
)
|
|
(1,353
|
)
|
|
11,382
|
|
|||
Comprehensive income (loss)
|
|
$
|
(2,791
|
)
|
|
$
|
(32,845
|
)
|
|
$
|
1,403
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|||
From continuing operations - basic and diluted
|
|
$
|
0.00
|
|
|
$
|
(0.31
|
)
|
|
$
|
(0.52
|
)
|
From discontinued operations - basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
|
$
|
0.44
|
|
Net income (loss) per share
|
|
$
|
0.00
|
|
|
$
|
(0.24
|
)
|
|
$
|
(0.08
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||
Basic and diluted
|
|
134,224,799
|
|
|
132,371,396
|
|
|
119,558,566
|
|
WESTPORT FUEL SYSTEMS INC.
|
Consolidated Statements of Shareholders’ Equity
|
(Expressed in thousands of United States dollars, except share amounts)
|
December 31, 2019, 2018 and 2017
|
|
|
Common
|
|
|
|
|
|
Additional
|
|
|
|
Accumulated
other
|
|
Total
|
|||||||||||||
|
|
shares
|
|
|
|
Other equity
|
|
paid in
|
|
Accumulated
|
|
comprehensive
|
|
shareholders'
|
|||||||||||||
|
|
outstanding
|
|
Share capital
|
|
instruments
|
|
capital
|
|
deficit
|
|
income (loss)
|
|
equity
|
|||||||||||||
January 1, 2017
|
|
110,109,092
|
|
|
$
|
1,042,410
|
|
|
$
|
20,926
|
|
|
$
|
10,079
|
|
|
$
|
(956,890
|
)
|
|
$
|
(31,087
|
)
|
|
$
|
85,438
|
|
Issuance of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
On exercise of share units
|
|
2,045,617
|
|
|
9,917
|
|
|
(9,917
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
On public offering, net of costs incurred
|
|
19,125,000
|
|
|
25,953
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,953
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
5,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,238
|
|
||||||
Net loss for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,979
|
)
|
|
—
|
|
|
(9,979
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,382
|
|
|
11,382
|
|
||||||
December 31, 2017
|
|
131,279,709
|
|
|
$
|
1,078,280
|
|
|
$
|
16,247
|
|
|
$
|
10,079
|
|
|
$
|
(966,869
|
)
|
|
$
|
(19,705
|
)
|
|
$
|
118,032
|
|
Issuance of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
On exercise of share units
|
|
2,101,190
|
|
|
8,788
|
|
|
(8,788
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
5,489
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,489
|
|
||||||
Net loss for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,492
|
)
|
|
—
|
|
|
(31,492
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,353
|
)
|
|
(1,353
|
)
|
||||||
December 31, 2018
|
|
133,380,899
|
|
|
$
|
1,087,068
|
|
|
$
|
12,948
|
|
|
$
|
10,079
|
|
|
$
|
(998,361
|
)
|
|
$
|
(21,058
|
)
|
|
$
|
90,676
|
|
Issuance of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
On exercise of share units
|
|
3,036,082
|
|
|
7,565
|
|
|
(7,565
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
1,474
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,474
|
|
||||||
Net income for the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,832
|
)
|
|
(2,832
|
)
|
||||||
December 31, 2019
|
|
136,416,981
|
|
|
$
|
1,094,633
|
|
|
$
|
6,857
|
|
|
$
|
10,079
|
|
|
$
|
(998,320
|
)
|
|
$
|
(23,890
|
)
|
|
$
|
89,359
|
|
WESTPORT FUEL SYSTEMS INC.
|
Consolidated Statements of Cash Flows
|
(Expressed in thousands of United States dollars)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
|||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
||||
|
|
|
|
|
|
|
|||||||
Cash flows from (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) for the year from continuing operations
|
|
$
|
188
|
|
|
$
|
(40,770
|
)
|
|
$
|
(62,860
|
)
|
|
Items not involving cash:
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
16,340
|
|
|
16,510
|
|
|
14,741
|
|
||||
Stock-based compensation expense
|
|
1,474
|
|
|
3,040
|
|
|
6,961
|
|
||||
Unrealized foreign exchange (gain) loss
|
|
(2,537
|
)
|
|
8,957
|
|
|
562
|
|
||||
Deferred income tax
|
|
(1,647
|
)
|
|
(1,838
|
)
|
|
(1,644
|
)
|
||||
Income from investments accounted for by the equity method
|
|
(26,741
|
)
|
|
(22,728
|
)
|
|
(12,514
|
)
|
||||
Interest on long-term debt and accretion of royalty payable
|
|
7,265
|
|
|
9,133
|
|
|
10,071
|
|
||||
Impairments on long lived assets, net
|
|
688
|
|
|
736
|
|
|
1,550
|
|
||||
Inventory write-downs to net realizable value (note 7)
|
|
57
|
|
|
162
|
|
|
1,111
|
|
||||
Other income (note 12)
|
|
(3,317
|
)
|
|
—
|
|
|
—
|
|
||||
Change in fair value of derivative liability and bad debt expense
|
|
831
|
|
|
(433
|
)
|
|
1,397
|
|
||||
Restructuring obligations
|
|
—
|
|
|
—
|
|
|
(14,187
|
)
|
||||
Net cash used before working capital changes
|
|
(7,399
|
)
|
|
(27,231
|
)
|
—
|
|
(54,812
|
)
|
|||
|
|
|
|
|
|
|
|||||||
Changes in non-cash operating working capital:
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
|
(11,137
|
)
|
|
3,512
|
|
|
2,605
|
|
||||
Inventories
|
|
(2,004
|
)
|
|
(78
|
)
|
|
4,565
|
|
||||
Prepaid expenses
|
|
(2,653
|
)
|
|
(170
|
)
|
|
(93
|
)
|
||||
Accounts payable and accrued liabilities
|
|
2,386
|
|
|
(1,367
|
)
|
|
6,755
|
|
||||
Deferred revenue
|
|
926
|
|
|
(851
|
)
|
|
(2,143
|
)
|
||||
Warranty liability
|
|
4,196
|
|
|
(1,252
|
)
|
|
(6,330
|
)
|
||||
Net cash used in operating activities of continuing operations
|
|
(15,685
|
)
|
|
(27,437
|
)
|
|
(49,453
|
)
|
||||
Net cash from (used in) operating activities of discontinued operations
|
|
(147
|
)
|
|
(1,435
|
)
|
|
7,920
|
|
||||
Cash flows from (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
||||
Purchase of property, plant and equipment
|
|
(8,860
|
)
|
|
(10,273
|
)
|
|
(25,288
|
)
|
||||
Proceeds on sale of assets and investments
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
||||
Dividends received from joint ventures
|
|
25,045
|
|
|
23,191
|
|
|
16,633
|
|
||||
Proceeds received from holdbacks
|
|
—
|
|
|
6,968
|
|
|
—
|
|
||||
Net cash from (used in) investing activities of continuing operations
|
|
16,185
|
|
|
19,886
|
|
|
(8,740
|
)
|
||||
Net cash from investing activities of discontinued operations
|
|
—
|
|
|
14,050
|
|
|
77,148
|
|
||||
Cash flows from (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
||||
Drawings on operating lines of credit and long-term facilities
|
|
25,081
|
|
|
12,612
|
|
|
42,641
|
|
||||
Repayment of operating lines of credit and long-term facilities
|
|
(33,258
|
)
|
|
(15,616
|
)
|
|
(71,387
|
)
|
||||
Proceeds from share issuance, net
|
|
—
|
|
|
—
|
|
|
25,953
|
|
||||
Repayment of royalty payable
|
|
(6,034
|
)
|
|
(3,009
|
)
|
|
(11,467
|
)
|
||||
Long-term asset securing debt
|
|
(553
|
)
|
|
(2,129
|
)
|
|
—
|
|
||||
Net cash used in financing activities of continuing operations
|
|
(14,764
|
)
|
|
(8,142
|
)
|
|
(14,260
|
)
|
||||
Effect of foreign exchange on cash and cash equivalents
|
|
(696
|
)
|
|
(7,645
|
)
|
|
4,246
|
|
||||
Increase (decrease) in cash and cash equivalents
|
|
(15,107
|
)
|
|
(10,723
|
)
|
|
16,861
|
|
||||
Cash and cash equivalents, beginning of year
|
|
61,119
|
|
|
71,842
|
|
|
60,905
|
|
||||
Cash and cash equivalents, end of year (including restricted cash)
|
|
46,012
|
|
|
61,119
|
|
|
77,766
|
|
||||
Less: cash and cash equivalents from discontinued operations, end of year
|
|
—
|
|
|
—
|
|
|
5,924
|
|
||||
Cash and cash equivalents from continuing operations, end of year
|
|
$
|
46,012
|
|
|
$
|
61,119
|
|
|
$
|
71,842
|
|
WESTPORT FUEL SYSTEMS INC.
|
Consolidated Statements of Cash Flows (continued)
|
(Expressed in thousands of United States dollars)
|
December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Supplementary information:
|
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
|
$
|
3,953
|
|
|
$
|
4,039
|
|
|
$
|
4,416
|
|
Taxes paid, net of refunds
|
|
1,926
|
|
|
540
|
|
|
722
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Year end exchange rate as at:
|
|
Average for the year ended:
|
|||||||||||
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
Canadian dollar
|
|
0.77
|
|
|
0.73
|
|
|
0.75
|
|
|
0.77
|
|
|
0.77
|
|
Euro
|
|
1.12
|
|
|
1.14
|
|
|
1.12
|
|
|
1.18
|
|
|
1.13
|
|
Argentina Peso
|
|
0.02
|
|
|
0.03
|
|
|
0.02
|
|
|
0.04
|
|
|
0.06
|
|
RMB
|
|
0.14
|
|
|
0.15
|
|
|
0.14
|
|
|
0.15
|
|
|
0.15
|
|
Swedish Krona
|
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.12
|
|
|
0.12
|
|
Indian Rupee
|
|
0.0140
|
|
|
0.0143
|
|
|
0.0142
|
|
|
0.0156
|
|
|
0.0154
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
Assets
|
|
Basis
|
|
Rate
|
Buildings
|
|
Straight-line
|
|
20 years
|
Computer equipment and software
|
|
Straight-line
|
|
3 years
|
Furniture and fixtures
|
|
Straight-line
|
|
5 years
|
Machinery and equipment
|
|
Straight-line
|
|
8 – 10 years
|
Leasehold improvements
|
|
Straight-line
|
|
Lease term
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
|||
Revenue
|
|
$
|
—
|
|
|
$
|
8,837
|
|
|
$
|
46,268
|
|
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
—
|
|
|
7,548
|
|
|
34,647
|
|
|||
Research and development
|
|
—
|
|
|
603
|
|
|
2,972
|
|
|||
General and administrative
|
|
—
|
|
|
1,083
|
|
|
5,027
|
|
|||
Sales and marketing
|
|
147
|
|
|
575
|
|
|
2,713
|
|
|||
|
|
147
|
|
|
9,809
|
|
|
45,359
|
|
|||
Operating income (loss) from discontinued operations
|
|
(147
|
)
|
|
(972
|
)
|
|
909
|
|
|||
|
|
|
|
|
|
|
||||||
Restructuring costs
|
|
—
|
|
|
1,268
|
|
|
—
|
|
|||
Net gain on sale of assets
|
|
—
|
|
|
(10,710
|
)
|
|
(58,310
|
)
|
|||
Other expenses
|
|
—
|
|
|
—
|
|
|
220
|
|
|||
Income (loss) from discontinued operations before income tax
|
|
(147
|
)
|
|
8,470
|
|
|
58,999
|
|
|||
Income tax expense (recovery)
|
|
—
|
|
|
(808
|
)
|
|
6,118
|
|
|||
Net income (loss) from discontinued operations
|
|
$
|
(147
|
)
|
|
$
|
9,278
|
|
|
$
|
52,881
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Customer trade receivables
|
|
$
|
62,974
|
|
|
$
|
52,188
|
|
Other receivables
|
|
9,092
|
|
|
8,853
|
|
||
Income tax receivable
|
|
475
|
|
|
717
|
|
||
Due from related parties (note 19)
|
|
272
|
|
|
122
|
|
||
Allowance for doubtful accounts
|
|
(5,863
|
)
|
|
(4,762
|
)
|
||
|
|
$
|
66,950
|
|
|
$
|
57,118
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Purchased parts and materials
|
|
$
|
32,814
|
|
|
$
|
31,735
|
|
Work-in-process
|
|
2,854
|
|
|
2,297
|
|
||
Finished goods
|
|
12,134
|
|
|
11,367
|
|
||
Inventory on consignment
|
|
4
|
|
|
612
|
|
||
|
|
$
|
47,806
|
|
|
$
|
46,011
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Cummins Westport Inc. (a)
|
|
$
|
7,850
|
|
|
$
|
6,309
|
|
Weichai Westport Inc. (b)
|
|
1,824
|
|
|
1,824
|
|
||
Other equity accounted investees
|
|
913
|
|
|
685
|
|
||
|
|
$
|
10,587
|
|
|
$
|
8,818
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Investment income from CWI
|
|
$
|
26,586
|
|
|
$
|
22,701
|
|
|
$
|
12,482
|
|
Dividends received
|
|
25,045
|
|
|
23,191
|
|
|
16,633
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Balance at December 31, 2019
|
|
|
Balance at December 31, 2018
|
|
||||||||||
|
|
Carrying
amount |
|
|
Maximum
exposure to loss |
|
|
Carrying
amount |
|
|
Maximum
exposure to loss |
|
||||
Equity method investment in CWI
|
|
$
|
7,850
|
|
|
$
|
7,850
|
|
|
$
|
6,309
|
|
|
$
|
6,309
|
|
Accounts receivable due from CWI
|
|
272
|
|
|
272
|
|
|
122
|
|
|
122
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Current assets:
|
|
|
|
|
|
|
||
Cash and short-term investments
|
|
$
|
90,296
|
|
|
$
|
85,812
|
|
Accounts receivable
|
|
1,363
|
|
|
2,336
|
|
||
Other current assets
|
|
—
|
|
|
120
|
|
||
Long-term assets:
|
|
|
|
|
||||
Property, plant and equipment
|
|
844
|
|
|
934
|
|
||
Deferred income tax assets
|
|
21,322
|
|
|
22,851
|
|
||
Total assets
|
|
$
|
113,825
|
|
|
$
|
112,053
|
|
Current liabilities:
|
|
|
|
|
||||
Current portion of warranty liability
|
|
$
|
19,816
|
|
|
$
|
19,829
|
|
Current portion of deferred revenue
|
|
16,678
|
|
|
21,299
|
|
||
Accounts payable and accrued liabilities
|
|
3,858
|
|
|
4,348
|
|
||
|
|
40,352
|
|
|
45,476
|
|
||
Long-term liabilities:
|
|
|
|
|
||||
Warranty liability
|
|
30,463
|
|
|
22,995
|
|
||
Deferred revenue
|
|
23,667
|
|
|
27,009
|
|
||
Other long-term liabilities
|
|
3,631
|
|
|
3,943
|
|
||
|
|
57,761
|
|
|
53,947
|
|
||
Total liabilities
|
|
$
|
98,113
|
|
|
$
|
99,423
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Product revenue
|
|
$
|
246,503
|
|
|
$
|
227,408
|
|
|
$
|
235,220
|
|
Parts revenue
|
|
115,267
|
|
|
91,997
|
|
|
82,077
|
|
|||
|
|
361,770
|
|
|
319,405
|
|
|
317,297
|
|
|||
Cost of revenue and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Cost of product and parts revenue
|
|
257,717
|
|
|
228,452
|
|
|
207,840
|
|
|||
Research and development
|
|
15,933
|
|
|
18,000
|
|
|
30,733
|
|
|||
General and administrative
|
|
1,363
|
|
|
1,474
|
|
|
1,113
|
|
|||
Sales and marketing
|
|
17,950
|
|
|
15,350
|
|
|
19,675
|
|
|||
Foreign exchange loss
|
|
8
|
|
|
12
|
|
|
51
|
|
|||
Bank charges, interest and other
|
|
372
|
|
|
706
|
|
|
609
|
|
|||
|
|
293,343
|
|
|
263,994
|
|
|
260,021
|
|
|||
Income from operations
|
|
68,427
|
|
|
55,411
|
|
|
57,276
|
|
|||
Interest and investment income
|
|
2,421
|
|
|
1,939
|
|
|
982
|
|
|||
Income before income taxes
|
|
70,848
|
|
|
57,350
|
|
|
58,258
|
|
|||
Income tax expense:
|
|
|
|
|
|
|
|
|
|
|||
Current
|
|
16,102
|
|
|
8,397
|
|
|
16,068
|
|
|||
Deferred (1)
|
|
1,575
|
|
|
3,552
|
|
|
17,226
|
|
|||
|
|
17,677
|
|
|
11,949
|
|
|
33,294
|
|
|||
Income for the year
|
|
$
|
53,171
|
|
|
$
|
45,401
|
|
|
$
|
24,964
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
|
|
|
Accumulated
|
|
|
Net book
|
|
|||
December 31, 2019
|
|
Cost
|
|
|
depreciation
|
|
|
value
|
|
|||
Land and buildings
|
|
$
|
4,764
|
|
|
$
|
1,565
|
|
|
$
|
3,199
|
|
Computer equipment and software
|
|
5,601
|
|
|
4,521
|
|
|
1,080
|
|
|||
Furniture and fixtures
|
|
4,213
|
|
|
3,715
|
|
|
498
|
|
|||
Machinery and equipment
|
|
91,926
|
|
|
41,775
|
|
|
50,151
|
|
|||
Leasehold improvements
|
|
11,463
|
|
|
7,535
|
|
|
3,928
|
|
|||
|
|
$
|
117,967
|
|
|
$
|
59,111
|
|
|
$
|
58,856
|
|
|
|
|
|
|
Accumulated
|
|
|
Net book
|
|
|||
December 31, 2018
|
|
Cost
|
|
|
depreciation
|
|
|
value
|
|
|||
Land and buildings
|
|
$
|
4,765
|
|
|
$
|
1,474
|
|
|
$
|
3,291
|
|
Computer equipment and software
|
|
7,079
|
|
|
6,043
|
|
|
1,036
|
|
|||
Furniture and fixtures
|
|
3,553
|
|
|
2,975
|
|
|
578
|
|
|||
Machinery and equipment
|
|
87,151
|
|
|
33,476
|
|
|
53,675
|
|
|||
Leasehold improvements
|
|
11,578
|
|
|
6,727
|
|
|
4,851
|
|
|||
|
|
$
|
114,126
|
|
|
$
|
50,695
|
|
|
$
|
63,431
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
|
|
Accumulated
|
|
|
Net book
|
|
||||
December 31, 2019
|
|
Cost
|
|
|
amortization
|
|
|
value
|
|
|||
Patents and trademarks
|
|
$
|
20,386
|
|
|
$
|
9,333
|
|
|
$
|
11,053
|
|
Technology
|
|
5,457
|
|
|
4,917
|
|
|
540
|
|
|||
Customer contracts
|
|
12,150
|
|
|
10,668
|
|
|
1,482
|
|
|||
Other intangibles
|
|
328
|
|
|
328
|
|
|
—
|
|
|||
Total
|
|
$
|
38,321
|
|
|
$
|
25,246
|
|
|
$
|
13,075
|
|
|
|
|
|
Accumulated
|
|
|
Net book
|
|
||||
December 31, 2018
|
|
Cost
|
|
|
amortization
|
|
|
value
|
|
|||
Patents and trademarks
|
|
$
|
21,142
|
|
|
$
|
7,978
|
|
|
$
|
13,164
|
|
Technology
|
|
5,150
|
|
|
4,369
|
|
|
781
|
|
|||
Customer contracts
|
|
12,355
|
|
|
9,476
|
|
|
2,879
|
|
|||
Other intangibles
|
|
334
|
|
|
329
|
|
|
5
|
|
|||
Total
|
|
$
|
38,981
|
|
|
$
|
22,152
|
|
|
$
|
16,829
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Balance, beginning of year
|
|
$
|
3,170
|
|
|
$
|
3,324
|
|
Impact of foreign exchange changes
|
|
(60
|
)
|
|
(154
|
)
|
||
Balance, end of year
|
|
$
|
3,110
|
|
|
$
|
3,170
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Trade accounts payable
|
|
$
|
60,170
|
|
|
$
|
60,027
|
|
Accrued payroll
|
|
15,906
|
|
|
13,723
|
|
||
Accrued interest
|
|
1,568
|
|
|
1,568
|
|
||
Due to related parties (note 19)
|
|
794
|
|
|
—
|
|
||
Taxes payable
|
|
3,497
|
|
|
4,298
|
|
||
Deferred revenue
|
|
2,717
|
|
|
996
|
|
||
Restructuring obligation
|
|
—
|
|
|
467
|
|
||
Other payables
|
|
1,528
|
|
|
4,350
|
|
||
|
|
$
|
86,180
|
|
|
$
|
85,429
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
Operating lease cost:
|
|
|
||
Amortization of right-of-use assets
|
|
$
|
3,513
|
|
Interest
|
|
973
|
|
|
Total lease cost
|
|
$
|
4,486
|
|
|
|
|
||
2020
|
|
$
|
4,406
|
|
2021
|
|
3,765
|
|
|
2022
|
|
3,691
|
|
|
2023
|
|
2,691
|
|
|
2024
|
|
2,016
|
|
|
Thereafter
|
|
3,724
|
|
|
Total undiscounted cash flows
|
|
20,293
|
|
|
Less: imputed interest
|
|
(2,769
|
)
|
|
Present value of operating lease liabilities
|
|
17,524
|
|
|
Less: current portion
|
|
(4,406
|
)
|
|
Long term operating lease liabilities
|
|
$
|
13,118
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Term loan facilities, net of debt issuance costs (a)
|
|
$
|
22,207
|
|
|
$
|
24,023
|
|
Senior financing (b)
|
|
2,504
|
|
|
8,645
|
|
||
Convertible debt (c)
|
|
17,431
|
|
|
17,382
|
|
||
Other bank financing (d)
|
|
5,105
|
|
|
3,744
|
|
||
Capital lease obligations (e)
|
|
1,632
|
|
|
1,516
|
|
||
Balance, end of period
|
|
48,879
|
|
|
55,310
|
|
||
Current portion
|
|
(13,567
|
)
|
|
(10,327
|
)
|
||
Long-term portion
|
|
$
|
35,312
|
|
|
$
|
44,983
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Term loan facilities
|
|
Senior financing
|
|
Convertible debt
|
|
Other bank financing
|
|
Capital lease obligations
|
|
Total
|
||||||||||||
2020
|
|
$
|
7,858
|
|
|
$
|
741
|
|
|
$
|
—
|
|
|
$
|
4,378
|
|
|
$
|
590
|
|
|
$
|
13,567
|
|
2021
|
|
9,846
|
|
|
834
|
|
|
17,431
|
|
|
338
|
|
|
545
|
|
|
28,994
|
|
||||||
2022
|
|
2,311
|
|
|
929
|
|
|
—
|
|
|
389
|
|
|
275
|
|
|
3,904
|
|
||||||
2023
|
|
2,192
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
2,342
|
|
||||||
2024 and thereafter
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
72
|
|
||||||
|
|
$
|
22,207
|
|
|
$
|
2,504
|
|
|
$
|
17,431
|
|
|
$
|
5,105
|
|
|
$
|
1,632
|
|
|
$
|
48,879
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|||
Balance, beginning of year
|
|
$
|
20,935
|
|
|
$
|
19,031
|
|
Accretion expense
|
|
3,357
|
|
|
4,135
|
|
||
Repayment
|
|
(6,034
|
)
|
|
(3,009
|
)
|
||
Additional finance charge from prepayment
|
|
—
|
|
|
778
|
|
||
Balance, end of year
|
|
18,258
|
|
|
20,935
|
|
||
Current portion
|
|
(5,936
|
)
|
|
(6,091
|
)
|
||
Long-term portion
|
|
$
|
12,322
|
|
|
$
|
14,844
|
|
2020
|
|
$
|
5,936
|
|
2021
|
|
7,268
|
|
|
2022
|
|
5,103
|
|
|
2023
|
|
1,162
|
|
|
2024
|
|
1,637
|
|
|
2025 and thereafter
|
|
5,122
|
|
|
|
|
$
|
26,228
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Balance, beginning of year
|
|
$
|
4,941
|
|
|
$
|
6,301
|
|
|
$
|
11,612
|
|
Warranty claims
|
|
(1,863
|
)
|
|
(2,787
|
)
|
|
(2,627
|
)
|
|||
Warranty accruals
|
|
6,794
|
|
|
2,112
|
|
|
1,232
|
|
|||
Change in estimate
|
|
(481
|
)
|
|
(1,443
|
)
|
|
(2,949
|
)
|
|||
Impact of foreign exchange changes
|
|
(490
|
)
|
|
758
|
|
|
(967
|
)
|
|||
Balance, end of year
|
|
8,901
|
|
|
4,941
|
|
|
6,301
|
|
|||
Less: Current portion
|
|
(4,505
|
)
|
|
(2,800
|
)
|
|
(3,529
|
)
|
|||
Long-term portion
|
|
$
|
4,396
|
|
|
$
|
2,141
|
|
|
$
|
2,772
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
||||||||||||
|
|
Number of
units
|
|
|
Weighted
average
grant
date fair
value
(CDN $)
|
|
|
Number of
units
|
|
|
Weighted
average
grant
date fair
value
(CDN $)
|
|
|
Number of
units
|
|
|
Weighted
average
grant
date fair
value
(CDN $)
|
|
|||
Outstanding, beginning of year
|
|
2,667,403
|
|
|
$
|
4.41
|
|
|
4,509,990
|
|
|
$
|
6.00
|
|
|
6,664,591
|
|
|
$
|
6.75
|
|
Granted
|
|
1,877,101
|
|
|
3.08
|
|
|
1,009,230
|
|
|
3.50
|
|
|
993,659
|
|
|
2.18
|
|
|||
Exercised/vested
|
|
(2,622,338
|
)
|
|
3.81
|
|
|
(2,101,190
|
)
|
|
5.44
|
|
|
(2,045,617
|
)
|
|
6.31
|
|
|||
Forfeited/expired
|
|
(144,225
|
)
|
|
2.86
|
|
|
(750,627
|
)
|
|
3.61
|
|
|
(1,102,643
|
)
|
|
6.51
|
|
|||
Outstanding, end of year
|
|
1,777,941
|
|
|
$
|
3.19
|
|
|
2,667,403
|
|
|
$
|
4.41
|
|
|
4,509,990
|
|
|
$
|
6.00
|
|
Units outstanding and exercisable, end of year
|
|
14,450
|
|
|
$
|
2.41
|
|
|
2,076,684
|
|
|
$
|
4.66
|
|
|
636,073
|
|
|
$
|
5.38
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
|
|
CDN$
|
|
|
CDN$
|
|
||
Share units:
|
|
|
|
|
||||
Outstanding
|
|
$
|
5,458
|
|
|
$
|
4,828
|
|
Exercisable
|
|
44
|
|
|
3,759
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Research and development
|
|
$
|
157
|
|
|
$
|
778
|
|
|
$
|
1,182
|
|
General and administrative
|
|
1,111
|
|
|
1,952
|
|
|
5,450
|
|
|||
Sales and marketing
|
|
206
|
|
|
310
|
|
|
329
|
|
|||
|
|
$
|
1,474
|
|
|
$
|
3,040
|
|
|
$
|
6,961
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Income (loss) from continuing operations before income taxes
|
|
$
|
2,148
|
|
|
$
|
(38,658
|
)
|
|
$
|
(67,284
|
)
|
Expected income tax expense (recovery)
|
|
580
|
|
|
(10,438
|
)
|
|
(17,494
|
)
|
|||
Increase (reduction) in income taxes resulting from:
|
|
|
|
|
|
|
||||||
Non-deductible stock-based compensation
|
|
264
|
|
|
433
|
|
|
786
|
|
|||
Other permanent differences
|
|
15
|
|
|
3,762
|
|
|
3,624
|
|
|||
Withholding taxes and other foreign taxes
|
|
1,017
|
|
|
657
|
|
|
444
|
|
|||
Change in enacted tax rates
|
|
34
|
|
|
135
|
|
|
22,960
|
|
|||
Foreign tax rate differences, foreign exchange and other adjustments
|
|
271
|
|
|
1,585
|
|
|
138
|
|
|||
Non-taxable income from equity investment
|
|
(6,416
|
)
|
|
(6,834
|
)
|
|
(3,245
|
)
|
|||
Change in valuation allowance
|
|
6,195
|
|
|
12,812
|
|
|
(11,637
|
)
|
|||
Income tax expense (recovery)
|
|
$
|
1,960
|
|
|
$
|
2,112
|
|
|
$
|
(4,424
|
)
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
Deferred income tax assets:
|
|
|
|
|
|
|
||
Net loss carry forwards
|
|
$
|
211,738
|
|
|
$
|
197,585
|
|
Intangible assets
|
|
4,008
|
|
|
5,655
|
|
||
Property, plant and equipment
|
|
15,518
|
|
|
12,799
|
|
||
Warranty liability
|
|
3,342
|
|
|
3,251
|
|
||
Foreign tax credits
|
|
620
|
|
|
620
|
|
||
Inventory
|
|
2,306
|
|
|
4,223
|
|
||
Research and development
|
|
6,107
|
|
|
5,961
|
|
||
Other
|
|
13,618
|
|
|
11,135
|
|
||
Total gross deferred income tax assets
|
|
257,257
|
|
|
241,229
|
|
||
Valuation allowance
|
|
(255,328
|
)
|
|
(239,565
|
)
|
||
Total deferred income tax assets
|
|
$
|
1,929
|
|
|
$
|
1,664
|
|
Deferred income tax liabilities:
|
|
|
|
|
|
|
||
Intangible assets
|
|
$
|
(1,756
|
)
|
|
$
|
(2,456
|
)
|
Property, plant and equipment
|
|
(61
|
)
|
|
(106
|
)
|
||
Other
|
|
(2,628
|
)
|
|
(2,959
|
)
|
||
Total deferred income tax liabilities
|
|
$
|
(4,445
|
)
|
|
$
|
(5,521
|
)
|
Total net deferred income tax liabilities
|
|
$
|
(2,516
|
)
|
|
$
|
(3,857
|
)
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
|
|
Income tax expense (recovery)
|
||||||||||||
|
|
Net income (loss)
|
|
|
|
|
||||||||||
|
|
before income
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
taxes
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Italy
|
|
$
|
26,645
|
|
|
$
|
2,260
|
|
|
$
|
(1,647
|
)
|
|
$
|
613
|
|
United States
|
|
16,174
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Canada
|
|
(28,160
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
(12,511
|
)
|
|
1,334
|
|
|
—
|
|
|
1,334
|
|
||||
|
|
$
|
2,148
|
|
|
$
|
3,607
|
|
|
$
|
(1,647
|
)
|
|
$
|
1,960
|
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Italy
|
|
$
|
7,445
|
|
|
$
|
1,741
|
|
|
$
|
(1,188
|
)
|
|
$
|
553
|
|
United States
|
|
17,161
|
|
|
803
|
|
|
—
|
|
|
803
|
|
||||
Canada
|
|
(61,933
|
)
|
|
214
|
|
|
—
|
|
|
214
|
|
||||
Other
|
|
(1,331
|
)
|
|
1,192
|
|
|
(650
|
)
|
|
542
|
|
||||
|
|
$
|
(38,658
|
)
|
|
$
|
3,950
|
|
|
$
|
(1,838
|
)
|
|
$
|
2,112
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Italy
|
|
$
|
679
|
|
|
$
|
493
|
|
|
$
|
(1,470
|
)
|
|
$
|
(977
|
)
|
United States
|
|
3,023
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
Canada
|
|
(61,458
|
)
|
|
(3,737
|
)
|
|
(17
|
)
|
|
(3,754
|
)
|
||||
Other
|
|
(9,528
|
)
|
|
447
|
|
|
(157
|
)
|
|
290
|
|
||||
|
|
$
|
(67,284
|
)
|
|
$
|
(2,780
|
)
|
|
$
|
(1,644
|
)
|
|
$
|
(4,424
|
)
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
Expiring in:
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023 and later
|
|
|
Total
|
|
|||||
Canada
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
561,836
|
|
|
$
|
561,836
|
|
Italy
|
|
—
|
|
|
—
|
|
|
—
|
|
|
329
|
|
|
329
|
|
|||||
United States
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111,427
|
|
|
111,427
|
|
|||||
Sweden
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,893
|
|
|
12,893
|
|
|||||
Other
|
|
2,866
|
|
|
3,420
|
|
|
3,618
|
|
|
19,712
|
|
|
29,616
|
|
|||||
Total
|
|
$
|
2,866
|
|
|
$
|
3,420
|
|
|
$
|
3,618
|
|
|
$
|
706,197
|
|
|
$
|
716,101
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Revenue:
|
|
|
|
|
|
|
|
|||||
Transportation
|
|
$
|
305,338
|
|
|
$
|
270,283
|
|
|
$
|
229,833
|
|
CWI
|
|
361,770
|
|
|
319,405
|
|
|
317,297
|
|
|||
Total segment revenues
|
|
667,108
|
|
|
589,688
|
|
|
547,130
|
|
|||
Less: equity investee revenue
|
|
(361,770
|
)
|
|
(319,405
|
)
|
|
(317,297
|
)
|
|||
Consolidated revenue from continuing operations
|
|
$
|
305,338
|
|
|
$
|
270,283
|
|
|
$
|
229,833
|
|
Consolidated revenue from discontinuing operations
|
|
$
|
—
|
|
|
$
|
8,837
|
|
|
$
|
46,268
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Operating income (loss):
|
|
|
|
|
|
|
||||||
Transportation
|
|
$
|
(798
|
)
|
|
$
|
(10,706
|
)
|
|
$
|
(40,638
|
)
|
CWI
|
|
68,427
|
|
|
55,411
|
|
|
57,276
|
|
|||
Corporate
|
|
(21,619
|
)
|
|
(31,511
|
)
|
|
(22,256
|
)
|
|||
Restructuring costs
|
|
(825
|
)
|
|
(808
|
)
|
|
(1,682
|
)
|
|||
Foreign exchange gain (loss)
|
|
2,537
|
|
|
(8,957
|
)
|
|
(562
|
)
|
|||
Impairments on long lived assets, net (note 9 and 10)
|
|
(688
|
)
|
|
(736
|
)
|
|
(1,550
|
)
|
|||
Total segment operating income (loss)
|
|
47,034
|
|
|
2,693
|
|
|
(9,412
|
)
|
|||
Less: equity investee operating income
|
|
(68,427
|
)
|
|
(55,411
|
)
|
|
(57,276
|
)
|
|||
Consolidated operating loss from continuing operations
|
|
$
|
(21,393
|
)
|
|
$
|
(52,718
|
)
|
|
$
|
(66,688
|
)
|
Consolidated operating income (loss) from discontinued operations
|
|
$
|
(147
|
)
|
|
$
|
(972
|
)
|
|
$
|
909
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
|
|
|
|
|
|
|
||||||
Total additions to long-lived assets, excluding business combinations:
|
|
|
|
|
|
|
|
|||||
Transportation
|
|
$
|
8,255
|
|
|
$
|
10,062
|
|
|
$
|
25,177
|
|
Corporate
|
|
606
|
|
|
211
|
|
|
111
|
|
|||
|
|
$
|
8,861
|
|
|
$
|
10,273
|
|
|
$
|
25,288
|
|
|
|
Total assets by operating segment
|
||||||
|
|
Years ended December 31
|
||||||
|
|
2019
|
|
|
2018
|
|
||
Transportation
|
|
$
|
251,948
|
|
|
$
|
236,340
|
|
Corporate
|
|
27,978
|
|
|
31,912
|
|
||
CWI
|
|
113,825
|
|
|
112,053
|
|
||
|
|
393,751
|
|
|
380,305
|
|
||
Add: assets held for sale
|
|
—
|
|
|
1,676
|
|
||
Less: equity investee total assets
|
|
(113,825
|
)
|
|
(112,053
|
)
|
||
Total consolidated assets
|
|
$
|
279,926
|
|
|
$
|
269,928
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
December 31, 2019
|
|
Property, plant and equipment
|
|
|
Intangible assets and goodwill
|
|
|
Total
|
|
|||
Italy
|
|
$
|
22,534
|
|
|
$
|
12,883
|
|
|
$
|
35,417
|
|
Canada
|
|
31,909
|
|
|
192
|
|
|
32,101
|
|
|||
United States
|
|
951
|
|
|
—
|
|
|
951
|
|
|||
Rest of Europe
|
|
3,423
|
|
|
3,110
|
|
|
6,533
|
|
|||
Asia Pacific
|
|
883
|
|
|
—
|
|
|
883
|
|
|||
|
|
59,700
|
|
|
16,185
|
|
|
75,885
|
|
|||
Less: equity investee long lived assets
|
(844
|
)
|
|
—
|
|
|
(844
|
)
|
||||
Total consolidated long-lived assets
|
$
|
58,856
|
|
|
$
|
16,185
|
|
|
$
|
75,041
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
Property, plant and equipment
|
|
|
Intangible assets and goodwill
|
|
|
Total
|
|
|||
Italy
|
|
$
|
23,470
|
|
|
$
|
16,067
|
|
|
$
|
39,537
|
|
Canada
|
|
35,089
|
|
|
237
|
|
|
35,326
|
|
|||
United States
|
|
1,210
|
|
|
—
|
|
|
1,210
|
|
|||
Rest of Europe
|
|
2,870
|
|
|
3,695
|
|
|
6,565
|
|
|||
Asia Pacific
|
|
1,726
|
|
|
—
|
|
|
1,726
|
|
|||
|
|
64,365
|
|
|
19,999
|
|
|
84,364
|
|
|||
Less: equity investee's long lived assets
|
(934
|
)
|
|
—
|
|
|
(934
|
)
|
||||
Total consolidated long-lived assets
|
$
|
63,431
|
|
|
$
|
19,999
|
|
|
$
|
83,430
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
|
Carrying
amount
|
|
|
Contractual
cash flows
|
|
|
< 1 year
|
|
|
1-3 years
|
|
|
4-5 years
|
|
|
>5 years
|
|
||||||
Accounts payable and accrued liabilities
|
|
$
|
86,180
|
|
|
$
|
86,180
|
|
|
$
|
86,180
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term loan facilities (note 14 (a))
|
|
22,207
|
|
|
24,978
|
|
|
9,507
|
|
|
13,158
|
|
|
2,313
|
|
|
—
|
|
||||||
Senior revolving financing (note 14 (b))
|
|
2,504
|
|
|
2,897
|
|
|
815
|
|
|
1,966
|
|
|
116
|
|
|
—
|
|
||||||
Convertible debt (note 14 (c))
|
|
17,431
|
|
|
19,727
|
|
|
1,575
|
|
|
18,152
|
|
|
—
|
|
|
—
|
|
||||||
Other bank financing (note 14 (d))
|
|
5,105
|
|
|
5,112
|
|
|
4,383
|
|
|
729
|
|
|
—
|
|
|
—
|
|
||||||
Capital lease obligations (note 14 (e))
|
|
1,632
|
|
|
1,747
|
|
|
598
|
|
|
884
|
|
|
265
|
|
|
—
|
|
||||||
Long-term royalty payable (note 15)
|
|
18,258
|
|
|
26,228
|
|
|
5,936
|
|
|
12,371
|
|
|
2,799
|
|
|
5,122
|
|
||||||
Operating lease commitments (note 13)
|
|
17,524
|
|
|
20,293
|
|
|
4,406
|
|
|
7,456
|
|
|
4,707
|
|
|
3,724
|
|
||||||
|
|
$
|
170,841
|
|
|
$
|
187,162
|
|
|
$
|
113,400
|
|
|
$
|
54,716
|
|
|
$
|
10,200
|
|
|
$
|
8,846
|
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
WESTPORT FUEL SYSTEMS INC.
|
Notes to Consolidated Financial Statements
|
(Expressed in thousands of United States dollars except share and per share amounts)
|
Years ended December 31, 2019, 2018 and 2017
|
|
Level 1 –
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
|
|
|
Level 2 –
|
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
|
Level 3 –
|
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
|
•
|
Independent aftermarket (“IAM”): We sell systems and components across a wide range of brands primarily through a global network of distributors, that consumers can purchase and have installed onto their vehicles to use LPG or CNG fuels in addition to gasoline and diesel.
|
•
|
DOEM: We directly or indirectly convert new passenger cars for OEMs or importers, to address local market needs when a global LPG or CNG bi-fuel vehicle platform is not available directly from the OEM.
|
•
|
Light-duty OEM: We sell systems and components to OEMs that are used to manufacture new, direct off the assembly line LPG or CNG-fueled vehicles.
|
•
|
Heavy-duty OEM: We sell systems and components, including High Pressure Direct Injection ("Westport HPDI 2.0™" or "HPDI") products, to engine OEMs and commercial vehicle OEMs. Our fully integrated Westport HPDI 2.0™ system powered primarily by natural gas matches the power, torque, and fuel economy benefits found in traditional compression ignition engines using only diesel fuel resulting in reduced greenhouse gas emissions, and the capability to cost-effectively run on renewable fuels.
|
|
|
Years ended December 31,
|
|
|||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
(expressed in millions of United States dollars, except for per share amounts and shares outstanding)
|
||||||||||||
Revenue
|
|
$
|
305.3
|
|
|
$
|
270.3
|
|
|
$
|
229.8
|
|
Gross margin
|
|
68.2
|
|
|
64.2
|
|
|
60.3
|
|
|||
GM %
|
|
22.3
|
%
|
|
23.8
|
%
|
|
26.2
|
%
|
|||
Net income (loss) from continuing operations
|
|
0.2
|
|
|
(40.8
|
)
|
|
(62.9
|
)
|
|||
Net income (loss) from discontinued operations
|
|
(0.1
|
)
|
|
9.3
|
|
|
52.9
|
|
|||
Net income (loss) for the year
|
|
0.0
|
|
|
(31.5
|
)
|
|
(10.0
|
)
|
|||
Net income (loss) per share from continuing operations - basic and diluted
|
|
0.00
|
|
|
(0.31
|
)
|
|
(0.52
|
)
|
|||
Weighted average basic and diluted shares outstanding
|
|
134,224,799
|
|
|
132,371,396
|
|
|
119,558,566
|
|
|
|
Three Months Ended December 31,
|
|
|||||
|
|
2019
|
|
|
2018
|
|
||
(expressed in millions of United States dollars, except for per share amounts and shares outstanding)
|
||||||||
Revenue
|
|
$
|
74.3
|
|
|
$
|
60.5
|
|
Gross margin
|
|
13.8
|
|
|
12.2
|
|
||
GM %
|
|
18.6
|
%
|
|
20.2
|
%
|
||
Net income (loss) from continuing operations
|
|
0.7
|
|
|
(10.4
|
)
|
||
Net income from discontinued operations
|
|
0.0
|
|
|
1.2
|
|
||
Net income (loss) for the period
|
|
0.7
|
|
|
(9.2
|
)
|
||
Net income (loss) per share from continuing operations - basic and diluted
|
|
—
|
|
|
(0.08
|
)
|
||
Weighted average basic and diluted shares outstanding
|
|
136,081,959
|
|
|
133,093,452
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||
(expressed in millions of United States dollars)
|
|
|
|
|
|
|
||
Cash and cash equivalents (including restricted cash)
|
|
$
|
46.0
|
|
|
$
|
61.1
|
|
Total assets
|
|
279.9
|
|
|
269.9
|
|
||
Debt, including current portion
|
|
48.9
|
|
|
55.3
|
|
||
Royalty payable, including current portion
|
|
18.2
|
|
|
20.9
|
|
||
Total liabilities
|
|
190.6
|
|
|
179.3
|
|
||
Shareholder's equity
|
|
89.4
|
|
|
90.7
|
|
|
|
Three months ended December 31,
|
|
|
Change
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||||||||||||
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
||||||||||
Transportation (consolidated)
|
|
$
|
74.3
|
|
|
$
|
60.5
|
|
|
$
|
13.8
|
|
|
23
|
%
|
|
$
|
305.3
|
|
|
$
|
270.3
|
|
|
$
|
35.0
|
|
|
13
|
%
|
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
$
|
|
%
|
|||||
Transportation (consolidated)
|
|
$
|
270.3
|
|
|
$
|
229.8
|
|
|
$
|
40.5
|
|
|
18
|
%
|
|
|
Three months ended
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|||||||
|
|
December 31,
|
|
|
% of
|
|
December 31,
|
|
|
% of
|
|
Change
|
|||||||||
|
|
2019
|
|
|
Revenue
|
|
2018
|
|
|
Revenue
|
|
$
|
|
%
|
|||||||
Transportation (consolidated)
|
|
$
|
13.8
|
|
|
18.6
|
%
|
|
$
|
12.3
|
|
|
20.3
|
%
|
|
$
|
1.5
|
|
|
12
|
%
|
|
|
Year ended
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|||||||
|
|
December 31,
|
|
|
% of
|
|
December 31,
|
|
|
% of
|
|
Change
|
|||||||||
|
|
2019
|
|
|
Revenue
|
|
2018
|
|
|
Revenue
|
|
$
|
|
%
|
|||||||
Transportation (consolidated)
|
|
$
|
68.2
|
|
|
22.3
|
%
|
|
$
|
64.2
|
|
|
23.8
|
%
|
|
$
|
4.0
|
|
|
6
|
%
|
|
|
Year Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|||||||
|
|
December 31,
|
|
|
% of
|
|
December 31,
|
|
|
% of
|
|
Change
|
|||||||||
|
|
2018
|
|
|
Revenue
|
|
2017
|
|
|
Revenue
|
|
$
|
|
%
|
|||||||
Transportation (consolidated)
|
|
$
|
64.2
|
|
|
23.8
|
%
|
|
$
|
60.3
|
|
|
26.2
|
%
|
|
$
|
3.9
|
|
|
6
|
%
|
|
|
Three months ended December 31,
|
|
|
Change
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||||||||||||
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
||||||||||
Transportation
|
|
$
|
6.0
|
|
|
$
|
6.6
|
|
|
$
|
(0.6
|
)
|
|
(9
|
)%
|
|
$
|
24.8
|
|
|
$
|
29.6
|
|
|
$
|
(4.8
|
)
|
|
(16
|
)%
|
Corporate
|
|
(0.1
|
)
|
|
0.2
|
|
|
(0.3
|
)
|
|
(150
|
)%
|
|
0.4
|
|
|
1.0
|
|
|
(0.6
|
)
|
|
(60
|
)%
|
||||||
Total R&D
|
|
$
|
5.9
|
|
|
$
|
6.8
|
|
|
$
|
(0.9
|
)
|
|
(13
|
)%
|
|
$
|
25.2
|
|
|
$
|
30.6
|
|
|
$
|
(5.4
|
)
|
|
(18
|
)%
|
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
$
|
|
%
|
|||||
Transportation
|
|
$
|
29.6
|
|
|
$
|
48.4
|
|
|
$
|
(18.8
|
)
|
|
(39
|
)%
|
Corporate
|
|
1.0
|
|
|
1.7
|
|
|
(0.7
|
)
|
|
(41
|
)%
|
|||
Total R&D
|
|
$
|
30.6
|
|
|
$
|
50.1
|
|
|
$
|
(19.5
|
)
|
|
(39
|
)%
|
|
|
Three months ended December 31,
|
|
|
Change
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||||||||||||
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
||||||||||
Transportation
|
|
$
|
10.1
|
|
|
$
|
9.3
|
|
|
$
|
0.8
|
|
|
9
|
%
|
|
$
|
36.6
|
|
|
$
|
36.8
|
|
|
$
|
(0.2
|
)
|
|
(1
|
)%
|
Corporate
|
|
3.8
|
|
|
6.9
|
|
|
(3.1
|
)
|
|
(45
|
)%
|
|
21.1
|
|
|
30.2
|
|
|
(9.1
|
)
|
|
(30
|
)%
|
||||||
Total SG&A
|
|
$
|
13.9
|
|
|
$
|
16.2
|
|
|
$
|
(2.3
|
)
|
|
(14
|
)%
|
|
$
|
57.7
|
|
|
$
|
67.0
|
|
|
$
|
(9.3
|
)
|
|
(14
|
)%
|
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
$
|
|
%
|
|||||
Transportation
|
|
$
|
36.8
|
|
|
$
|
43.4
|
|
|
$
|
(6.6
|
)
|
|
(15
|
)%
|
Corporate
|
|
30.2
|
|
|
19.8
|
|
|
10.4
|
|
|
53
|
%
|
|||
Total SG&A
|
|
$
|
67.0
|
|
|
$
|
63.2
|
|
|
$
|
3.8
|
|
|
6.0
|
%
|
|
|
Years ended December 31,
|
|
|||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
(expressed in millions of United States dollars)
|
|
|
|
|
|
|
|
|
|
|||
Total revenue
|
|
$
|
361.8
|
|
|
$
|
319.4
|
|
|
$
|
317.3
|
|
Gross margin
|
|
104.1
|
|
|
91.0
|
|
|
109.5
|
|
|||
GM %
|
|
28.8
|
%
|
|
28.5
|
%
|
|
34.5
|
%
|
|||
Net income before income taxes
|
|
70.8
|
|
|
57.4
|
|
|
58.3
|
|
|||
Net income
|
|
53.2
|
|
|
45.4
|
|
|
25.0
|
|
|||
Net income attributable to the Company (1)
|
|
26.6
|
|
|
22.7
|
|
|
12.5
|
|
|
|
Three months ended December 31,
|
|
|||||
|
|
2019
|
|
|
2018
|
|
||
(expressed in millions of United States dollars)
|
|
|
|
|
||||
Total revenue
|
|
$
|
102.5
|
|
|
$
|
94.1
|
|
Gross margin
|
|
28.3
|
|
|
21.0
|
|
||
GM %
|
|
27.6
|
%
|
|
22.3
|
%
|
||
Net income before income taxes
|
|
20.6
|
|
|
12.4
|
|
||
Net income
|
|
13.5
|
|
|
11.4
|
|
||
Net income attributable to the Company
|
|
6.7
|
|
|
5.7
|
|
|
|
Three months ended December 31,
|
|
|
Change
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||||||||||||
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
|
2019
|
|
|
2018
|
|
|
$
|
|
%
|
||||||||||
CWI
|
|
$
|
102.5
|
|
|
$
|
94.1
|
|
|
$
|
8.4
|
|
|
9
|
%
|
|
$
|
361.8
|
|
|
$
|
319.4
|
|
|
$
|
42.4
|
|
|
13
|
%
|
|
|
Years ended December 31,
|
|
|
Change
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
$
|
|
%
|
|||||
CWI
|
|
$
|
319.4
|
|
|
$
|
317.3
|
|
|
$
|
2.1
|
|
|
1
|
%
|
|
|
Three months ended
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|||||||
|
|
December 31,
|
|
|
% of
|
|
December 31,
|
|
|
% of
|
|
Change
|
|||||||||
|
|
2019
|
|
|
Revenue
|
|
2018
|
|
|
Revenue
|
|
$
|
|
%
|
|||||||
CWI
|
|
$
|
28.3
|
|
|
27.6
|
%
|
|
$
|
21.0
|
|
|
22.3
|
%
|
|
$
|
7.3
|
|
|
35
|
%
|
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Interest expense on long-term debt
|
|
$
|
3.9
|
|
|
$
|
4.2
|
|
|
$
|
6.1
|
|
Royalty payable accretion expense and finance charge from prepayment
|
|
3.4
|
|
|
4.9
|
|
|
8.4
|
|
|||
Total interest on long-term debt and accretion on royalty payable
|
|
$
|
7.3
|
|
|
$
|
9.1
|
|
|
$
|
14.5
|
|
|
|
Three months ended December 31,
|
||||||
|
|
2019
|
|
|
2018
|
|
||
Interest expense on long-term debt
|
|
$
|
1.1
|
|
|
$
|
1.0
|
|
Royalty payable accretion expense and finance charge from prepayment
|
|
0.8
|
|
|
1.3
|
|
||
Total interest on long-term debt and accretion on royalty payable
|
|
$
|
1.9
|
|
|
$
|
2.3
|
|
|
|
Carrying amount
|
|
Contractual cash flows
|
|
< 1 year
|
|
1 - 3 years
|
|
4-5 years
|
|
> 5 years
|
||||||||||||
Accounts payable and accrued liabilities
|
|
$
|
86.2
|
|
|
$
|
86.2
|
|
|
$
|
86.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt, principal (1)
|
|
48.8
|
|
|
48.8
|
|
|
13.6
|
|
|
32.8
|
|
|
2.4
|
|
|
—
|
|
||||||
Long-term debt, interest (1)
|
|
—
|
|
|
5.6
|
|
|
3.3
|
|
|
2.0
|
|
|
0.3
|
|
|
—
|
|
||||||
Long-term royalty payable (2)
|
|
18.3
|
|
|
26.2
|
|
|
5.9
|
|
|
12.4
|
|
|
2.8
|
|
|
5.1
|
|
||||||
Operating lease commitments
|
|
17.5
|
|
|
20.3
|
|
|
4.4
|
|
|
7.5
|
|
|
4.7
|
|
|
3.7
|
|
||||||
|
|
$
|
170.8
|
|
|
$
|
187.1
|
|
|
$
|
113.4
|
|
|
$
|
54.7
|
|
|
$
|
10.2
|
|
|
$
|
8.8
|
|
|
|
December 31, 2019
|
|
March 16, 2020
|
||||||
|
|
Number
|
|
|
Weighted average exercise price
|
|
Number
|
|
|
Weighted average exercise price
|
|
|
|
|
$
|
|
|
|
$
|
||
Common shares outstanding
|
|
136,416,981
|
|
|
|
|
136,424,206
|
|
|
|
Share units
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
1,777,941
|
|
|
3.19
|
|
1,780,795
|
|
|
N/A
|
Exercisable
|
|
14,450
|
|
|
2.41
|
|
9,123
|
|
|
N/A
|
Three months ended
|
31-Mar-18
|
|
30-Jun-18
|
|
30-Sep-18
|
|
31-Dec-18
|
|
31-Mar-19
|
|
30-Jun-19
|
|
30-Sep-19
|
|
31-Dec-19
|
||||||||||||||||
(expressed in millions of United States dollars except for per share amounts)
|
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Revenue
|
$
|
63.8
|
|
|
$
|
80.5
|
|
|
$
|
65.5
|
|
|
$
|
60.5
|
|
|
$
|
73.2
|
|
|
$
|
82.4
|
|
|
$
|
75.4
|
|
|
$
|
74.3
|
|
Cost of revenue
|
$
|
49.2
|
|
|
$
|
58.8
|
|
|
$
|
49.9
|
|
|
$
|
48.2
|
|
|
$
|
56.0
|
|
|
$
|
63.1
|
|
|
$
|
57.5
|
|
|
$
|
60.5
|
|
Gross margin
|
$
|
14.6
|
|
|
$
|
21.7
|
|
|
$
|
15.6
|
|
|
$
|
12.3
|
|
|
$
|
17.2
|
|
|
$
|
19.3
|
|
|
$
|
17.9
|
|
|
$
|
13.8
|
|
Gross margin percentage
|
22.9
|
%
|
|
27.0
|
%
|
|
23.8
|
%
|
|
20.3
|
%
|
|
23.5
|
%
|
|
23.4
|
%
|
|
23.7
|
%
|
|
18.6
|
%
|
||||||||
Net income (loss) from continuing operations
|
$
|
(12.6
|
)
|
|
$
|
(5.7
|
)
|
|
$
|
(12.1
|
)
|
|
$
|
(10.4
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(2.3
|
)
|
|
$
|
4.9
|
|
|
$
|
0.6
|
|
Net income (loss)
|
$
|
(14.2
|
)
|
|
$
|
(4.9
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(9.2
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
4.9
|
|
|
$
|
0.7
|
|
EBITDA (2)
|
$
|
(5.4
|
)
|
|
$
|
0.2
|
|
|
$
|
(3.0
|
)
|
|
$
|
(5.3
|
)
|
|
$
|
4.2
|
|
|
$
|
4.0
|
|
|
$
|
11.7
|
|
|
$
|
5.0
|
|
Adjusted EBITDA (3)
|
$
|
(3.4
|
)
|
|
$
|
8.5
|
|
|
$
|
4.3
|
|
|
$
|
0.2
|
|
|
$
|
7.3
|
|
|
$
|
8.1
|
|
|
$
|
9.4
|
|
|
$
|
3.6
|
|
Euro to U.S. dollar average exchange rate
|
1.23
|
|
|
1.20
|
|
|
1.16
|
|
|
1.14
|
|
|
1.14
|
|
|
1.12
|
|
|
1.11
|
|
|
1.11
|
|
||||||||
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic and diluted from continuing operations
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
0.00
|
|
Basic and diluted
|
$
|
(0.11
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
0.00
|
|
CWI net income attributable to the Company
|
1.5
|
|
|
7.8
|
|
|
7.7
|
|
|
5.7
|
|
|
8.6
|
|
|
5.9
|
|
|
5.4
|
|
|
6.7
|
|
Three months ended
|
|
31-Mar-18
|
|
|
30-Jun-18
|
|
|
30-Sep-18
|
|
|
31-Dec-18
|
|
|
31-Mar-19
|
|
|
30-Jun-19
|
|
|
30-Sep-19
|
|
|
31-Dec-19
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|||||||||||||||
Income (loss) before income taxes from continuing operations
|
|
$
|
(11.7
|
)
|
|
$
|
(5.6
|
)
|
|
$
|
(9.5
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
5.7
|
|
|
$
|
(0.3
|
)
|
Interest expense, net (1)
|
|
2.1
|
|
|
1.7
|
|
|
2.3
|
|
|
2.6
|
|
|
1.8
|
|
|
1.4
|
|
|
1.8
|
|
|
1.5
|
|
||||||||
Depreciation and amortization
|
|
4.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.0
|
|
|
4.3
|
|
|
4.0
|
|
|
4.2
|
|
|
3.8
|
|
||||||||
EBITDA
|
|
$
|
(5.4
|
)
|
|
$
|
0.2
|
|
|
$
|
(3.0
|
)
|
|
$
|
(5.3
|
)
|
|
$
|
4.2
|
|
|
$
|
4.0
|
|
|
$
|
11.7
|
|
|
$
|
5.0
|
|
Three months ended
|
|
31-Mar-18
|
|
|
30-Jun-18
|
|
|
30-Sep-18
|
|
|
31-Dec-18
|
|
|
31-Mar-19
|
|
|
30-Jun-19
|
|
|
30-Sep-19
|
|
|
31-Dec-19
|
|
||||||||
EBITDA
|
|
$
|
(5.4
|
)
|
|
$
|
0.2
|
|
|
$
|
(3.0
|
)
|
|
$
|
(5.3
|
)
|
|
$
|
4.2
|
|
|
$
|
4.0
|
|
|
$
|
11.7
|
|
|
$
|
5.0
|
|
Stock based compensation
|
|
0.3
|
|
|
1.3
|
|
|
0.6
|
|
|
0.7
|
|
|
0.4
|
|
|
0.3
|
|
|
0.3
|
|
|
0.5
|
|
||||||||
Unrealized foreign exchange (gain) loss
|
|
—
|
|
|
5.2
|
|
|
2.2
|
|
|
1.6
|
|
|
0.1
|
|
|
(0.7
|
)
|
|
0.7
|
|
|
(2.6
|
)
|
||||||||
Intangible impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||||
Asset impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Restructuring, termination and other exit costs
|
|
0.6
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Costs associated with SEC investigation
|
|
0.9
|
|
|
2.5
|
|
|
3.5
|
|
|
3.1
|
|
|
1.8
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
||||||||
Other
|
|
0.2
|
|
|
(0.9
|
)
|
|
1.0
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
||||||||
Adjusted EBITDA
|
|
$
|
(3.4
|
)
|
|
$
|
8.5
|
|
|
$
|
4.3
|
|
|
$
|
0.2
|
|
|
$
|
7.3
|
|
|
$
|
8.1
|
|
|
$
|
9.4
|
|
|
$
|
3.6
|
|
Date: March 17, 2020
|
By:
|
/s/ David M. Johnson
|
|
|
Name: David M. Johnson
Title: Chief Executive Officer, Westport Fuel Systems Inc.
|
Date: March 17, 2020
|
By:
|
/s/ Richard Orazietti
|
|
|
Name: Richard Orazietti
Title: Chief Financial Officer, Westport Fuel Systems Inc.
|
March 17, 2020
|
/s/ David M. Johnson
|
|
|
|
David M. Johnson
|
|
Chief Executive Officer
|
March 17, 2020
|
/s/ Richard Orazietti
|
|
|
|
Richard Orazietti
|
|
Chief Financial Officer
|
|
KPMG LLP
PO Box 10426 777 Dunsmuir Street
Vancouver, BC V7Y 1K3
Canada
|
Telephone:(604) 691-3000
Fax: (604) 691-3031
Internet: www.kpmg.ca
|