Corporate Overview November 2019
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Corporate Overview November 2019
CAUTIONARY NOTE
Forward Looking Statements
> This presentation is confidential and is being issued for informational purposes only, is not intended to provide the basis for any credit or other evaluation and does not form part of any offer or
invitation to sell or issue any securities or any solicitation of any offer to purchase or subscribe for any securities. This presentation, in whole or in part, shall not form the basis for any contract or
investment decision with respect to Westport Fuel Systems and should not be relied on in connection with any such contract or decision. No reliance should be placed on the accuracy or
completeness of the information contained in this presentation. Westport Fuel Systems has not independently verified any data from third party sources referred to in this presentation.
> This presentation contains forward-looking statements, including statements regarding Westport Fuel Systems’ business, revenue, liquidity and cash usage expectations, future of our development
programs, future sales of products and gross margin, the demand for and future availability of our products, the growth rate for various business segments, the costs of various competing
technologies, the future success of our business and technology strategies, social and regulatory environments, the performance and competitiveness of Westport Fuel Systems products and
expansion of product coverage and future market opportunities. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties and are based on
both the views of management and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activities,
performance or achievements expressed in or implied by these forward looking statements. These risks and uncertainties include risks and are based on certain assumptions related to our revenue
growth, operating results, costs and recoveries of ongoing regulatory investigations, industry and products, the general economy, conditions of and access to the capital and debt markets,
governmental policies, regulation and approvals, technology innovations, fluctuations in foreign exchange rates, operating expenses, the availability and price of natural gas, global government
stimulus packages, the acceptance of and shift to natural gas vehicles, the relaxation or waiver of fuel emission standards, the inability of fleets to access capital or government funding to purchase
natural gas vehicles, the development of competing technologies, our ability to adequately develop and deploy our technology, the actions and determinations of our joint venture and development
partners, as well as other risk factors and assumptions that may affect our actual results, performance or achievements or financial position discussed in Westport Fuel Systems most recent Annual
Information Form and Annual Report on Form 40-F for the year ended December 31, 2018 and other filings made by Westport Fuel Systems with securities regulators. Readers should not place
undue reliance on any such forward-looking statements, which speak only as of the date they were made. We disclaim any obligation to publicly update or revise such statements to reflect any
change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in
these forward looking statements except as required by National Instrument 51-102. The contents of any website, RSS feed or twitter account referenced in this presentation are not incorporated by
reference herein.
> This communication is not intended to and does not constitute an advertisement, an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any
securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the United States Securities Act of 1933, as
amended. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, no public offer will be made directly or indirectly, in or into any jurisdiction where
to do so would constitute a violation of the laws of such jurisdiction, or by use of the mail or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the
internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction. No securities commission or similar authority of the United States, Canada, or any
other jurisdiction has reviewed or in any way passed upon this document or the merits of the securities described herein, and any representation to the contrary is an offense.
PAGE 2
WESTPORT FUEL SYSTEMS
Overview Sales by Region (2018)
$270M > Leading global supplier of clean, affordable
2018 alternative fuel systems for automotive applications
Revenue
> Four business segments: 18%
62%
750+ 12 > Aftermarket systems
Patents / Offices Growing, profitable, 10%
Applications & > Light duty OEM strong market share
Facilities 10%
> Heavy duty OEM - Game-changing technology
Europe Americas Asia Other
1250 > Cummins Westport Inc.
70 Key Priorities
Employees
10 > Strongly positioned to capitalize on the shift away
Countries Established from traditional transportation fuels toward clean 1. Sustained growth of
customers brands transportation aftermarket and light duty
served
OEM businesses
> Steady progress on attaining positive earnings
~$375M 2. Accelerate HPDI 2.0
Market commercialization
Capitalization Listings
3. Continue to improve cash
> NASDAQ and TSX: WPRT flow and operating results
Note: Approximate number of employees and products as of December 31, 2018;
worldwide granted patents and pending applications for Westport Fuel Systems PAGE 3
companies as of June 5, 2018. Market capitalization as of November 8, 2019
WESTPORT’S ALTERNATIVE FUEL CAPABILITIES
Broad Range of Products that Deliver Emission Reductions
LPG CNG LNG H2
Liquefied Petroleum Compressed Liquefied Hydrogen
Gas / Propane / Natural Gas Natural Gas
Autogas / BioLPG
> Components and complete > Components and > Complete systems > High and low pressure
systems complete systems components
> Heavy-duty and high
> Light-duty applications – > Light- and medium-duty horsepower applications > Light- to heavy-duty and
vapor and liquid LPG applications industrial applications
> Monofuel and dual fuel
> Monofuel, bi-fuel, dual fuel > Monofuel, bi-fuel, dual solutions > Hydrogen/CNG blends or
solutions fuel solutions pure hydrogen
> The most commonly used
alternative fuel in the world
Renewable Fuels
Substitute for fossil based fuels
PAGE 4
WE DESIGN, DEVELOP AND MANUFACTURE
ALTERNATIVE FUEL COMPONENTS AND SYSTEMS
Fuel Tank Systems Valves Regulators Injectors Electronics
CNG
Tank CNG
Valves Pressure
Regulators Natural Gas
Type 1 CNG Tank System Injectors
CNG
CNG Electronic
Fill Injector Control
LPG
Valves Rails Modules
Pressure
Reducers
LPG Level Sensor
Solenoid
Cylinder
Valves
HPDI LNG HPDI
Pump Gas
Conditioning
Integrated Module Bi-Fuel
Tank Valve
Electronic
Regulator
Control
Modules
HPDI
Injector
H2 Pressure
H2 Tank Control
Valves Modules
HPDI LNG Tank Module
PAGE 5
NATURAL GAS AND LPG VEHICLES IN SERVICE
Natural Gas Vehicles in Service LPG Vehicles in Service
(in thousands) (in thousands)
Africa, 268 North America, 225 Japan, China, 240
Mexico, 350 USA, 210
340
Australia, 700
Europe, Total: Total:
2,014 27.8 million Thailand,
27.1 million
Turkey,
1,600
6,100
• Natural gas and LPG
Latin
vehicles are in wide use
Ukraine,
America, 2,400 in many countries
5,417 around the world.
• About 55 million
Italy, 3,000
natural gas and LPG
Russia, vehicles are currently in
Asia- 4,500
Pacific, service, with about 1.5
19,842 million new vehicles or
Korea, 3,500
vehicle conversions sold
Poland, annually.
4,200
Source: NGV Global July 2019 Source: World LPG Association 2018 Annual Report, Westport analysis
PAGE 6
SAVING MONEY WITH LPG & CNG VEHICLES
Fuel Type Petrol LPG CNG
Incremental Price per Vehicle € 1,000 € 1,500
The actual payback period is
dependent upon vehicle
Fuel Cost (€/ltr or kg) €1.50 € 0.65 € 0.95* transaction prices, annual
distance traveled, fuel prices
and the impact of taxes and
Annual Distance (km) 20,000 20,000 20,000 incentives.
All of these factors vary over
Fuel Consumption (km/ltr or kg)** 12 11 21 time and between jurisdictions.
Annual Fuel Cost € 2,500 € 1,200 € 900
Annual Fuel Cost Savings € 1,300 € 1,600
Payback Period (months) 9 11
FOR ILLUSTRATIVE PURPOSES ONLY
Note: Payback period improves with incentives
PAGE 7
* Euro 0.95/kg = 0.684/m3
** Average European car
TRANSPORTATION FUEL PRICES
Sources:
Average US energy prices for vehicles US DOE Alternative Fuel Data Center,
Current Diesel and NG Prices (US $/gallon or DGE)
$ per diesel gallon equivalent US EIA, Westport analysis
$7.00
$5.00
$4.50
$6.00
$4.00
$3.50
$5.00
$3.00
$2.50 CNG
$4.00
$2.00 Diesel
$1.50
$3.00
$1.00
$0.50
$2.00
$0.00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$1.00
$0.00 In the US
US Germany France UK Italy • Natural gas prices have been relatively stable
Diesel NG • Diesel prices have fluctuated, a lot
• Diesel price dropped to be on par with natural
Sources:
globalpetrolprices.com Nov 8, 2019
In Europe gas from 2015 through 2017
cngeurope.com Nov 2019 • Sustained high prices for fuel
US EIA Nov 2019
• Sustained price advantage for natural gas
PAGE 8
Source: European Automobile Manufacturers Association (ACEA),
NEW VEHICLES BY FUEL TYPE IN EUROPE Power Systems Research
Vehicle Sales in Millions Passenger Car Sales by Fuel Commercial Vehicle Sales by Fuel
20 100% 100%
18 90% 90%
16 80% 80%
44% 47%
14 70% 50% 70%
57%
12 60% NG/LPG 60%
Commercial
Vehicle PHEV/BEV
10 50% 50% 98.9% 98.7% 98.5% 98.2%
Hybrid
Passenger Petrol
Car 8 40% 40%
Diesel
6 30% 30%
52% 49%
44%
4 20% 20%
36%
2 10% 10%
0 0% 0%
2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018
PAGE 9
EUROPEAN LIGHT DUTY OEM MARKET OVERVIEW
Key driver: Emissions standards – EU Light Duty vehicles CO2 regulations summary
EU introduced stringent regulations for passenger cars and
Path to achieve the 2021 target of 95 g/km is
vans requiring roughly -33% reduction in CO2 emissions in
2025 and -50% in 2030 compared to 2018 disrupted by:
• Loss of diesel
• Growth of petrol
• Growth of SUVs
CO2 Emissions are on the rise
Penalties are set at €95 for each g/km above the
target from 2025. If the industry as a whole misses
NEW!
the passenger car target by 20 g/km, this would
result in average penalties of €1900 per vehicle
https://www.theicct.org/sites/default/files/publications/EU-LCV-CO2-2030_ICCTupdate_20190123.pdf
*https://www.eea.europa.eu/highlights/average-co2-emissions-from-new.
PAGE 10Global market size and market
LIGHT DUTY OEM SYSTEMS shares are WFS estimates
Global OEM LPG/CNG Light Duty Vehicles Brescia Italy Plant
• Global sales: ~500,000 units/year
• WFS ~30% share
• 70% CNG / 29% LPG / 1% H2
4% Europe
14%
India
15% 51% China
IATF 16949:2016 ISO 14001:2014 • High level of automation
• Poka-Yoke systems
Robust processes,
Middle East • A complete OEM design validation plan
risk prevention and
16% • Safety reliability
environmental controls
Other • State-of-the-art technical cleanliness control
Customer Portfolio
PAGE 11Global market size and market
INDEPENDENT AFTERMARKET (IAM) shares are WFS estimates
Aftermarket Kits and Components Delayed OEM Services
• Global LPG/CNG conversion kits: ~1 million units/year • Global DOEM installations: ~35,000 units/year
• WFS ~30% global share: 300,000 kits annually • WFS ~95% share
• 60% LPG / 40% CNG • Key markets: Italy, Turkey, USA
DOEM Customers
5% Europe & Middle
East
25% Americas
50%
Asia Pacific
20% Other
Key Market Share Fuel WFS Aftermarket Brands
Argentina 50% CNG WFS capabilities:
Italy 40% LPG & CNG • Application development
Poland 30% LPG • Certification
Russia 30% LPG • Product validation
Turkey 30% LPG • Vehicle conversion
• Logistics solutions
PAGE 12FULLY INTEGRATED WESTPORT HPDI 2.0™ HD TRUCK SOLUTION
HIGH CONTENT AND SIGNIFICANT WESTPORT FUEL SYSTEMS IP
On Engine On Chassis On LNG Tank
High Pressure Tank Selection Gas Temperature
Direct Injector Control Manifold Sensor
Gas Rail
LNG Pump
Control Manifold
LNG Tank
OEM Engine
Module
Gas
Conditioning
Module
Cryogenic High
(GCM)
HPDI Control Pressure Pump
Integrated Gas Module Fuel Level Signal
Software
CANditioner
PAGE 13BENEFITS OF WESTPORT HPDI 2.0™
> Same torque as diesel engine
> Same efficiency as diesel engine
> Lower emissions than diesel engine
▪ 20% CO2 reduction
▪ >100% CO2 reduction potential
> No change to engine architecture
> Minimal change to vehicle architecture
Compared to spark ignited natural gas engines:
> Higher torque, more efficient, less CO2
PAGE 14*Assuming recognition of 20% carbon intensity reduction
CO2 REDUCTION OPPORTUNITY with 20% renewable gas blend and 90% gas energy ratio
** Varies by vehicle class and application
With HPDI 2.0TM Technology
CO2 reduction legislation driving • Westport HPDI 2.0 provides 20%+ CO2 reduction.
new technologies in HD trucking • Meets or exceeds 2025/2030 EU requirement.
Europe:
From 2019 baseline,
• Penalty for non-compliance in EU is €4,250 per
-15% CO2 required by 2025
gram/ton-km starting in 2025.
-30% CO2 required by 2030
• Penalty up to €38,000 per truck.
US:
Up to 25%** CO2 reduction
from 2017 through 2027 • Only technology available today that meets the
Westport HPDI 2.0TM EU 2025 regulation.
20% Renewable
Fossil LNG
LNG
• Preserves substantial OEM investments.
-20% -34%*
PAGE 15HPDI / LNG OEM HEAVY-DUTY VEHICLE PAYBACK ANALYSIS
Fuel Type Diesel HPDI / LNG
Incremental Price per Vehicle €40,000
The actual payback period is
Fuel Cost (€/ltr or kg) €1.36 € 0.95* dependent upon vehicle
transaction prices, annual
distance traveled, fuel prices
Annual Distance (km) 120,000 120,000 and the impact of taxes and
incentives.
Fuel Consumption (km/ltr or kg) 3.3 4.8 All of these factors can vary over
time and between jurisdictions.
Annual Fuel Cost € 49,000 € 23,900
Annual Fuel Cost Savings € 25,100
Payback Period (months) 19
FOR ILLUSTRATIVE PURPOSES ONLY
PAGE 16
* Euro 0.95/kg = 0.684 Euro/m3FUELS AND TECHNOLOGIES COMPETING Information based on latest
estimates from multiple
industry sources and may vary
FOR THE TRANSPORTATION FUTURE
Heavy Duty Truck, 400 mile daily range, current costs and technologies:
Fuel Fuel + Propulsion Daily Daily
Fuel System Storage Storage System Fueling Fuel
Size Weight Cost Time Cost
(cubic feet) (pounds) (approximate) (minutes) (US West Coast)
Diesel 11 560 $42,000 10 $185
SI NG 55 1,125 $72,000 15 $165
HPDI 32 1,270 $82,000 10 $135
H2 Fuel Cell 60 1,500 $150,000 20 $285
80 (@ 700kW)
Battery Electric 160 17,800 $310,000 $115
480 (@ 120kW)
There has been considerable interest and hype around battery electric and
fuel cell technologies but in many applications, particularly those that require
extended range, these technologies are not yet economically viable
PAGE 17HPDI 2.0™ - COMMERCIALLY ATTRACTIVE & AVAILABLE NOW
Westport Battery
For Long Haul HD Truck Application Diesel
HPDI 2.0™ Electric
Meet EU 2025/2030 requirements? X ✓ ✓
Meet customer requirements?
• Range, payload, performance, durability
• Operations, refuel/recharge time
✓ ✓ X
Infrastructure in place? ✓ ✓ X
Commercially available and viable? ✓ ✓ X
Total Cost of Operation Baseline Lower Higher
PAGE 18THE PROMISE OF RENEWABLE NATURAL GAS
Renewable Natural Gas (RNG) use has grown by 55% annually in the
Natural gas vehicles operating on captured US and in 2018 accounted for almost 1/3 of US on-road NGV fuel use
methane can provide negative CO2 emissions, United States RNG Growth
making them cleaner than electric vehicles. (Diesel Gallon Equivalents)
200 RNG
Millions
,
Lifecycle Carbon Intensity of Petroleum and Alternative Fuels 150 32%
CO2 equivalent per megajoule 100
CNG
Diesel 102.0 50 ,
68%
Gasoline 99.8 0
Fossil CNG 79.4 2014 2015 2016 2017 2018
Source: NGV America and Coalition for Renewable Natural Gas, April 2019
Corn Ethanol 66.8
Biodiesel (Corn/Soy) 55.5
RNG (Landfill) 48.2 RNG uses
the existing
Synthetic Diesel 28.0
gas grid to
Biodiesel (Cooking Oil) 20.9 connect
RNG (Wastewater Treatment) 19.3 producers to
RNG (Food Waste) -22.9 consumers
RNG (Dairy Manure) -252.0 across
continents
Traditional Fuels
20% to 50% CO2 reduction
50% to 100% CO2 reduction
Source: California Air Resources Board >100% CO2 reduction
PAGE 19CAN WE MAKE ROAD TRANSPORT CARBON NEUTRAL?
ZERO NET CARBON BIO METHANE + FOSSIL GAS BLEND
ENOUGH FOR 100% OF EU 28 TRUCK ENERGY DEMAND IN 2030
0%
Less than Zero Net CI
Zero Combined CI
7% Livestock Manure Anaerobic Digestion
20%
25% Woody Residues Gasification→
Blend Percentage
40%
29% Crop Residues Anaerobic Digestion →
60%
4% Muni. Solid Waste
80% 35% Fossil Gas
100%
-400 -350 -300 -250 -200 -150 -100 -50 0 50 100 150
Carbon Intensity [MJ/kg]
Ref: Westport estimate based on CARB LCFS averages and GTI data sources
SAE INTERNATIONAL MARK DUNN - WESTPORT FUEL SYSTEMS 20
Copyright © SAE International. Further use or distribution is not permitted without permission from SAESTEADY REVENUE, WITH HPDI POSITIONED FOR GROWTH
2017 Revenue 2018 Revenue 2019 Guidance
$230M $270M $295-305M
82.4
80.5
75.4
73.2
63.8 65.5
($ in millions)
60.5
57.3 58.6 57.5
56.4
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Balanced business with market-ready solutions and customers in 70 countries
Note: Results for 2019 are unaudited. PAGE 212016 – 2019 ADJUSTED EBITDA TREND
30
+$24.8 m
20 Q3
10
+$9.6 m Q2
Q1
0
2016 2017 2018 2019
In millions of $
-10
-20
-$19.9 m
-30
-40
-$46.0 m
-50
Note: Results for 2019 are unaudited. PAGE 22WFS BUSINESS UNITS
Independent Cummins Westport
Light Duty OEM Heavy Duty OEM Corporate
After Market JV
• Small vehicle market • Small vehicle market • Commercial launch of • CNG SI engines • Continue to
where fuel savings is where fuel savings is HPDI 2.0 in Europe in • UltraLow NOx rationalize corporate
the key driver the key driver 2018 • Solid revenues and expenditures
• Distribution • OEMs such as VW • Weichai signed as 2nd gross margins • Increasing operating
• Moderate growth of 5% • Growth of 10 - 15% per customer in 2018 • Declining R&D and tax leverage
per annum annum • Regulation and total expenses
• AEBITDA margins of • AEBITDA margins of cost of ownership will • Net income growing
~15% ~10% drive business • JV term ends 2021
Increasing operating Growth and cash flow Increasing volumes Strong cash dividends Overhead to decrease
cash flows business improve margin as % of revenue
Future growth plus aligning costs with revenues will drive profitability
PAGE 23WFS GROWTH PATH
HD OEM / HPDI business
Game changing technology
High growth potential
LD OEM business
10-15% growth rate
Stable, profitable
Aftermarket business
Single digit growth rate
Stable, profitable
2017 2018 2019
Aftermarket LD OEM HD OEM
PAGE 24THINKING AHEAD > www.wfsinc.com
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