Westport 2012 Annual General Meeting (given April 11, 2013)

The global leader in natural gas engines.
Powering transportation.
Driving change.
Westport 2012 AGM
stock symbols
market capitalization
TSX
NASDAQ
CAD
USD
WPT
WPRT
$1.6 billion
$1.6 billion
April 11, 2013
1
Forward Looking Statements
 This presentation contains forward-looking statements that are based on the beliefs of Westport’s
management and reflect Westport’s current expectations. Investors are cautioned that all forwardlooking statements involve risks and uncertainties that could cause actual results to differ materially
from those expressed in these forward-looking statements, including, without limitation, Westport’s
ability to develop viable fuel systems; Westport’s ability to provide the capital required for research,
product development, operations, and marketing; product development, production and commercial
launch delays; changing environmental regulations; Westport’s ability to attract and retain key
personal and business partners; competition from conventional diesel fuelled engines; and
Westport’s ability to protect its intellectual property. These factors should be considered carefully
and investors should not rely on any forward-looking statements. Investors are encouraged to
review Management’s Discussion and Analysis and the Risk Factors section in Westport’s most
recently filed Annual Information Form and filings with securities regulators for a more complete
discussion of factors that could affect Westport’s future performance. We undertake no obligation
to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
 All figures are in U.S. dollars unless otherwise stated.
2
Westport Engineers Advanced Natural Gas Engines
 We are enabling the global shift to a cleaner, cheaper, more
sustainable energy source for transportation and fundamentally
changing the way the world travels the roads, rails and seas.
market focus
position
opportunity
Leading the
global shift in
transportation
from petroleum
fuels
to methane
(natural gas)
Strong first mover
advantage with
unmatched IP,
relationships,
market coverage,
products, and
capabilities
Shifting products
from “proof of
concept” to
widespread
global adoption
3
Westport at a Glance
 Through its market focus and
position, Westport has moved from
proof of concept to capture the
global emergence of
natural gas vehicles
through a broad range of
transport applications.
4
Investment Highlights
1. ​Key markets are established – Westport is focused on
rapid introduction of new products establishing
technology standards and harvesting investment returns
2. Aggressive price and performance improvements in
all markets to encourage accelerated adoption
3. Leverage key OEM partnerships allowing for fast and
profitable scale up at low risk for all stakeholders
4. Continue developing new markets and new partnerships
5
Accelerated Market Adoption
 Adoption rate in leading markets moving faster than the gasoline to diesel transformation
 Clean Energy Fuels, Shell, Encana, ENN, and others are leading the build-out of natural
gas stations and fuelling infrastructure around the world
100%
New sales of Class 8
diesel trucks, USA1
Share
75%
50%
New registrations
of diesel passenger
cars, Europe2
25%
0%
1950
1970
Data sources:
1. MacKay & Co., & Wards Auto Group, a
division of Penton Media, Inc.
1990
2. ACEA
3. Westport
4. Westport
New sales of natural gas
refuse trucks, USA3
2010
2030
6
Westport is the Technology Leader
 Global patent portfolio pivotal to
Westport’s market leading
position with OEMs
 Worldwide, Westport and its
affiliates have filed over 700
patent applications relating to
over 180 inventions in:
 engine technologies
 fuel system components
 control methods
 vehicle integration
 other related technologies
 Established strong development
lead times and barriers to entry
with over $390M in R&D and
commercialization since 1995
Top 10 Companies with
Natural Gas Engine Related Patents*
325
Westport
218
Toyota
191
Fiat
Bosch
169
Ford
167
GM
162
CAT
158
Honda
142
Siemens
141
121
Daimler
0
100
200
300
400
* Based on the patent search results of publicly available data within the International Patent
Classification F02, meeting the search term criteria: one of ("engine" or "combustion" or "injector"
or "injection valve") and ("natural gas" or "methane" or "gaseous fuel") and not ("fuel cell" or
"turbine"). This chart includes issued or granted patents from: Australia, Brazil, Canada, China,
European Patent Office Grants, France, Germany, India, Italy, Japan, Poland, Russia, Spain, UK,
USA, USSR, and pending published patent applications from: the European Patent Office, USA,
and the World Intellectual Property Office.
as of January 22, 2013
7
Converting R&D to ROI
Product Commercialization Roadmap
 Proprietary technology enables latest diesel and gasoline
engines to operate on natural gas (or other gaseous fuels)
 Compatible with current and future engine technology; preserves
and improves performance, efficiency, emissions
earlier
2011
2012
2013
2014
2015
Westport 2.4L
Industrial Engine
Volvo V70
Ford F-250/350
Westport WiNG
Ford F-450/550
Westport WiNG
Volvo 13L
Westport HPDI
Cummins Westport
ISB6.7 G
Westport JumpStart
Westport
LNG Tank System
Cummins Westport
5.9L & 8.3L
Cummins Westport
8.9L ISL G
Cummins Westport
ISX12 G
Westport HPDI 15L
Weichai Westport
WP12HPDI
Weichai Westport
6.8–11.6L
Westport Product
colour legend
automotive
urban
trucking
off-road
fueling
8
URBAN COMMERCIAL FLEET
APPLICATIONS IN NORTH AMERICA
9
Historical Success:
Urban Return-to-Base Fleets
San Pedro Bay Ports
Los Angeles
Las Vegas
Ontario
10
Cummins Westport Joint Venture
 50:50 JV established in 2001,
revised 2004 and 2012 (ten year deal)
 Key recent growth driver:
 28% revenue CAGR from CY 2006–2012
 refuse trucks in North America – approaching 50%
natural gas market penetration
 medium truck applications
Products
ISL G
ISX12 G
ISB6.7 G
8.9L
SEGR
250–320hp
660–1,100 lb-ft
11.9L
SEGR
320–400hp
1,150–1,450 lb-ft
6.7L
SEGR
available now
2013 launch
2015 launch
11
Addressable Market:
Urban Commercial Fleets in North America
annual
market
turnover
CWI Engines in North America by Segment
(cumulative)
30,000
Truck
25,000
Refuse
Coach/Shuttle/Specialty
20,000
School Bus
Transit
current
CWI
engine
future
CWI
engine
Transit Bus
5,000 –
6,0001
ISL G
n/a
Coach,
Shuttle,
Speciality
2,000 –
4,0002
ISL G
ISB6.7 G
School Bus
Type C
20,000 –
30,0003
n/a
ISB6.7 G
School Bus
Type D
3,000 –
6,0003
ISL G
n/a
Refuse
Truck
5,000 –
7,0004
ISL G
ISX12 G
Class 6 & 7
71,000 –
97,0005
ISL G
ISB6.7 G
Class 8
110,000 –
199,0006
ISL G
ISX12 G
(2015)
(2015)
15,000
10,000
5,000
0
1. New Flyer Annual Information Form March 2012
2. CWI analysis
3. School Bus Fleet magazine annual market survey
(2013)
(2015)
4. CWI analysis
5. ACT Research of all OEMs’ sales in class 6 & 7 from 2009-2011
6. ACT Research of all OEMs’ sales in class 8 from 2009-2011
(2013)
12
Cummins Westport Financial Summary
USD$MM
2007
2008
2009
2010
2011
2012
66.4
$ 92.9
$ 101.5
$ 117.1
$ 163.9
$ 198.0
Cost of revenue
43.2
68.3
69.3
71.8
92.4
136.6
Expenses
13.1
14.8
16.3
18.1
22.1
26.1
Operating income*
$ 10.1
$ 9.8
$ 15.9
$ 27.2
$ 48.4
$ 35.4
Operating income %
15.2%
10.5%
15.7%
23.2%
30.1%
17.9%**
Capital expenditures
-
0.2
-
0.4
0.3
0.2
Revenue
$
* Excludes foreign exchange effects and bank charges
** The decrease in CWI operating income percentage for the year ended December 31, 2012 was primarily due to warranty adjustments as a result
of fleets using smaller CWI ISL G 8.9L engine in broader applications with higher duty cycles in order to take advantage of strong economic
benefits of driving natural gas trucks. Excluding warranty adjustments and higher extended coverage claim impact, CWI operating income
percentage would have been 26%.
13
INCREASE IN FUELLING INFRASTRUCTURE
TRUCKING & AUTOMOTIVE APPLICATIONS
14
Growth in LNG Fueling Infrastructure
Public – open
Built – not open
2013 – planned
Source: Westport analysis January 2013, Clean Energy Fuels, Encana, Shell, and BLU., FortisBC, Gaz Metro
15
Market Forecast
North American Class 8 Natural Gas Trucks
20%
15%
10%
5%
0%
2012
2013
2014
2015
2016
2017
16
North America:
Natural Gas Offerings for the Trucking Market
regional haul
long haul
heavy haul
Engine size
8–12L
13–15L
15–16L
Annual sales volume*
52,500
117,200
30,000
Current engines
CWI ISL G
Westport 15L
Westport 15L
Development engines
CWI ISX12 G [2013]
Volvo 13L (w/ Westport HPDI) [2014]
Westport 15L
Kenworth
T440
T470
T660
T800B
Freightliner
T800SH
W900S
M2 - 112
SD - 114
Cascadia
Mack
Granite / Pinnacle
legend
9
9
9
12
15
12
9/12
Navistar
TranStar
9
9
Peterbilt
320
382
384
365
367
386
12
CWI ISL G 9L
Volvo
CWI ISX12 G
12
388
VNM
12
VNL
15
Westport 15L
9
9/12
9
9/12 9/12
15
15
15
*Polk database of new truck sales based on 2011 registrations, Westport analysis
9
12
17
Global Truck Market Opportunity
 China first, followed by India and Europe
Natural Gas Stations in China
China LNGV Population
LNG Station
14
10
8
33%
CAGR
2,500
118%
CAGR
2,000
350
1,500
13.3
0.9
2003 2004
2005 2006
2007 2008
2009 2010
2011
1,477
7
1,329
4
537
0
0.7
3
480
3.1
0.3
355
5.8
293
500
2
410
1,000
4
0
15
2,500
6
123
20
1,604
12
(thousands)
CNG Station
3,000
2003 2004
2005 2006
2007 2008
2009 2010
Sources: China Automotive Technology and Research Center, www.chinaev.org, China Road Transport Association, Westport analysis
2011
18
Strong Growth in China

First announced Weichai Westport JV in 2008; formal JV commenced July 2010

Light-duty component business has >60% share in China*

Existing NG engine business demonstrating strong growth in China

Current priorities: launch Westport HPDI technology for Asian market in 2013
with broad LNG infrastructure

Westport revenue model


Hong Kong
Peterson (CNG)
Equipment
35%
25%
40%
Sale of components to JV and to vehicle OEMs
Participate in the JV’s profitability
Weichai Westport Financial Summary
USD$MM
2008
2010
2011
2012
9.9
$ 19.0
$ 44.8
$ 109.8
$ 272.1
Cost of revenue
8.1
15.7
35.9
90.1
234.3
Expenses
1.6
2.5
6.4
14.1
28.1
5.6
$ 8.2
5.1%
3.0%
1.9
$2.9
8,451
22,025
Revenue
Net income
$
2009
$
0.1
$
0.8
Net income %
1.3%
4.2%
WPT 35% interest*
-
-
Engines sold
720
1,696
$
2.4
$
5.4%
$
0.6
3,602
$
* Westport began reporting its income from WWI in July 2010
*Westport analysis
19
Fuel Storage Applications:
The New Westport™ LNG Tank System
hydraulic
power
module
 Proprietary Westport technology,
optimized for spark-ignited
engines, such as CWI
 The 120 or 150 gallon single-tank
systems can run for ~350 to 450 miles,
respectively, on cold (unsaturated)
LNG fuel – ranges double for
dual-tank
LNG tank
and pump module
 A single 150 gallon Westport LNG Tank System takes the place
of 3 standard CNG tanks, lowering fuel storage costs, speeding
up refueling, and reducing overall vehicle weight by 600 lbs
 Fuel-flexibility with either warm (saturated) or cold
(unsaturated) LNG – increasing vehicle range by up to 10%
when using cold LNG
 westport.com/is/core-technologies/westport-lng-tank-system
driver
display
20
Global Automotive Market
 Approximately 14.9M1 natural gas passenger car & light commercial vehicles on the road
 Approximately 79.5M2 passenger car & light commercial sales annually for all fuel types
 Approximately 1.5M3 compressed natural gas vehicle sales annually including aftermarket
Canada & USA4
Western Europe4
Eastern Europe4
Greater China4
Light Vehicles
Produced
12.6M
Light Vehicles
Produced
12.8M
Light Vehicles
Produced
6.3M
Light Vehicles
Produced
18.7M
Light Vehicles
Sold
16.2M
Light Vehicles
Sold
13.2M
Light Vehicles
Sold
5.1M
Light Vehicles
Sold
19.2M
Latin America4
India4
Australia & NZ4
Light Vehicles
Produced
6.8M
Light Vehicles
Produced
3.8M
Light Vehicles
Produced
0.2M
Light Vehicles
Sold
6.8M
Light Vehicles
Sold
3.3M
Light Vehicles
Sold
1.1M
1.NGVA Europe (2012)
2.IHS (2012)
3.NGV Global (2011)
4.IHS (2012)
‘Light vehicle’ refers to passenger cars, light passenger trucks & vans,
minibuses, and light commercial vehicles usually less than 3.5 tons
and not more than 7 tons
21
NGV Components & Complete Solutions
off-engine
components
on-engine
components
complete industrial engines
complete systems designed to specific OEM platforms
22
OFF-ROAD APPLICATIONS
23
Significant Off Road Opportunities
target vehicles
MINING
(RESOURCE EXTRACTION)
opportunity
mine haul
trucks
drill rigs and
frac pumps
RAIL
diesel
mainline
freight
locomotives
diesel
passenger
locomotives
MARINE
ferries
tugboats
PSVs
work and
crew boats
1.
2.
3.
4.
2bn gal of diesel consumed annually by
the top 10 mining companies alone
operating around the world1
Rail industry consumes 9bn gal of
diesel fuel annually, half of this in North
America2
Fuel represents approximately 24% of
US railroad operating costs3
OEM partners
worldwide units
19,406 engine units
(>127 ton)4
13,890 engine units
(drill rigs & frac
pumps)5
50,594 engine units
(mainline
locomotives)6
Marine industry consumes 13bn gal of
diesel fuel annually2
Emissions reduction in sensitive coastal
and inland waterways are a priority
Some examples of LNG ferries and
platform support vessels (PSV) in
Scandinavia, but no widespread
adoption yet
Morgan Stanley/Parker Bay, Westport analysis
UN Energy Statistics Database 2008
Burlington Northern 2008 Annual Report
Parker Bay Mobile Mining Equipment Database
2012, Westport Analysis
5. Baker Hughes Rotary Rig Count Report, Westport
analysis
6. Diesel Locomotives – Global Market Trends 2011
25,000 engine units
(small vessels)7
by SCI Verkehr GmbH, Westport analysis
7. Diesel and Gas Turbine Magazine 2011 Marine
Propulsion Order Survey, Westport analysis
24
North America:
Potential Off-Road Business Models
Fuel Delivery
proprietary cryogenic
components deliver
high pressure fuel
Fuel Storage
LNG fuel storage
solutions
Engines
Apply Westport HPDI
technology
25
INVESTMENT OVERVIEW
26
Business Unit Realignment
Previous Structure
Light Duty
 Westport (Sweden) - Volvo V70 bi-fuel system
 OMVL and Emer (Italy)
 aftermarket conversion kits, direct to OEM systems
 Wesport (Australia)
 Westport™ WiNG Power System for Ford F-250/350/450/550
 Westport™ 2.4L and Westport™ 3.8L Industrial engines
 Mobile and stationary industrial applications incl. forklifts
Heavy Duty
Realignment
Applied Technologies
 OMVL and Emer (Italy)
 aftermarket conversion kits, direct to OEM systems
 Westport (Australia)
On-Road Systems
 Westport (Sweden) - Volvo V70 bi-fuel system
 Westport™ WiNG Power System for Ford F-250/350/450/550
 Westport™ 2.4L and Westport™ 3.8L Industrial engines
 Mobile and stationary industrial applications incl. forklifts
 Westport™ 15L system with Westport™ HPDI technology
 Westport™ 15L system with Westport™ HPDI technology
 Volvo 13L system with Westport™ HPDI technology
 Volvo 13L system with Westport™ HPDI technology
 Westport™ LNG Tank System (North America)
 Weichai Westport HPDI 12L system
 JumpStart mobile refuelling solutions
 Westport™ LNG Tank System (North America)
 Products for On-Road Systems after development
 JumpStart mobile refuelling solutions
Corporate including High-Horsepower
 CAT development program
 SDTC / EMD development program
 Tata Motors development program
New Markets and Off-Road Systems
 Weichai Westport HPDI 12L system
 Products for Off-Road Systems after development
Corporate and Technology Investments
Joint Ventures
 GM, CAT, Tata, and Volvo development programs
 SDTC / EMD development program
 2 new OEM development programs
 Cummins Westport and Weichai Westport
Joint Ventures
 GM development programs
 Cummins Westport and Weichai Westport
27
Applied Technologies
3 months
ended Dec. 31
($ in millions)
Revenue
Gross margin
2012
2011
$ 19.8 $ 19.5
5.3
3.7
26.8%
19.0%
Operating expenses
3.8
4.1
Segment operating
income (loss)
1.4
(0.4)
Gross margin percentage
12 months
ended Dec. 31
change
2%
43%
2012
2011
$ 91.7 $ 62.1
change
48%
25.3
13.0
27.6%
20.9%
(7%)
14.4
11.6
24%
450%
10.8
1.4
671%
-
95%
-
28
On-Road Systems
3 months
ended Dec. 31
($ in millions)
Revenue
Gross margin
Gross margin percentage
Operating expenses
Segment operating
income (loss)
2012
2011
$ 12.4 $ 13.6
0.4
12 months
ended Dec. 31
change
(9%)
0.8 (50%)
2012
2011
$ 40.7 $ 24.5
4.6
change
66%
(0.5) 1,020%
11.3%
(2.0%)
18%
47.9
35.1
36%
22%
(43.3)
(35.6)
22%
3.2%
5.9%
-
14.9
12.6
(14.5)
(11.9)
-
29
New Markets and Off-Road Systems
3 months
ended Dec. 31
($ in millions)
2012
12 months
ended Dec. 31
2011
change
2012
2011
change
Revenue
-
-
-
-
-
-
Gross margin
-
-
-
-
-
-
Gross margin percentage
-
-
-
-
-
-
Operating expenses
Segment operating
income (loss)
$
3.6 $
(3.6)
1.3
177%
$ 12.3 $
(1.3)
177%
(12.3)
3.1
297%
(3.1)
297%
30
Corporate and Technology Investments
3 months
ended Dec. 31
($ in millions)
Service revenue
Operating expenses
Segment operating
income (loss)
2012
$
7.8 $
2011
12 months
ended Dec. 31
change
9.8 (20%)
2012
2011
$ 23.2 $ 14.3
change
62%
27.0
13.5
100%
73.4
43.0
71%
(19.2)
(3.6)
433%
(50.2)
(28.8)
74%
31
Overcoming Challenges
Perception
Actual
Emerging
competition
Global patent portfolio protects our technology leadership position and OEM relationships
Dependent upon
OEM partners
OEM-centric business model allows Westport to grow quickly and minimize capital investments
Profitability is
unclear
Westport is focused on long-term sustainable profits—establishing technology & market leadership
Westport is an essential partner to help OEMs improve their competitive position, increase market
share, and get to market faster with natural gas engines
Product launches will generate new investment returns while increasing economies of scale will
drive cost reductions and enhance operational efficiencies
Cummins Westport and Weichai Westport have proven our profitable business model
High average
selling price (ASP)
Westport 15L HPDI system ASP has decreased by 11% year over year (2012 vs. 2011)
Limited fueling
infrastructure
Clean Energy Fuels, Shell, ENN, Encana, Chesapeake, ConocoPhillips, and others have committed
to build the natural gas infrastructure in N.A., China and Europe
Automotive
market is
unattractive
>90% of the vehicles sold globally are light-duty1 and >64% of transportation fuel is consumed by
light-duty vehicles in the U.S.2
Westport WiNG Power System is priced at an industry-leading $9,500
Westport has relationships with 8 of the 10 largest automotive OEMs in the world
Westport Applied Technologies business unit gross margin for the year ended December 31, 2012
was 27.6%
Combustion technology development programs with GM highlight strong technology and competitive
advantage
1.The Gas Vehicles Report, September 2012
2.NPC Future Transportation Fuels Study, August 2012
32
Pure-play global leader for
natural gas as a transportation fuel
Strong
First-Mover
Advantage
Valuable
Strategic &
Business
Alliances
Capital
Efficient &
Scalable
Business
Model
Talented &
Experienced
Management
Team
www.westport.com
33