Westport Fuel Systems Inc. (NASDAQ:WPRT) Q3 2023 Earnings Call Transcript

Bill Larkin: I think there is a couple of market drivers. When we have talked about the economics, but also the other side of the equation is regulation. And trying to get to kind of a net zero carbon, we are seeing broader use of biogas and in addition to just LNG. And I think that will drive a lot of adoption. We are – it’s getting more and more broader market share adoption of HPDI and getting the truck to more market in Europe. So, on having Volvo as a partner, leveraging their marketing and sales machine will help drive that, but also regulation is our friend as well in today’s environment in driving that adoption. And from our side, from a cost perspective, it’s in our best interest to continue to pull costs out of the system to make the overall upfront investments more attractive for these owners and operators. So, it’s going to be really from a couple of different angles that will have a really a positive benefit on HPDI adoption.

Rob Brown: Okay. Great. Thank you. And then just back to the Volvo kind of JV closing and timing. I just want to clarify that, as that comes through, you get the cash from them and then additional cash through earn-out activity? And are there cash contributions that you need to make ultimately to that JV, or will this be kind of a net cash positive to Westport?

Bill Larkin: So, you are right. So, we will get the upfront $28 million upon closing and when we launched JV. And then the earn-out of $45 million will be based on achieving certain milestones. And we are actually going through that process right now and standing with JV. We are working with our partner on the business plan and doing a really detailed and roll up budgets for ‘24 and beyond. And that business plan will determine how much cash will be needed in the JV. And the partners will contribute their portion on a pro rata basis. And so we are going through that process right now. So, I would expect there will be some level of cash contribution both from – both us and Volvo to make sure the JV is fully funded.

Tony Guglielmin: Yes. Rob, it’s Tony Yes, I will just pile on to say, absolutely. I appreciate a bit of patience. Certainly, we talked about getting through the signing definitive agreements closing. And Bill, spot on, one of the mutual deliverables is a detailed business plan, which we have presented a first graph. So, we will have more – I think well, it’s safe to say that we will have a bit more color at year-end and going into early next year on the business plan, maybe a bit more color on the burn. But yes, there will be some mutual investment as we stand this up and get it up and running. But it is expected, we will – based on the business plan, it won’t be a protracted cash investment in terms of the timing, we expect this thing to quickly move to cash flow breakeven, but we will have more color on that in the New Year.

Rob Brown: Okay. Thank you. I will turn it over.

Operator: Thank you. The last question comes from Bill Peterson from JPMorgan. Please go ahead. Your line is open.

Bill Peterson: Yes. Hi. Good morning and thanks for taking my questions. You discussed the cash, I guess, exiting the year around $50 million. I guess within that, how should we think about the drivers, especially including working capital here into the fourth quarter? And I guess you mentioned some of the cash things in the prior question, how should we think about working capital or use of cash at least at the start of the year before the JV is consummated?