Westport Fuel Systems Inc. (WPRT) Earnings Call Transcript & Summary

Welcome, everyone, and thank you for joining us today for the alphaDIRECT Virtual Conference series. As part of our ongoing alphaDIRECT Virtual Conference series, we invite leading emerging growth companies and investors to connect in our open forum. My name is Shawn Severson, founding partner of alphaDIRECT. And presenting today is David Johnson, CEO of Westport Fuel Systems; and Chief Financial Officer, Rich Orazietti. Mr. Johnson will present today with Westport's strategy of looking past COVID-19. As a reminder, this presentation is also being recorded and will be available for replay at www.alphadirectadvisors.com. [Operator Instructions] We would also encourage you to visit www.alphadirectadvisors.com, where you can find additional investor content on Westport Fuel Systems where you review. If you'd like to download a copy of today's presentation, please visit the Event Resources tab on the left side of the screen. There's a forward-looking statement, reminders, you are reminded that certain statements made in this conference call and the company's responses to various questions may constitute forward-looking statements within the meaning of the U.S. and applicable Canadian securities law, and such forward-looking statements are made based on current expectations and involve certain risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements, so you are cautioned not to place undue reliance on these statements. Information contained in this conference call is subject to and qualified in its entirety information contained in the company's public filings. I'll now turn the call over to David. David?

Good afternoon, everyone, and thank you for joining us today. I sincerely hope that all of you, your families and your networks are healthy and well and that you stay healthy and well. The health and well-being of our employees continues to be our utmost priority. Our teams have shown tremendous resilience during this difficult time, and we're encouraged by governmental action to act decisively to mitigate the impact of the pandemic. COVID-19 is clearly an unprecedented crisis. As a global organization with complex operations, supply chains and partner networks, the pandemic has disrupted our 2020 business plan and [indiscernible] uncertainty for the entire automotive sector. Consider that in March, car registrations in Italy were down 85%. And at one point, approximately 90% of global automakers were shut down. The future is rarely clear or easy to predict, but now it's especially difficult. We are working hard to mitigate any and all potential risks to position ourselves to not only weather this storm but to emerge strongly post COVID-19. We're pleased to update you today regarding the state of our global operations, our view of the market outlook post COVID and our efforts to improve liquidity, reduce expenses and to gain access to government financial support around the world, so that we can emerge strongly from this crisis and realize our goal to become a sustainably profitable company. Westport Fuel Systems has global operations. Let's start with China. COVID-19 set us back in Q1 of this year, but we're pleased to see that industrial activity in China is now coming back online. Our Weichai Westport JV is up and running, serving our customers in the largest natural gas trucking market in the world. Working with our customers and government regulators, our JV is pushing ahead with the final certification step for HPDI-equipped engines, and we look forward to announcing the completion of that multistep, multiparty activity that will signal the start of production and sales of this critical product. In Italy, our teams in Brescia, Cherasco and Albinea have been managing the impact of COVID-19 since the beginning of the year. In January and February, our Italian team worked diligently to secure our global supply chain, especially supplies from China, and to ensure that we could minimize disruptions to customers, leading up to the Italian market shut down. We work to increase inventories to ensure adequate stocks should Chinese supplies be unavailable for any extent period of time. These efforts had the desired effect of minimizing the negative impact on our customers. As we all know, starting in late February, Italy has been particularly hard hit by COVID-19. Prior to the Italian government shutdown, some of the -- some commercial and industrial operations in mid-March, our team continued to work to limit the impact on customer order flow. Our facility is operated in accordance with orders from local governments regarding nonessential services and to the most stringent measures for health and safety. On March 16, we announced the 10% of production in Brescia. And on March 23, we announced the 10% suspension of production in Cherasco and Albinea. The Italian government's decree, which was set to expire today, was extended this past weekend to May 3. While we wait for the improving health results and the government's next decisions, our teams have been preparing to restart production with counter measures to ensure a safe and efficient return to work for our employees. I look forward to having our Italian operations back online. In the Netherlands, our Prins division has been continuous operating while following the direction of health officials and the Dutch government. Similarly, in Gothenburg, Sweden, our heavy-duty OEM team has been able to continue their work without interruption through the implementation of smart working methods. In Canada, our operations in Vancouver, Calgary and Cambridge have been complying with the orders issued by their provinces. And with smart working, staggered shifts and revised work schedules, we've been able to maintain our development and operations that are critical for our customer program. In India, a countrywide lockdown has been in place for the last 3 weeks. Last night, Prime Minister Modi extended the lockdown until May 3. During this shutdown, time marched on. And on April 1, the new Bharat Stage VI emission standards came into effect. We've been working with our Indian OEM customers to upgrade their natural gas engines to the new standard and have certified a total of 10 truck and bus engines from 5 different OEMs, with another 4 engines in the final stages of certification. In addition, we've entered into the 3-wheeler market, sometimes called the Tuk Tuk market in India, and providing natural gas systems to 4 of the leading 3-wheeler OEM. The 3-wheeler market India was about 800,000 units last year. Our OEM customers have all wanted to add natural gas options to their 3-wheeler product lines, as natural gas fueling infrastructure is expanding in India, and the Bharat Stage VI emission standards make diesel and gasoline engines for those vehicles more complex and more expensive. We certified 6 engines in this segment and have another 2 in the final stages, with production commencing after shutdown. Like all other organizations, we've been working remotely, staying connected to planning for a safe and orderly return to work as permitted. We have been closely tracking and also providing real-time input to shape government programs to mitigate the economic impact of COVID-19. As a Canadian-headquartered, clean tech company, we've been engaged with our federal government to understand potential supports related to wage subsidies, taxation, business and other potential sources of funding. Our site leaders around the world have responded to the crisis by offering our facilities, talent and expertise to combat COVID-19. And one of our engineers have developed a ventilator prototype that's currently being tested in the U.K. I'm really proud of our team and how they've responded as unprecedented challenge. Despite the operational challenges during this period, I'm pleased that our commercial activities have continued quite successfully. We've secured new build wins in all our businesses, that is light-duty, heavy duty, delayed OEM, aftermarket and also in our electronics business. In total, we tallied so far this year nearly $100 million in new businesses. These multiyear contract wins demonstrate that Westport Fuel Systems will continue to be a long-term growth story despite the COVID-related challenge we face now and into the second half of this year. I'd also like to point out that might have been missed about the markets that we serve. Refueling infrastructure continues to grow. LNG stations in Europe grew 50% since 2018. Shell has committed to nearly 50 new LNG stations in Germany and to supplying them with carbon-neutral LNG. CNG stations in Europe are also climbing, approaching 4,000. In India, the government continues to press forward their CNG station buildout with a goal of 10,000 stations by 2030. And in China, already the national leader for CNG and LNG infrastructure, continues to build in line with their 13th 5-year plan, which calls for the doubling of natural gas vehicles and have 12,000 refueling stations nationwide. Meanwhile, vehicle sales in Europe continue to grow. LNG truck sales in Europe are growing. For example, in Italy, up 50% last year and up 10x since 2016. CNG passenger vehicle registrations in Italy more than doubled in the first 2 months of 2020 versus 2019, from a 1.1% market share to 2.4% market share. In Germany, registration of CNG-fueled vehicles grew 260% in January 2020 versus the prior year, joining hybrids and plug-in electric vehicles to take share from gasoline and diesel-fueled vehicles. Given that the market is, for the most part, globally paused due to COVID-19, I find it useful to think about what might be the same and what might be different after COVID-19, including some of the new opportunities you might see arise as the world pivots to resin to new circumstances. So what should be the same? Transportation of people and transportation of goods will be required. Use of and demand for vehicles for transportation will continue to follow long-term mega trends that are tied to population growth and economic development. Stringent regulations requiring reduced CO2 emissions will remain, importantly, those for truck OEMs in Europe, a 15% reduction in CO2 by 2025 and a 30% reduction by 2030 compared to a baseline that's being established right now, that is until the end of June 2020. Decision-makers will continue to make choices from what is available on the marketplace than what is most economic for themselves and their businesses. So what might be different? Well, it's hard to imagine that we'll be immediately picking up right where we left off. I expect the second half of this year to be challenging. Consumer and business confidence will take some time to be restored. In this context, individuals and businesses will be under pressure to make tougher decisions, economically speaking. Decision-makers may shift to more practical minded path, technologies that are available today and that are economic for them and their customers. In the past month, global pollution indices have seen measurable impacts from the COVID shutdown, which may inspire more drastic measures to maintain cleaner urban air quality using proven market rate technologies like ours. These conditions look favorable for our products because our products are cost effective. Consumers buy our aftermarket kits in order to use less expensive gaseous fuels. Consumers choose cars fueled by natural gas and LPG to save money. Fleets choose HPDI-equipped trucks to lower their total operating costs. Bottom line in challenging economic times, I expect our products will gain market share. At the end of 2019, there are more than 300,000 natural gas-fueled vehicles in use in China, and 1/3 of those vehicles, 100,000 vehicles use LNG. Compare that to 11,000 LNG trucks used in Europe today. It is clear, ours is a growth story. And with that growth, we'll be able to reduce our per unit cost and improve our margins. The Chinese market offers the potential rapid increase in our sales volume, and the 2025 and 2030 CO2 regulations in Europe will add to that equation in a very useful way. So with that, I'd like to turn the call over to Richard to talk about our financial update and commentary specific to COVID-19. Richard?

Thank you, David. As David mentioned from the outset, the COVID-19 virus has had a significant impact on our operations and has stressed our liquidity to fund our operations and meet our obligations like many other businesses in the automotive sector and beyond. I would like to share with you some of the efforts to improve liquidity the company has taken as that has been a concern for many of our investors and stakeholders. Just to address a bit of our thinking and process, the COVID-19 virus impacted our business early in the outbreak due to location of our Italian businesses, and we knew we had to mobilize quickly on a local and corporate level to prepare, to resolve the immediate crisis and ensure the organization was resilient as we move through it and emerge on the other side. We've undertaken a structured and coordinated approach, prepared numerous forecasts and scenarios and worked alongside our stakeholders. We are taking measures to gather and protect as much liquidity to weather the storm to ensure we have sufficient working capital to continue operating, meet our debt service payments and emerge strongly after the crisis into the new normal. Turning to financing. We have been working with our existing and new lenders to support our short-term liquidity needs. The first step was to secure agreement from Export Development Canada, otherwise known as EDC, to defer payments on our existing term loan to 2021. The remaining principal payments shall be paid to EDC in 7 consecutive quarterly installments of $2 million, commencing March 2021. We are very appreciative of the EDC's ongoing commitment to Canadian clean tech exporters, especially at this time of need. We have also drawn on our existing credit facility to enable payment of our annual Cartesian royalty earlier this month. Further, we will be seeking government-backed financing in Canada and Italy to support funding of our operations and shore up the balance sheet. Both the governments of Canada and Italy have announced bold plans to support businesses with lending that we plan to tap into. In Canada, this has taken place through the EDC and Canadian Financial Institutions, while in Italy, the program will be operated through the Italian banks. Now moving on to our austerity measures. As part of the plan to enhance our liquidity, we have taken a series of measures to reduce spend or defer expenditures with the objectives of freeing up cash flow, but also protecting employment of highly skilled and critical employees. Firstly, we defined and executed a temporary salary reduction and operating plans for all our sites, which included a 20% reduction for all Canadian employees to help support fund our labor costs during this downturn. We will also be seeking government-funded wage subsidy programs in all of our operating locations where available. In Italy, we have already implemented the long-standing wage subsidy program called cassa integrazione, or temporary layoff of employees in those Italian operations. In Canada, we will be accessing the Canada emergency wage subsidy, which provides a 75% wage subsidy of an employee's remuneration for qualifying businesses up to a threshold of $847 per week per employee. Further, to demonstrate our commitment to the company and overcoming this crisis, we deferred annual bonus payments for the prior year at corporate and members of the executive team, and Board have voluntary deferred compensation until we restart our operations and liquidity stabilizes. Besides these labor measures, we also reduced and deferred discretionary and capital expenditures, which has freed up near-term pressure on cash flow until the businesses restart. Based on our current forecast, we believe we will have sufficient liquidity to weather the crisis. However, depending on the length of COVID-19's impact on the restart of the economy and corresponding recovery, there is risk to our plans, like most businesses. With that, I turn it back to you, David.

Yes. Thank you, Richard. The work done by the team has been truly exceptional, and I'm very proud of them. And I also want to just comment on the government's role here around the world is really important, and from our perspective, they're doing a very good job. So with that, let me just remind you of our strategic priorities. Firstly, the successful commercial launch of HPDI in China. China has returned to work. While the delay in the launch of the 12-liter certification pushes out the production and sales rhythm that follows, the Chinese market offers significant potential to grow HPDI environment and to achieve the needed economies of scale. Secondly, cost reduction. New product launches, market share growth, volume growth and cost reduction are all critical and work together to improve our profitability as we grow this business. Third, new light-duty and heavy-duty OEM businesses in key market geographies. We believe with cost competitive commercially developed products like ours can make -- be a critical component of OEM strategy to satisfy their customers, to make money and to meet stringent emissions regulations, all at once. And lastly, profitable growth of our light-duty business through both our aftermarket and OEM channels. The economic drivers are a critical part of the decision to purchase or convert a passenger vehicle. People need affordable clean transportation solution. With the need to mitigate climate change and urban air quality issues, I expect continued demand for our products even in the down economy. Like you, I've been closely following the commentary about how the global economy might recover. Perhaps a new age of pragmatism will down following COVID-19. The need to deploy affordable, low carbon clean transportation all markets to address climate change to ensure healthy, breathable air in our cities is as urgent as ever. Westport Fuel Systems is market-ready, tested. Our gaseous fuel products have achieved scale in many market segments already. With the potential of renewable gas to offer a net zero-carbon solution, we are ready to be part of the economic recovery. We're happy to take your questions. But first, I want to remind you of our upcoming Annual and Special General Meeting. That's going to be held on April 29 at 10 am Pacific time. And we've turned it into a virtual meeting, so everybody could join like we're doing today. And with that, I'll turn the call back to Shawn Severson, who's been organizing the question queue. Shawn?

Great. Thanks, David. Before we organizing the questions, let me start with one. As you reramp per se, in Italy specifically, are there any parts of supply chain that you think could be a bottleneck related to other shutdowns or suppliers or other parts of your own supply chain that could be problematic in getting things up and running?

Yes. Thanks for the question, Shawn. I would say without going into the details, which would be gruesome, it is a lot of work, and there will be challenges, and it will cause us to have trouble to restart. It won't be easy. Having said that, the large majority of the supply base that we use is in Italy. But the problem, I would say, more than anything else is the supply chain, where -- there are suppliers, raw materials and so forth and so on. But we do have a very good team, and we've been in close contact with their colleagues and suppliers and their suppliers. And so we will work very hard to mitigate those issues. And basically, from my perspective, everybody wants to get back to work. So there's going to be a worldwide effort to do this, and we're just one part of that equation.

Great, Okay. Let's take some questions from the field. First one is, about HPDI in China, by what date do you expect the process to be completed?

So the process in China, as may be described in other forums, but basically, we have 3 different tests that we have to complete. And 2 of the 3 of those are complete, and the third one is in completion, so it's in process. And I expect in very short order, we'll be able to make the release announcing that all the process and all the stance and all the paperwork from the government are complete. And yes, that's right around the corner, and we look forward to it

The next question is on Cartesian. Did you say secured extension by 2020 royalty payment or seeking?

So what we did, I think Richard commented on it, was we made the payment that was due within the month of April. So our payments on our royalty stream are annual payment. And that payment in April is always a challenge for us to make sure that we're able to make, and we did bake that in. Is that your question?

Yes. Thank you. Next question come from the field is one we get quite often is when you break out sales of HPDI 2. So I guess maybe another way of asking that is, what are the things that have to happen at the company until we can get more detail on that -- on the breakout.

So one of the things that's been challenging for us is that we have just 1 customer in production in the world of HPDI right now. And so basically breaking out HPDI would be divulging that specific customer's information, which they do not want us to do. So that has been -- tied our hands for the time being. But I would expect as we have the ramp of HPDI with Weichai in China, that within this year, we'll be able to provide more transparency on that business as we put the 2 customers together and present that data.

Okay. Next question we get a lot as well. Hydrogen fuel cells, how does that fit into the business, particularly in the long-haul trucking side? I think, is where the question is going. But what is the -- how would you address that -- the impact that, that would have on the business?

From my perspective, hydrogen is just another "gaseous fuel." So if you think about the hydrogen fuel cell stack as a kind of engine of the vehicle, when it's run by a fuel cell, it still needs a tank and regulators and lines and controls to get that fuel from the tank to the fuel cell stack. And so that is part of our business. We're in the hydrogen business. We have a line of products called GFI, that are designed and developed for hydrogen applications. And we work with customers, both on passenger vehicles, commercial vehicles and material handling applications where there's already a pretty sizable install base of fuel cell-driven forklifts.

What, if any, impact to low oil prices having on the economic competitiveness of natural gas-based engines?

Yes. Any time oil prices go down, basically, natural gas prices are already quite low. When oil prices go down, that does create some headwind for us. But what I would tell you is that the price differential, the decrease of the oil, the crude price doesn't move the needle so much in markets like Europe because the price difference between natural gas and diesel, for example, is heavily based on the taxation of diesel. So -- and then there are other things that are in support of our business. So for example, in Germany, road [Audio Gap] [ Technical Difficulty ]

Hello?

I'm here, Shawn. I think we just lost David here.

Did we lose David there? We'll give him a moment to dial back in. Sorry, everybody in the audience. David -- we lost David on the connection, so he's dialing back in. We do have a question actually that we can address for Richard here while we're waiting. It's another Cartesian question. The question is, have you asked Cartesian to restructure their stake to align with shareholders, i.e., save cash?

We have a good working relationship with Cartesian and their managing partner, Peter Yu, who sits on our Board. We have addressed the topic, and it's something that we're looking at addressing with regards to our long-term financing of the company. So it's one of those things that we're evaluating.

I think, Dave, did you make it back in?

Yes, I'm back. Mobile telephony.

All right.

Smart working.

Yes. The next question is, can you provide more details on government wage subsidy programs, and how long it will take to see this and how they'd be accounted for the business?

I think we'll hand to Richard, he knows cassa integrazione well.

Yes. No, I think most -- the Italian program is in place right now. In terms of the accounting of all these wage subsidy programs, I mean they're just going to be within accrued within the numbers there, so you basically would see effectively a subsidy or lower numbers. The -- within the Canadian process, that's still being worked through, and the wage subsidy I spoke about today has just passed this last weekend and will be operationalized very soon over this next week or so.

Our next question is, have you outlined a path for restarting the business? And how much can you derisk the process as we wait for an economic restart?

So I would say far more than outlined. So at our sites in Italy, for example, the leadership of those operations have detailed an incredibly tactical plan with respect to every employee, every machine, every customer. So we have not wasted the time where we've been smart working from home without the plant operating, but actually have been doing the planning and getting ready for the days ahead when we can restart. Additionally, we have orders. We have customers contacting us and placing orders, and so we have product to build. So I expect a rather robust restart now with the only risk being the risk of the unknown, and that would be on the order of -- with respect to the supply chain, if there is something somewhere in the supply chain that disrupts us. But we deal with supply chain disruptions normally, and that's part of our business, and we have a team to work on that, too. So frankly, I feel our plans are quite well developed, and I'm looking forward to being fully back online and serving and supporting our customers.

Thanks, David. Next question is regarding HPDI in North America. Do you have any plans to launch? And if so, when? And what has prevented you from doing this earlier?

So I think this is not so much on us, as it is on our customers. So as you can imagine, customers, being the OEMs that make the engines of vehicles for heavy-duty trucking, for example, around the world look for market conditions where they could be confident in launching. And frankly, as a general scheme of things, the price of fuel in North America has not been so high. We generally have low prices at the pump compared to prices around the world. And the differential between diesel fuel and natural gas in North America has not been as strong and persistent and enduring, if you will, as it has been in other markets around the world. So you know in a place like China, for example, the government has taken action to create a 5-year plan that says, we're going to double the number of natural gas vehicles, and we're going to incentivize the build-out of the infrastructure. And by a law, they create a market. And meanwhile in Europe, they have regulations that drive in the same way with the 2025 and 2030, and they have a high price of fuel and a big price differential at the pump between natural gas and diesel. And we don't quite have as compelling a marketplace in North America. Having said that, there is still an economic benefit in North America. And I think as the world sees the success of our lead customer in Europe and sees the success of the Chinese with their products, first spark ignited now HPDI in the year will -- the North American companies will pay more attention. And I think some of those North American companies that serve the Class 8 market here are the same companies that are doing that in Europe and China. So they are global companies and bringing it to the U.S. will not be difficult when they decide to do so.

The next question is regarding subsidies, again. It says they're asking, you gave the details of the Canadian subsidy, but not in Italy, specifically, can you provide more color on Italy?

Yes. In Italy, the rule of thumb, it was about a 75% subsidy of 80% effectively. You do the math roughly 56% of the salaries. They are actually increasing that amount, and I believe it's up to 90% now that they're going to do during this period over the next 3 months. And that's something we can provide.

Great. Thanks Richard. I'm going to combine a bunch of questions, as you can imagine, on the Cummins Westport JV and any updates on the status there. I know it's not a topic today. But is there any kind of -- anything you can give as far as an update there, David?

Yes. As you know, we face in the end of 2021 the potential termination of the JV according to our current agreement. We have ongoing discussions with our partner, as we've had for the entire duration of the agreement. But certainly, as we approach the end, those conversations are becoming more, let's say, rich and engaged. And so when I have something to announce, I certainly will bring it to the marketplace. But at this point in time, all I can say is that, yes, those are topics of discussion. And we could see a number of paths and the challenges for the 2 partners to align on what the right path is that is best for both businesses

And next question is a good one, regarding liquidity. The question is when discussing and anticipating having the needed liquidity to get through the crisis. Are you making that statement assuming it lasts for how long? Is it for a few months or half a year? How long does that cover?

We looked at a variety of scenarios. But in terms of kind of my statement here, kind of our base case, which was what I would define a conservative one. We're anticipating that we're going back to work in the second quarter for a May, June time frame. But we've also then downsized our business in terms of the recovery of that. We forecasted a significant decline in the numbers of greater than 30% during the second quarter and then continuing on into the third quarter. So that we had a -- we'll call it, we want to make sure that we had a conservative case that considered the stress of how long it would take Europe to get back to business.

Yes. Just to add to Richard's comments. I think one of the things that I observed is that we can look to China as some kind of example of what kind of duration we might expect. And so I think on that basis, we think that the models we've run give us enough insight to kind of know what things look like and what to expect. So the China example is on the order of 2 to 3 months. Basically, you have a business disruption that was rather significant. And so those are the kinds of things we've modeled. I think the other element of this, which is, let's say, maybe not possible for us to model is what is the duration of government programs. And for what we've seen both in Canada and Italy, what governments are already doing, our expectation is that the support will be there, if we're wrong somehow with our estimate of how long the duration is and how the economy comes back and they do seem very committed to helping our business through this challenging time.

Next question is in Europe. When does spark ignited win? And when does HPDI win relative applications?

In Europe, specifically?

Yes. The question was regarding Europe specifically. I think as there been some announcements of some wins over there, and just kind of maybe compare and contrast.

Yes. I think the important thing here to understand is that the spark-ignited product from Iveco and now joined by Scania a few years ago, this is a mature technology that's been in the marketplace by Iveco since, I think, 2012. So the fleets there have 8 years of experience with it. And what they'll tell you is that it's a good product but it doesn't have all the torque and drivability they're used to. And so they have to be very selective in where they apply those vehicles in their fleet operations because they can't do all the things that they're used to doing. The drivability is not the same. The performance is not the same. And now, contrast that with HPDI, which is new. There's not so many trucks on the road yet. We've had a good year-over-year sales increase. But we're still at the very beginning of getting product out to the marketplace. And people are just starting to get those comparisons. And what we hear back from the marketplace is this truck drives just like my diesel truck. A question that remains out there to be demonstrated by us and our partner is the durability of that product because I think everybody understands in the fleet business until you have the durability demonstrated, it's a big question that hangs over the product and the technology. And our technology is new. It's not the run of the mill spark ignite natural gas engines that have been around for a long time, it's a different kind of technology. It takes some time for people to get used to it, believe it, understand it and work with it and to realize those benefits that are basically 2x the benefit versus diesel engines on cost savings for fuel. So it's a really important benefit for the product.

Thank you, David. We've had a couple of questions to come back in again on the oil price. That's, I think, where we lost you on there. Could you maybe go back again and address low oil prices, especially if it's sustained on the business, what your view is.

Yes. My view is just real clear that basically, this is a headwind. It does not help us. Basically, anytime fuel prices are low, this works against us. Having said that, the reality in the marketplace is there will still be, there is today and will still be a price advantage in the European market and in the Chinese market between natural gas and diesel that is substantial and will drive our business. It just doesn't drive it as much, but it is reduced by some. So instead of being a full 100% benefit, it might be 80% reduced as the oil prices come up. And that's because of the structures that have been put in place by government to support this technology, this cleaner technology for transportation, where basically diesel fuel is taxed quite heavily and natural gas, not so much. Meanwhile, there are other economic benefits associated with natural gas trucking specifically in Europe, whereby you don't have to pay road taxes in Germany, which can be on the order of EUR 15,000 to EUR 20,000 per year per truck. So in total, sure, lower fuel prices, unhelpful. But doesn't completely erode the benefit or even substantially erode the benefit of our technology from an economic standpoint. And frankly, you know...

Okay. David -- sorry, go ahead.

Yes. Go ahead. Sorry. Go ahead.

No, go ahead, finish the thought.

I was just going to say, we have to see -- one of the things that does happen with low fuel prices, it tends to stimulate the economy because people lower their costs. So I think in this time frame that also is good to help us recover out of this hole. So it's kind of a sidebar to the main question about HPDI and trucking. But overall, low oil prices tend to help the economy in the long run.

The next question is kind of an interesting one. With European OEMs actively pursuing international markets with their HPDI trucks, Australia, obviously, China's already ways out -- but are they pushing internationally well? Or is it constrained primarily to Europe at this point that you know of?

Well, what I would say -- I can't talk specifically about any one of our customers, of course. But generically, our customer and the other customers in the marketplace that make heavy duty trucking, the Daimlers, Ivecos, Scanias, MAN, Volvos, all those companies sell their products on a global basis. Even PACCAR that has different brands in North America, Peterbilt and Kenworth and DAF in Europe, they are different brands, but the underlying engines and technologies are the same between Europe. Some small differences for certification purposes, but fundamentally the same hardware. So in terms of do they pursue other markets, the answer is absolutely. And that's why you see in markets around the world, be it in Russia, Argentina, Brazil, you name it. Those brands are the same brands around the world because all the automakers, all the truck makers are in markets around the world. And now I have to say, with respect to HPDI, this is likely on the agenda of many companies. But step by step, they want to prove it in one market before they go to another market. So it is a learning cycle they go through.

Next question goes back to a financial one. After the changes in debt and overhead, what is the monthly cash burn or cash overhead? I assume that's going to vary by, of course, your revenues and production. But what are you guys looking at in terms of cash burn?

Yes. No, I mean that's confidential information that -- I couldn't provide that. They got to figure it on their own.

Okay. The next question is, any new products in development? And I think we can group this into a couple of different questions. Maybe on what's going on in India and any other regions and new products as well?

I think the most important and the bulk of our work right now is taking our existing market-ready technologies and applying it to new customer applications. At the outset of the meeting, I talked a little bit about what's going on in India. I know that's not so easy for all of us in North America to see. But in India, we've got a significant market turn. Basically, when the Bharat Standard-VI was announced a couple of years ago and product planners at OEMs did the calculations around how to respond to that regulation, they quickly realized that it wasn't going to be with diesel engines and complicated gas-treatment systems. And so as a result of that, we've had a significant body of work over the last few years and continuing now still as we finish up the certification to get our existing technology applied to the Indian products to achieve Bharat VI certification. And so we've got regulators and injectors and tank valves and all the different parts that we sell being integrated into customers' engines and vehicles and then brought to market. So frankly, that's really, I would call it, application work, and that is the bulk of our R&D budget these days. Same true for HPDI.

And going back, maybe to expand on India a little bit more. Again, there are a few questions on this to consolidate them. But obviously, COVID having an impact there as well. But what's the bigger-picture outlook for India over -- through this year and next?

So India for us is a very important market, basically because of the change to Bharat Standard-VI and thinking of the OEMs and fleets and customers that diesel becomes very unaffordable for them as they look for alternatives. And of course, natural gas and the buildup of the infrastructure there is the prime government activity -- government-led activity to incentivize and support the build-out of the infrastructure. So today, there's about 1,500 stations in all of India, and they're expecting to have 10,000 or targeting have 10,000 stations by the end of this decade. So you can see that just from that -- those basic targets and the thinking of the OEMs where the market is headed. And so therefore, it's very important for us to continue to support our customers and deliver for our customers and to bring those products to marketplace in India. The market itself is -- we talked about -- I talked earlier about 800,000 3-wheelers. There's also about 800,000 commercial vehicles in India per year. And of course, there's a large passenger car market. And so these -- this is the right market. We have as a customer, Maruti Suzuki, the largest passenger car maker in the world. We have as a customer, TATA, the largest commercial vehicle maker -- I think I said in the world, in India. So these are really the leading suppliers of vehicles in the nation. And they're all pushing to add and bring their natural gas products to the marketplace and Bharat Standard-VI with our help.

Our next question is that did you say $100 million in new orders so far this year? If so, can you give any color on how that mix of orders breaks down by product and market?

It's a great question and one which I would love to answer in great detail. What we will be doing is as we get permission from our customers to share those details with our investors, we will do so. So I will say in advance warning that we won't get everyone categorically to approve us to make the announcement. So -- but where we can, we will. And those will be future announcements that provide those details. And unfortunately, the only thing I can do today is provide that aggregate number for you.

Next question is relative to global market demands, what is the future of the North American market, especially the U.S. market look like for demand for WFS products? And I think they mean outside of the Cummins Westport agreement.

Yes. So right now, my assessment of the North American market is that it still feels a little weak to me. And basically, it's driven by low oil prices, for example, and not a big price differential at the pump. And as a general premise, I've often looked at these studies that look at price of fuel at the pump compared to disposable income of the population. We tend to be relatively wealthy, and price of the pump tends to be relatively low. So people keep buying big SUVs on gasoline. I don't know why. It's terrible. They shouldn't do it, but that's what people do because people are mostly economic beings. I think there is opportunity in the future, depending on the political shifts that we may take a different posture and get in line to change the dynamic in the marketplace that would make a positive market for our products. Right now, it's a bit limited, unfortunately.

And I know this is a tough one to answer. But again, we've got a number of questions coming in regarding HPDI second European partner. Given the virus, do you have any visibility on the launch date? And I think we apply that to kind of general new business developments. And if this is having any material impact -- or on the timing of what you would expect for anything that's a pipeline right now?

Yes. I would say, no. It doesn't have any timing on things in the pipeline because we've been able to keep our engineering team intact and working on the various projects that we have in Vancouver and around the world to support HPDI. With respect to future product launches, we're just coming to the end of this kind of baseline establishment period that ends at the end of the month of June this year, so just around the corner. And I think with that, and as I mentioned in my opening comments, I'm expecting that in a more challenging economy in the second half of this year, people may go back to revisit decisions and say, hey, we've got to cut our capital budgets. We can't afford battery electric trucks. We can't afford all of these things that sounded like a great idea in the past, but were way many years out. Let's do something a bit more practically minded. My neighbor has car, this fleet has this truck, my competitor is doing this activity with Westport Fuel Systems. And our products are ready right now to respond to the challenges of both regulation, environment and economics. And so I'm cautiously optimistic that there could be a turn of the tide post COVID-19 that really accelerates things and get people to recognize that the response to 2025 and 2030 regulations for trucks and even the CO2 regulations for passenger cars can include natural gas and propane and HPDI as an important part of their strategy. And so with a bit of pragmatism, I can see more announcements in the future with some luck. I should also mention -- it's always a good reminder. I should mention, in general, we won't be making these announcements. Our customers are making these announcements. And so when they're making strategic decisions, they're not going to be making their announcements and tipping their hands to their competitors. So that is an unfortunate consequence of being a supplier to the industry and not being able to control the timing of such announcements.

This is kind of an interesting question. I guess, is there any room for buyback in the current economic scenario, financial scenario that you're looking at with the company? Would it even be something to consider?

I think -- I'll handle this one, David. I think in normal circumstances, if the company had -- was more flush with cash and not reliant on wage subsidies and things from the government, it's just as much as we believe that the stock is undervalued right now, it's just not a good use of our cash and our capital that we have available. Right now, it's a question of making sure that we can make it through this period and be able to keep investing in our businesses that are yielding high rates of return as well. But it's a question of survival in terms of liquidity. We need to make sure that we have a business coming out of this crisis as opposed to -- yes, there is an opportunity for sure, financially to buy the stock at under value.

And if I could just add, I understand. I heard from an investor that not always do you see the insider trading announcements that are published on the Canadian exchange. And so individually, we are able to buy when we're not in a blackout period. And I did take advantage of that in some weeks past and you could find that information on SEDAR.

Thank you, David. We have time for one more question. Again, I apologize to all the participants that we couldn't get to you for questions. Hopefully, we'll be able to follow-up with you or Westport management to follow-up as well. But we'll take one last question before turning it back for closing remarks. Last question is what is the -- how does the -- excuse me, may have missed it, but did you disclose how many steps are left in the certification of China, and what exactly is that step?

Yes, glad to answer. So it's real simple. There's a -- the answer is simple, the test is not simple. The test is called a portable emission measurement system test. And what this means is you basically strap on to an actual full vehicle, all developed and on the road an emissions measurement device, which is not so simple to get and is not so cheap to get and easy to calibrate. But when you have this piece of equipment, you can put it on the vehicle and then you measure the vehicle in real driving environments, and there are certain standards that have to be met. So this particular test has to be coordinated between ourselves, our joint venture. Our joint venture customer with the truck maker. We have to have a prototype truck with a prototype license plate. And then we have to have the certifying agencies all together in one place at one time. And this has been, I would say, quite frankly, logistical challenge, if not, nightmare. But we expect to pursue -- push through and finish that in the very near term. That's all that's left. That, and the paperwork.

Right. Thank you, everyone, and thank you for everybody who was able to participate in today's virtual conference. And with that, I'll turn it over to David for conclusion.

Yes. Thank you very much, Shawn. I really enjoyed the opportunity to update you all on what we're doing in this really somewhat crazy time, unprecedented time. I've never seen anything like it in my life. Hope to never see anything like it again. The health consequences, obviously, are just terrible to behold. But I do see some green shoots that we're turning the corner. We see signs that the end of this crisis period is approaching, and we're prepared to exit strongly. I'm really thankful to my team. They've done a great job managing on the going in, the during. And now, on the coming out, I expect they'll do the same. The work of Richard and his team to access the government support and shore up our liquidity and all of the employees of Westport Fuel Systems, who have taken some pain in this crisis in order for the company to persevere and survive for the next day, a stronger and better company in the future. We see the fundamentals in the market is very strong, and we just need to get through this crisis, and then we'll be back to our business of growing and prospering. I thank everybody for their time and interest today, and I greatly appreciate the opportunity.

Great. Thank you, everyone. Bye-bye.