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

Hello, and welcome to the Annual Meeting of Shareholders of Westport Fuel Systems, Inc. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant the Computershare and the corporation that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. During the meeting, we'll have a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. Daniel Hancock, Board Chair of Westport Fuel Systems, Inc. Please go ahead, Mr. Hancock.

Good day, ladies and gentlemen, and welcome to Westport Fuel Systems Annual Meeting of Shareholders. This is Dan Hancock speaking. I'm the Chair of Westport Fuel Systems Board of Directors, and I'm so pleased you have joined us on this webcast for our virtual shareholder meeting today. This virtual meeting is open to the public by webcast. Registered shareholders and duly appointed proxy holders can participate, vote or submit questions during the meeting's live webcast. In order to handle certain voting procedural matters in an efficient manner, we are requesting that all registered shareholders and proxy holders record their votes for the election of our individual directors with our scrutineers in advance. We are recording today's meeting, and a replay will be available for anyone unable to attend the meeting. The replay will be made available under the Investors section of Westport's website. Joining us today are members of the company's senior management team, which we will introduce momentarily. I would like to introduce the senior leaders present with us today, following which we will conduct the formal shareholders' meeting through a business update from our CEO, Dan Sceli and conclude with a question-and-answer session with management. As I mentioned, I'm Dan Hancock, Chair of the Board and I have been a member of the Westport Fuel Systems' Board since 2017. I would now like to present the members of the Westport Fuel Systems' Management on the call here today. And so Dan, let's start with you.

This is Daniel Sceli speaking. I am the Chief Executive Officer and a Director of Westport Fuel Systems.

I'm Bill Larkin, Westport Fuel Systems' Chief Financial Officer.

Good day. I'm Lance Follett, Executive Vice President, Corporate Development and the Chief Legal Officer with Westport Fuel Systems.

Great. Thank you all for being here today. I'll now ask Jeremy Chan, Westport Fuel Systems' Associate General Counsel and Corporate Secretary, to lead the formal part of the meeting.

Good day to everyone. I'm Jeremy Chan, Associate General Counsel and Corporate Secretary, and I'm pleased to present the formal portion of our meeting today. Please keep in mind that even though we are using a virtual platform, the normal rules of procedure for corporate meetings will apply. If you wish to participate in the formal meeting, you must be a registered shareholder or proxy holder. And as per instructions announced in the company's May 7 Notice of Meeting, have preregistered for this meeting. If you are a registered shareholder or proxy holder who did not register in advance of entering this meeting, you will unfortunately be unable to vote or participate in the formal portion of the meeting. Access to the webcast can be found on the company website at wfsinc.com. At any time, anyone can reach out to the company at [email protected] with questions and inquiries. To ensure that we cover the required business, we have prearranged with certain persons to move and second certain motions. This is not intended to discourage participation. At each opportunity for participation, the operator will announce instructions for how registered shareholders and proxy holders can enter the question queue or place votes. During the conduct of the formal business, questions and comments should be limited to the specific proposal then under consideration. The formal meeting will now come to order. As noted, I will act as Secretary of the meeting, and I will ask Victoria [indiscernible] of Computershare to act as scrutineer. The meeting materials were mailed to shareholders and filed online on May 7, 2024, so I will dispense the reading of the notice of the meeting. The scrutineer has reported that the required quorum is present because 9,360,125 shareholders are present on the webcast or by proxy, representing 54.31% of the outstanding shares. For your information, copies of the financial statements for the financial year ended December 31, 2023, are available in the mailed annual report or on the company's website at wfsinc.com. Printed copies of the annual report may be requested by e-mailing [email protected] or calling area code (604) 718-2046. The first item of formal business is the election of directors. The Board has fixed the number of directors to be elected at 8. Each of the following individuals have been nominated for election as directors for the ensuing year or until the successors are elected or appointed. Anthony Guglielmin, Brenda Eprile, Dan Hancock, Dan Sceli, Eileen Wheatman, Karl-Viktor Schaller, Michele Buchignani and Philip Hodge. There are no other nominations. Can I please have a motion then to elect the directors?

This is Bill Larkin and I move that the persons nominated be elected as directors.

This is a Lance Follett, and I second the motion.

The motion is now open for discussion, if any, by registered shareholders and proxy holders on the webcast. [Operator Instructions] We will pause a few moments while we'll wait for any questions on this motion.

There are no further questions in the queue. We can continue.

You have heard the motion, and there is no further discussion, we will proceed with a vote for the directors. As previously noted, due to conducting this meeting by webcast voting and the requirement to determine the individual votes cast for each director, we will need to receive your votes for each director individually. Voting can be completed during the vote using the voting button on your screen. Thank you. We will move on. While we await the final figures in respect to the voting for nominating directors, I can advise that based on the size of the management proxy vote received, the nominated individuals have been duly elected as directors of Westport Fuel Systems. The final voting totals for each director will be available in the report of voting results to be issued by the corporation after this meeting. The next item of business is the appointment of auditors. Management has nominated KPMG LLP chartered accountants to be appointed as the auditors of Westport Fuel Systems, Inc. to hold office until the close of the next Annual Meeting of Shareholders and the Board of Directors has been authorized to set their remuneration. Is there a motion?

This is Bill Larkin and I move that KPMG be appointed as auditors.

I second the motion.

The motion is now open for discussion, if any, by registered shareholders and proxy holders on the webcast. [Operator Instructions] We will pause a few moments while we wait for any questions on this motion.

There are no further questions for discussion in the queue. We can continue.

The operator will now open the poll for votes. Please vote using the voting function on your screen. [Voting]

Voting has closed. While we wait for the final voting figures to be tabulated, I can confirm that based on the size of the management proxy vote received, KPMG has been duly appointed as auditors and the motion is carried. We also have before us an advisory say-on-pay resolution for consideration, approving Westport Fuel Systems' approach to executive compensation. The summary of the executive compensation is described on Page 38 to 53 of the information circular. This resolution does not have a binding effect, is being conducted on an advisory basis only and should not be considered to, in any way, diminish the role and responsibilities of the Board of Directors of the corporation. This resolution is intended to guide the Board of Directors on whether shareholders accept the approach to executive compensation discussed in the information circular dated May 7, 2024. Can I have a motion, please?

This is Bill Larkin, and I move that the meeting accept the approach to executive compensation as described in the information circular dated May 7, 2024.

This is Lance Follett. I second the motion.

The motion is now open for discussion, if any, by registered shareholders and proxy holders on the webcast. [Operator Instructions] We will pause a few moments while we wait for any questions on this motion.

There are no questions in the queue. We can continue.

You have heard the motion, and as there is no further discussion, we will proceed with the advisory vote. Please use the voting function on your screen to submit your vote. [Voting]

Voting has closed. Based on the previous proxies received by management nominees, I can advise that the advisory vote is carried. We have now reached the end of the formal business of the meeting. Before terminating we'll take a moment to confirm if any other matters of business are to be brought forward. There will be an opportunity to ask general questions related to the company after the business update. So I would ask that you hold such questions not related to the formal business of the meeting until that time. We'd now like to take any questions related to the formal business of the meeting from the phone line now. [Operator Instructions] I will pause a few moments to allow any matters to be brought forward.

There are no additional matters brought forward. We can continue.

Could I please ask someone to move the termination of the meeting?

This is Bill Larkin and I move that the formal meeting be terminated.

I second the motion.

The formal portion of the meeting is now terminated. I'd now like to invite Dan Sceli to provide a short business update, which will be followed by a Q&A session.

Thank you, Jeremy. For Westport to create value for its shareholders, we as a company need disciplined operations that flow from a strong strategic plan. As such, in my first 5 months in the role, I established 3 main priorities for 2024 and beyond, including driving success via our HPDI joint venture with Volvo which includes a focus on accelerating the commercialization of our HPDI fuel system technology, reducing CO2 emissions from long-haul and off-road applications. Number two, pursuing operational excellence, which means our team is embarking on bold initiatives to streamline processes, enhance efficiency and reduce cost. Finally, we are positioning Westport at the forefront of the transformative shift towards a hydrogen future. These priorities are expected to elevate the performance and value of our business long into the future. Back in July of 2023, we announced a transformative joint venture with the Volvo Group committed to accelerating the commercialization and global adoption of Westport's HPDI fuel system for long-haul and off-road applications. Just a few weeks ago, we announced the start of operations for this joint venture, a significant milestone for our teams, solidifying the beginning of this much anticipated partnership. Now that we have closed the joint venture transaction, the real work begins. Globally, Westport is fortunate to be part of an industry in which alternative fuels are seeing increased support and investments largely driven by more stringent regulatory environments focused on reducing emissions supported by the affordability and availability of alternative fuels in many markets. Global government policies are accelerating the shift to zero emissions. In the EU, ambitious emission reduction targets for the heavy-duty transport underscore the region's commitment to decarbonization, encouraging the adoption of cleaner fuels and technologies, including hydrogen-powered vehicles. We recognize that affordability and availability is key to the use of alternative fuels in everyday transportation and are excited that central to this shift is the ongoing development of new hydrogen fueling stations along key EU transport corridors. Also, the Biden Administration recently unveiled a detailed plan to help incentivize construction of hydrogen refueling infrastructure for large trucks across the United States. Westport has the solutions available now, enabling our customers to capture the growth in the alternative fuel sector, matching the cleanest gaseous fuels with the most efficient engine technologies. What is needed to solve transportation issues and climate challenges, differs around the world. Developed markets need clean vehicles they can afford at scale, while developing markets need affordable vehicles that are clean. There will not be just one solution for all transportation, rather, there will be a diversity of solutions, and that will include battery electric, fuel cell and internal combustion engines. Many thought the solution to decarbonization is battery-powered electric trucks, yet they are not addressing a real problem. Most CO2 emissions come from long-haul heavy-duty transport, an area in which battery-powered electric trucks are not an efficient solution. Internal combustion engines using clean fuels like LNG, biogas and hydrogen, will play a critical role in achieving decarbonization goals by providing the industry with an affordable solution that maintains the power and efficiency of the diesel engine. Wrapping up, I wanted to leave you with 3 takeaways. Our recently closed HPDI joint venture with Volvo is transformative. The JV elevates HPDI's market relevance and enhances our competitive position, expanding our reach to a wider customer base and drive growth and innovation by pooling resources and knowledge. Priorities are in place to improve our profitability and business outlook for 2024 and beyond. With the current support of global macro environment, the alternative fuel industry is becoming more dynamic and new opportunities are emerging on a regular basis with increasing levels of investment, industrial applications and policy support for the hydrogen fuel realm. I appreciate everyone being here today. And with that, I'll turn it over to the operator for our Q&A session.

We'll now take questions from the webcast. [Operator Instructions] There are no further questions on the line. So I will pass the call back over to Dan Sceli.

Okay, thank you all for your questions and interest in Westport Fuel Systems. You can always reach us at (604) 718-2046 or [email protected]. Dan, over to you.

Thank you, Dan. This concludes our Annual General Meeting of Shareholders. On behalf of the Board of Directors and management, we thank you for your participation today.

This concludes today's conference call. Thank you for participating and have a pleasant day.