Westport Fuel Systems(WPRT) - 2022 Q2 - Quarterly Report

Condensed Consolidated Interim Financial Statements (unaudited) This section presents the unaudited balance sheets, statements of operations, equity, and cash flows for the period Condensed Consolidated Interim Balance Sheets Total assets decreased to $424.4 million and shareholders' equity slightly declined to $229.1 million as of June 30, 2022 Balance Sheet Summary (in thousands of USD) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $291,863 | $338,564 | | Cash and cash equivalents | $98,174 | $124,892 | | Total Assets | $424,398 | $471,313 | | Total Current Liabilities | $123,427 | $146,447 | | Total Liabilities | $195,252 | $234,894 | | Total Shareholders' Equity | $229,146 | $236,419 | Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss) The company reported a net loss of $3.9 million for the first six months of 2022, a reversal from a net income of $14.1 million in the prior year Statement of Operations Summary (in thousands of USD, except per share amounts) | Metric | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $79,964 | $79,008 | $156,508 | $155,451 | | Loss from operations | $(11,325) | $(3,686) | $(22,128) | $(11,843) | | Net income (loss) | $(11,579) | $17,229 | $(3,869) | $14,089 | | Net income (loss) per share - basic and diluted | $(0.07) | $0.11 | $(0.02) | $0.09 | Condensed Consolidated Interim Statements of Shareholders' Equity Shareholders' equity decreased in H1 2022, driven by a net loss and other comprehensive loss from currency translation Reconciliation of Shareholders' Equity (Six months ended June 30, 2022, in thousands of USD) | Description | Amount | | :--- | :--- | | Balance at January 1, 2022 | $236,419 | | Net loss for the period | $(3,869) | | Other comprehensive loss | $(4,645) | | Stock-based compensation | $1,241 | | Issuance of common shares on exercise of share units | $0 | | Balance at June 30, 2022 | $229,146 | Condensed Consolidated Interim Statements of Cash Flows Cash used in operations increased significantly, leading to a $26.7 million decrease in total cash during the first half of 2022 Cash Flow Summary (Six months ended June 30, in thousands of USD) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(33,404) | $(11,306) | | Net cash from investing activities | $25,670 | $6,063 | | Net cash (used in) from financing activities | $(16,407) | $99,859 | | Decrease in cash and cash equivalents | $(26,718) | $96,449 | | Cash and cash equivalents, end of period | $98,174 | $160,711 | Notes to Condensed Consolidated Interim Financial Statements This section details accounting policies, liquidity risks, investment sales, debt structure, and segment performance Note 1: Company organization and operations The company engineers and supplies alternative fuel systems and components for the global transportation industry - The company focuses on providing alternative fuel systems (LPG, CNG, LNG, RNG, hydrogen) and components for a wide range of transportation applications globally[9] Note 2: Liquidity and impact of COVID-19 The company faces going concern risk due to operating losses, with future viability dependent on new financing or positive cash flow - The company continues to sustain operating losses and negative cash flows from operations, and its ability to continue as a going concern beyond August 2023 depends on generating sufficient positive cash flows or obtaining financing[11] - As of June 30, 2022, the company has cash and cash equivalents of $98,174 thousand[11] Note 6: Sale of investment The company sold its stake in the Cummins Westport Inc. joint venture, resulting in a total gain on sale of $19.1 million - The company sold its 100% interest in Cummins Westport Inc. ("CWI") to Cummins Inc. on February 7, 2022[20] Gain on Sale of Investment (in thousands of USD) | Description | Amount | | :--- | :--- | | Proceeds from sale of investment | $31,445 | | Holdback receivable | $9,713 | | Carrying value of investment | $(22,039) | | Gain on sale of investment | $19,119 | Note 11: Short-term debt Short-term debt from revolving facilities decreased to $8.6 million as of June 30, 2022 Short-Term Debt (in thousands of USD) | Facility | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Revolving financing facilities | $8,610 | $13,652 | Note 12: Long-term debt Total long-term debt decreased to $47.9 million, and the company remained in compliance with all debt covenants Long-Term Debt Summary (in thousands of USD) | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Term loan facilities, net | $46,143 | $53,516 | | Other bank financing | $502 | $544 | | Capital lease obligations | $1,295 | $1,655 | | Total Long-Term Debt | $47,940 | $55,715 | Note 15: Share capital, stock options and other stock-based plans Stock-based compensation expense increased to $1.4 million in H1 2022, with 2.5 million new share units granted - During the six months ended June 30, 2022, the company granted 2,533,288 share units, including 1,311,890 RSUs and 1,221,398 PSUs[49] Stock-Based Compensation Expense (in thousands of USD) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $864 | $539 | | Six Months Ended June 30 | $1,395 | $623 | Note 18: Segment information OEM segment revenue grew while IAM revenue declined, with both segments reporting operating losses in H1 2022 - Revenue from Europe constituted 66% of total revenue for the six months ended June 30, 2022, compared to 65% in the prior year period[59] Segment Performance (Six months ended June 30, in thousands of USD) | Segment | Revenue 2022 | Revenue 2021 | Operating income (loss) 2022 | Operating income (loss) 2021 | | :--- | :--- | :--- | :--- | :--- | | OEM | $106,101 | $90,165 | $(11,914) | $(9,883) | | IAM | $50,407 | $65,286 | $(367) | $2,744 | | Corporate | — | — | $(9,847) | $(4,704) | | Total | $156,508 | $155,451 | $(22,128) | $(11,843) | Note 19: Financial instruments The company faces significant liquidity risk, with $112.9 million in contractual obligations due within one year - The company highlights liquidity risk as a key financial risk due to its history of operating losses and negative cash flows from operations[61] Contractual Maturities of Financial Obligations (as of June 30, 2022, in thousands of USD) | Period | Contractual Cash Flows | | :--- | :--- | | < 1 year | $112,928 | | 1-3 years | $41,449 | | 4-5 years | $15,513 | | >5 years | $15,843 | | Total | $185,733 |