Westport Q2 Loss Widens as Heavy-Duty Revenue Collapses

Westport Innovations (WPRT) posted a second-quarter loss of 53 cents per share, exceeding the consensus estimate of 45 cents and widening the year-over-year deficit from 29 cents. The company reported revenues of $2.72 million, a 78.3% decline from the prior year, though this figure beat market expectations by 44.5%. According to data compiled by GN markets/earnings (en-US), the significant drop in top-line revenue is directly attributable to the expiration of the Heavy-Duty OEM transitional service agreement with Cespira, which left the segment with no sales activity in the quarter.

Operating loss expanded to $7.21 million from $1.01 million in the same period last year, driven by non-operating charges including a $1.69 million foreign exchange loss, a $1.50 million warrant-liability fair-value loss, and $1.09 million in financing transaction costs. Adjusted EBITDA was negative $6.27 million, compared with a loss of $1.02 million in the prior-year quarter. Gross profit fell to $0.13 million, compressing the gross margin to 5% from 7% as the high-margin transitional revenue stream disappeared.

Cespira Segment Drives Revenue Growth

The Cespira division served as the primary growth engine, with quarterly revenues surging 125% to $27.07 million. Product revenues rose 127% to $18.92 million on higher system volumes, while aftermarket and service revenues increased 108% and 156% respectively. This volume expansion materially improved profitability, swinging the segment from a gross loss of $1.93 million to a gross profit of $3.81 million. Consequently, Cespira’s net loss narrowed by 65% to $2.38 million as material costs declined and labor efficiency improved.

Controls Business Navigates Production Transition

Revenues in the High-Pressure Controls business declined 6% to $2.17 million, primarily due to lower sales volume. The company characterized the first half of the year as a transition period, citing the transfer of equipment from Europe, facility recertification, and workforce training at its Canadian and Chinese plants. Westport states that customer demand remains high, with backlog waiting to be fulfilled as production ramps up. Management expects the second half of the year to focus on increasing output and clearing the backlog, with no additional major bottlenecks currently identified.

Liquidity Constraints Raise Going-Concern Doubts

Cash and cash equivalents ended June at $23.95 million, down from $24.50 million in March. Operating activities consumed $4.56 million, while investing activities used $3.56 million, largely funding Cespira. Financing activities provided $8.30 million following a June equity and warrant transaction, partly offset by debt repayment. Despite this influx of capital, Westport disclosed that projected cash resources are insufficient to fund operations through the next 12 months, leading the company to raise substantial doubt about its ability to continue as a going concern. The firm is currently evaluating public-market, debt, and other financing alternatives to secure its financial footing.