Westport Innovations Inc.
April 2014
2013 ANNUAL GENERAL
MEETING OF SHAREHOLDERS
1
stock symbols market capitalization
TSX...
» This presentation contains forward-looking statements that are based on the beliefs of
Westport’s management and reflect...
» Energy transitions are enormously difficult
» Natural gas is emerging as the first significant new transportation fuel i...
4
Financial Summary
($ in millions) CY2011 CY2012 CY2013
Westport Revenue $ 100.8 $ 155.6 $ 164.0
CWI Revenue 163.9 198.0 ...
1. Natural gas increasingly visible as a
transportation fuel.
2. Westport is the key technology provider for OEM natural
g...
MACRO PERSPECTIVE
» Widespread availability of low cost natural gas (as a commodity) vs.
expensive oil is driving the firs...
7
Stability of Fuel Price Differential is
Driving Confidence at Fleets
Sources: EIA, DOE Alternative Fuel Price Report, EI...
8
Global Light Vehicle Market
“Light vehicle” refers to passenger cars, light passenger trucks & vans, minibuses, and
ligh...
9
Global Markets Emerging in Every Region
1. NGVA Europe and the GVR (2013)
-
1,000
2,000
3,000
4,000
5,000
6,000
2007 201...
» Westport is positioned to benefit from high
technology and OEM integration as the market
transitions to OEM integration
...
0%
5%
10%
15%
20%
25%
30%
35%
40%
2012 2013 2014 2015 2016 2017 2018 2019 2020
Frost & Sullivan – High
Frost & Sullivan – ...
12
Significant Off Road Opportunities
RAIL
MARINE
1. Morgan Stanley/Parker Bay, Westport analysis
2. UN Energy Statistics ...
» Price delta of locomotive diesel vs. LNG in rail: $1.48/DGE in 2014 » $1.77 in 2040
» High Rail LNG Case
 100% of locom...
APPLICATION
ENGINE
DISPLACEMENT FUEL / YEAR MILEAGE
FUEL
CHOICE CONSIDERATIONS
Large marine
up to
25,000 L
up to 30M L
(7....
TECHNOLOGIES / PRODUCTS
» Intellectual property leader
» Individual precision manufactured components up to
fully engineer...
» Originated at University of British
Columbia
» Strong global patent portfolio pivotal to
market leading position with OE...
17
Westport Technology & Applications
Heavy-Duty & High Horsepower Applications Medium-Duty Applications
Bi-Fuel Vehicles ...
» Scalable, asset-light business model leverages OEM partners’ infrastructure
allows us to operate globally
18
Operating B...
» 2014: Major focus on
US trucking industry
with goal of 3% to 5%
market penetration;
new ISX 12G engine
available across ...
» Weichai Westport JV commenced
July 2010; Westport has 35%
interest
» Focus on improved efficiencies in
JV supply chain w...
21
Advanced Vehicle Components
High
pressure
CNG lines
CNG
cylinder
valve
filling valve &
external CNG
filling valve
CNG &...
22
Whole System Solutions:
Ford Trucks and Volvo Cars
» Westport WiNG™ Power System
 Dedicated CNG or bi-fuel (natural ga...
» First deliveries underway
» High average selling price
~$800K to $1.2 million
» > 10,000 gallons LNG
capacity—provides l...
INVESTMENT OVERVIEW
» Growth strategy
» Path to profitability
» Investing in the future of natural gas technologies
» Key ...
25
Westport Growth Strategy
» Lead New & Differentiated
Technologies
 Combustion
 Fuel storage & delivery
 Components &...
$(16)
$(14)
$(12)
$(10)
$(8)
$(6)
$(4)
$(2)
-
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
millionsofdollars
Average $9.4M
Median $...
» Westport has invested
$205.7M in 2012/13
 Co-investing with OEMs
to develop a portfolio of
new natural gas vehicle
tech...
» 2014
 Westport’s combined operating business units, excluding joint
ventures, to be Adjusted EBITDA positive by end of ...
Strong
First-Mover
Advantage
Valuable
Strategic &
Business
Alliances
Capital
Efficient &
Scalable
Business
Model
Talented ...
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2013 Westport AGM

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Westport CEO David Demers presents a recap of Westport's 2013 fiscal year, an overview of the macro perspective in the natural gas for transportation industry, Westport technologies that bridge the gap between energy industry and the transportation industry, a roadmap of the future ahead, and much more.

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2013 Westport AGM

  1. 1. Westport Innovations Inc. April 2014 2013 ANNUAL GENERAL MEETING OF SHAREHOLDERS 1 stock symbols market capitalization TSX NASDAQ CAD USD WPT WPRT $0.95 billion $0.9 billion
  2. 2. » This presentation contains forward-looking statements that are based on the beliefs of Westport’s management and reflect Westport’s current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in these forward-looking statements, including, without limitation, Westport’s ability to develop viable fuel systems; Westport’s ability to provide the capital required for research, product development, operations, and marketing; product development, production and commercial launch delays; changing environmental regulations; Westport’s ability to attract and retain key personal and business partners; competition from conventional diesel fuelled engines; and Westport’s ability to protect its intellectual property. These factors should be considered carefully and investors should not rely on any forward-looking statements. Investors are encouraged to review Management’s Discussion and Analysis and the Risk Factors section in Westport’s most recently filed Annual Information Form and filings with securities regulators for a more complete discussion of factors that could affect Westport’s future performance. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. » All figures are in U.S. dollars unless otherwise stated. 2 Forward Looking Statements
  3. 3. » Energy transitions are enormously difficult » Natural gas is emerging as the first significant new transportation fuel in a century 3 Driving a Shift to Natural Gas as a Transportation Fuel ENERGY • Gas exploration & production • Distribution & utilities • Fuel station owners/operators • Renewable fuels TECHNOLOGY • Market-spanning experience • Expansive IP portfolio • Capital light business models TRANSPORTATION • Engine & vehicle OEMs • Fleet operators • Shippers, transportation users • Consumers
  4. 4. 4 Financial Summary ($ in millions) CY2011 CY2012 CY2013 Westport Revenue $ 100.8 $ 155.6 $ 164.0 CWI Revenue 163.9 198.0 310.7 WWI Revenue 109.8 272.1 466.6 Adjusted EBITDA Operating Business Units (36.0) (40.3) (34.6) Corporate & Technology Investments (5.4) (26.0) (62.3) Total (41.4) (66.3) (96.9) Consolidated including Corporate & Technology Adjusted EBITDA positive by end of 2015 Corporate & Technology Investments for new products developed with Volvo, Caterpillar, Weichai, Delphi and others Operating Business Units to be Adjusted EBITDA positive by end of 2014
  5. 5. 1. Natural gas increasingly visible as a transportation fuel. 2. Westport is the key technology provider for OEM natural gas engine and vehicle systems. 3. 2013 saw Westport reposition from market creation investments to product sales. Forecast Adjusted EBITDA positive by end of 2014. 4. Westport invested $205 million in 2012/2013 in new collaborations with global OEM’s for products launching from 2014 through 2017 in automotive, trucking and off-road applications. 5 Investment Highlights
  6. 6. MACRO PERSPECTIVE » Widespread availability of low cost natural gas (as a commodity) vs. expensive oil is driving the first new global fuel for transportation in a century » Adoption will be driven first by high-fuel-use fleets and transportation users seeking lower costs—not consumers » OEMs are now engaging; this will shift the market from aftermarket conversion to OEM factory-built vehicles » Emerging infrastructure participants 6
  7. 7. 7 Stability of Fuel Price Differential is Driving Confidence at Fleets Sources: EIA, DOE Alternative Fuel Price Report, EIA AEO2013; last update: 2013-09-04 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2010 2015 2020 2025 2030 Priceofcrudeoil[U.S.$/bbl] Price History of Diesel Fuel & CNG for Vehicles, with EIA Projections Actual Diesel fuel price [$/gal] Forecast Diesel fuel price [$/gal] Actual CNG fuel price [$/DGE] Forecast CNG fuel price [$/DGE]
  8. 8. 8 Global Light Vehicle Market “Light vehicle” refers to passenger cars, light passenger trucks & vans, minibuses, and light commercial vehicles usually less than 3–5 tons and not more than 7 tons. » Combined OEM and aftermarket annual sales growth of natural gas light vehicles in every region » ~16.6M natural gas passenger car & light commercial vehicles on the road1 1. NGVA Europe and the GVR (2013) 2. Navigant Research - 200 400 600 800 2013 2023 USA & Canada2 - 200 400 600 800 2013 2023 Europe2 - 200 400 600 800 2013 2023 China2 - 200 400 600 800 2013 2023 India2 - 200 400 600 800 2013 2023 Latin America2 - 200 400 600 800 2013 2023 Middle East & Africa2 - 200 400 600 800 2013 2023 Asia Pacific2 UnitSalesinThousands
  9. 9. 9 Global Markets Emerging in Every Region 1. NGVA Europe and the GVR (2013) - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 USA & Canada1 - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 Europe1 - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 China1 40% CAGR - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 India1 - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 Latin America1 - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 Middle East & Africa1 - 1,000 2,000 3,000 4,000 5,000 6,000 2007 2013 Asia Pacific1 Number of CNG & LNG Stations
  10. 10. » Westport is positioned to benefit from high technology and OEM integration as the market transitions to OEM integration 10 The NGV Market is Evolving QuicklyTECHNOLOGY LOW HIGH HIGH$ / VEHICLE Market Transition Components & Aftermarket (majority today) OEM Product (fully engineered, certified)
  11. 11. 0% 5% 10% 15% 20% 25% 30% 35% 40% 2012 2013 2014 2015 2016 2017 2018 2019 2020 Frost & Sullivan – High Frost & Sullivan – Reference Frost & Sullivan – Conservative NPC – Reference Oil mid point ACT Research ACT Research1 (8 yr. CAGR 43%) NPC2 (8 yr. CAGR 53%) <1,700 units4 >3,500 units4 3–5% (~6,000–10,000 units) Westport Analysis – Actuals Westport – Estimated range 11 Urban Commercial Fleets, Truck Market in North America Market Share of New Class 7 & 8 Natural Gas Trucks (NPC with approximate correction from VMT to vehicle units) 1. Act Research Future of Natural Gas Engines August 2012 2. NPC Advancing Technology, Reference Case, August 2012 3. Frost & Sullivan Strategic Outlook Truck Market 2013 4. Westport Analysis
  12. 12. 12 Significant Off Road Opportunities RAIL MARINE 1. Morgan Stanley/Parker Bay, Westport analysis 2. UN Energy Statistics Database 2008 3. Burlington Northern 2008 Annual Report 4. Parker Bay Mobile Mining Equipment Database 2012, Westport Analysis 5. Baker Hughes Rotary Rig Count Report, Westport analysis 6. Diesel Locomotives – Global Market Trends 2011 by SCI Verkehr GmbH, Westport analysis 7. Diesel and Gas Turbine Magazine 2011 Marine Propulsion Order Survey, Westport analysis 8. Zeus Intelligence MINING EXPLORATION & PRODUCTION TARGET VEHICLES OPPORTUNITY WORLDWIDE UNITS mine haul trucks Almost 2 billion gallons of diesel consumed annually by the top 10 mining companies operating worldwide1 19,411 engine units4 (large mining trucks >127 ton capacity) drill rigs and frac pumps Land-based rigs represent 500 million to 850 million diesel gallons per year8 13,890 engine units5 (drill rigs & frac pumps) diesel mainline freight locomotives diesel passenger locomotives Rail industry consumes 9bn gal of diesel fuel annually, half of this in North America2 Fuel represents approximately 23% of US railroad operating costs3 50,594 engine units6 (mainline locomotives) ferries, tugboats, PSVs, work, and crew boats Marine industry consumes 13bn gal of diesel fuel/year2 Emissions reduction in sensitive coastal and inland waterways are a priority Some examples of LNG ferries and platform support vessels (PSV) in Scandinavia, but no widespread adoption yet 25,000 engine units7 (small vessels)
  13. 13. » Price delta of locomotive diesel vs. LNG in rail: $1.48/DGE in 2014 » $1.77 in 2040 » High Rail LNG Case  100% of locomotives convert to HPDI within 20 years  LNG is 95% of freight rail energy consumption by 2040 » Reference Rail LNG Case  LNG locomotives adopted at average annual turnover rate of new and rebuilt stock  LNG is 35% of freight rail energy consumption by 2040 » Low Rail LNG Case  Locomotives convert to LNG at average rate of 1%/year  LNG is 16% of freight rail energy consumption by 2040 13 Potential for LNG Use as a Railroad Fuel 0 50 100 150 200 250 300 350 400 450 2015 2020 2025 2030 2035 2040 trillionBtu Energy Consumption for Freight Rail using LNG (source: U.S. Energy Information Administration, “Annual Energy Outlook 2014”, April 14, 2014) Reference High Rail LNG Low Rail LNG
  14. 14. APPLICATION ENGINE DISPLACEMENT FUEL / YEAR MILEAGE FUEL CHOICE CONSIDERATIONS Large marine up to 25,000 L up to 30M L (7.9M gallons) LNG Off-highway • locomotive • mine haul • medium marine 20 to 150 L ~1,000,000 L (264,000 gallons) LNG Heavy-duty vehicles • on-highway trucks 9 to 16 L ~100,000 L (26,400 gallons) > 250 miles/day LNG or CNG • range vs. return to base • weight of tank system vs. payload needs • grading of terrain • fueling time • chassis / body style impacts • fuel supply and price Medium-duty vehicles • buses • refuse haulers 5 to 9 L ~40,000 L (10,500 gallons) < 250 miles/day Light-duty vehicles • passenger cars • lights-duty trucks up to 7 L ~5,000 L (1,320 gallons) < 250 miles/day CNG 14 LNG and CNG – Customer’s Choice Based on Westport analysis
  15. 15. TECHNOLOGIES / PRODUCTS » Intellectual property leader » Individual precision manufactured components up to fully engineered complete systems for OEMs 15
  16. 16. » Originated at University of British Columbia » Strong global patent portfolio pivotal to market leading position with OEMs » Worldwide, Westport and its affiliates have filed over 825 patent applications 16 Strong Intellectual Property Heritage Positions Westport as the Global Leader * As of February 24, 2014 and based on the patent search results of publicly available data within the International Patent Classification F02, meeting the search term criteria: one of ("engine" or "combustion" or "injector" or "injection valve") and ("natural gas" or "methane" or "gaseous fuel") and in the claims, not ("fuel cell" or "turbine"). This chart includes issued or granted patents from: Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Ceuta and Melilla, China, Czech Republic, Denmark, European Patent Office Grants, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, India, Ireland, Italy, Japan, Latvia, Malaysia, Mexico, Moldova, Monaco, Netherlands, OAPI grants, Philippines, Poland, Portugal, Romania, Russian Federation, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Tajikistan, Turkey, UK, Ukraine, USA, USSR, Yugoslavia, and pending published patent applications from: Canada, China, the European Patent Office, USA, and the World Intellectual Property Office. 50 62 65 82 85 99 102 154 201 327 Bosch Cummins GM Honda Toyota Siemens GE Ford CAT Westport Top 10 Companies with Natural Gas Engine Related Patents* Combustion 41% Fuel Storage & Delivery 31% Components & Fuel Systems 21% Electronics 7% Westport Patent Portfolio Technology Breakdown
  17. 17. 17 Westport Technology & Applications Heavy-Duty & High Horsepower Applications Medium-Duty Applications Bi-Fuel Vehicles Spark Ignited Direct Injection Advanced Dual Fuel Vehicles
  18. 18. » Scalable, asset-light business model leverages OEM partners’ infrastructure allows us to operate globally 18 Operating Business Units & JVs » Profitable business, growing » $93M TTM revenue » Sells to over 20 global OEMs including Fiat, Volkswagen, the GAZ Group, Chrysler, Tata Motors, and GM » Sells to aftermarket customers in over 60 countries Applied Technologies » Ford QVM commercial trucks (Westport WiNG™); Volvo car systems » Westport iCE PACK™; Westport™ JumpStart » $55M TTM revenue (~$24M was related to HPDI 1.0) » Moving from 1st generation products and R&D culture to ROI and profit On-Road Systems » Rail, mining and industrial industry focus » $3M TTM revenue » Westport LNG Tender— works with locomotives from all major North American manufacturers » Westport™ 2.4L industrial engine for forklift and oilfield applications Off-Road Systems » Cummins Westport • $311M TTM revenue • 3yr CAGR = 38% • Profitable » Weichai Westport • $467M TTM revenue • 3yr CAGR = 118% • Profitable Joint Ventures TTM = trailing twelve months; CAGR = compound annual growth rate
  19. 19. » 2014: Major focus on US trucking industry with goal of 3% to 5% market penetration; new ISX 12G engine available across the industry » Westport has a 50% ownership interest in Cummins Westport with the potential to earn more than 50% of the income based on meeting certain sales thresholds 19 Cummins Westport Summary (millions of USD except units) 2011 2012 2013 Engines sold 5,465 6,804 10,314 Revenue $ 163.9 $ 198.0 $ 310.7 Gross margin 71.6 61.4 64.2 Operating expenses 22.1 26.1 40.7 Operating income(1) 48.4 35.4 23.5 Operating income % 30.1 % 17.9 %(2) 7.6 %(3) Westport interest 15.2 13.2 9.4 Capital expenditures 0.3 0.2 0.4 Notes: 1. Excludes foreign exchange effects and bank charges 2. The decrease in CWI operating income percentage was primarily due to R&D expense increases related to the ISX12 G, and warranty adjustments as a result of fleets using smaller ISL G 8.9L engine in broader applications with higher duty cycles in order to take advantage of strong economic benefits of driving natural gas trucks. 3. The decrease in CWI operating income percentage was due to mix of sales primarily from the sale of the ISX12 G engine, and also due to warranty adjustments for the ISL G 8.9L, as well as additional R&D related to the ISX12 G, development of the ISB6.7 G, and ongoing product and reliability improvements. Excluding the warranty related impact, CWI operating income percentage would have been 25.9% in 2012 and 19.4% for 2013. Joint Ventures
  20. 20. » Weichai Westport JV commenced July 2010; Westport has 35% interest » Focus on improved efficiencies in JV supply chain while trying to keep up with significant growth profile  JV represents beach head creating NG market in China for other product introductions from Westport while participating in JV’s profitability » Current priorities  Launch Westport HPDI technology in China  Sale of components to JV and other vehicle OEMs  Expand product offerings with differentiated technology 20 Strong Growth in China (millions of USD except units) 2011 2012 2013 Engines sold 8,451 22,025 38,138 Revenue $ 109.8 $ 272.1 $ 466.6 Gross margin % 12.8 % 24.8 % 37.3 % Operating expenses(1) 7.9 15.0 22.8 Segment operating income 6.1 9.8 14.5 Operating income % 5.6 % 3.6 % 3.1 % Westport 35% interest(2) 1.9 2.9 4.3 Weichai Westport Financial Summary Notes: 1. From 2008 to July 2010, operating expenses include income tax expenses 2. Westport began reporting its income from WWI in July 2010 Joint Ventures
  21. 21. 21 Advanced Vehicle Components High pressure CNG lines CNG cylinder valve filling valve & external CNG filling valve CNG & LPG reducer Fuel injection rail CNG & LPG filter Electronic controls Applied Technologies
  22. 22. 22 Whole System Solutions: Ford Trucks and Volvo Cars » Westport WiNG™ Power System  Dedicated CNG or bi-fuel (natural gas/gasoline)  Westport is now Ford’s largest partner under the Qualified Vehicle Modifier (QVM) program  Operational efficiencies by consolidating under one roof Q1 2014 » Volvo Car  Volvo V70 wagon & Volvo V60 sportwagon  Bi-fuel: CNG/biomethane or petrol (gasoline)  Installed inside Volvo’s main production centre in Gothenburg, Sweden  Export market opportunity On-Road Systems
  23. 23. » First deliveries underway » High average selling price ~$800K to $1.2 million » > 10,000 gallons LNG capacity—provides longer range than a diesel locomotive, reducing the need for LNG refuelling infrastructure and refuelling stops » Supports one or two locomotives, reducing the capital investment required to move to LNG 23 Westport LNG Tender Gas Supply Module proprietary cryogenic components deliver low or high pressure fuel LNG Storage Vessel Industry standard 40’ “Cold” LNG tank Universal Connection Compatible with locomotives from leading manufacturers Off-Road & Industrial
  24. 24. INVESTMENT OVERVIEW » Growth strategy » Path to profitability » Investing in the future of natural gas technologies » Key milestones 24
  25. 25. 25 Westport Growth Strategy » Lead New & Differentiated Technologies  Combustion  Fuel storage & delivery  Components & fuel systems  Electronics ex: HPDI, spark ignited, advanced dual fuel » Expand Application Segments  Medium- and heavy-duty  Trucks  Buses  Locomotives ex: GAZ , Tata, Weichai, CAT » Increase Systems Solutions  Add new OEM relationships  Broaden content with OEMs  Implement vertical integration ex: Strong relationships with top natural gas car producers such as Volkswagen and Fiat » Geographic Expansion  Target growing markets such as China and India  Expand distribution networks ex: Tata, Weichai, GAZ
  26. 26. $(16) $(14) $(12) $(10) $(8) $(6) $(4) $(2) - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 millionsofdollars Average $9.4M Median $8.7M 2012 2013 2014 26 Transitioning from R&D Phase to a Focused, Profitable Business » Contributions from:  Westport’s operating business units  Share of net income from the joint ventures  Funding from development partners OPERATING BUSINESS UNITS COMBINED TO BE ADJUSTED EBITDA POSITIVE BY Q4 2014 CONSOLIDATED BUSINESS TO BE ADJUSTED EBITDA POSITIVE BY END OF 2015
  27. 27. » Westport has invested $205.7M in 2012/13  Co-investing with OEMs to develop a portfolio of new natural gas vehicle technologies and related systems and components  Front-end-loaded investment cycle on new products and technologies designed to deliver high margin returns in the future 27 Investing in Next Generation Products Off-Road 9% Trucking 36% Automotive 28% Advanced Engineering 17% Capital Expenditure 10% Breakdown of Investments
  28. 28. » 2014  Westport’s combined operating business units, excluding joint ventures, to be Adjusted EBITDA positive by end of year  Reach critical breakthrough of 3–5% natural gas market penetration in the Class 8 truck market  1–3 new OEMs sign up to vertically integrate Westport natural gas technologies/systems  New product launch with Weichai  Introduce Westport technologies/products into new applications and regions » 2015  Westport’s consolidated business to be Adjusted EBITDA positive by end of year 28 Key Milestones
  29. 29. Strong First-Mover Advantage Valuable Strategic & Business Alliances Capital Efficient & Scalable Business Model Talented & Experienced Management Team 29 westport.com » Pure-play global leader for natural gas as a transportation fuel

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