The global leader in natural gas engines.          Powering transportation.              Driving change.Westport 2012 AGM ...
Forward Looking Statements This presentation contains forward-looking statements that are based on the beliefs of Westpor...
Westport Engineers Advanced Natural Gas Engines We are enabling the global shift to a cleaner, cheaper, more  sustainable...
Westport at a Glance Through its market focus and  position, Westport has moved from  proof of concept to capture the  gl...
Investment Highlights1. ​Key markets are established – Westport is focused on    rapid introduction of new products establ...
Accelerated Market Adoption Adoption rate in leading markets moving faster than the gasoline to diesel transformation Cl...
Westport is the Technology Leader Global patent portfolio pivotal to                       Top 10 Companies with  Westpor...
Converting R&D to ROI                                             Proprietary technology enables latest diesel and gasoli...
URBAN COMMERCIAL FLEETAPPLICATIONS IN NORTH AMERICA                                9
Historical Success:Urban Return-to-Base Fleets              San Pedro Bay Ports     Los Angeles                           ...
Cummins Westport Joint Venture 50:50 JV established in 2001,                    Key recent growth driver:  revised 2004 ...
Addressable Market:Urban Commercial Fleets in North America                                                               ...
Cummins Westport Financial Summary                USD$MM                    2007              2008              2009      ...
INCREASE IN FUELLING INFRASTRUCTURETRUCKING & AUTOMOTIVE APPLICATIONS                                      14
Growth in LNG Fueling Infrastructure                                                                                      ...
Market ForecastNorth American Class 8 Natural Gas Trucks 20% 15% 10%  5%  0%       2012       2013   2014   2015   2016   ...
North America:Natural Gas Offerings for the Trucking Market                                     regional haul             ...
Global Truck Market Opportunity China first, followed by India and Europe                            China LNGV Populatio...
Strong Growth in China   First announced Weichai Westport JV in 2008; formal JV commenced July 2010                      ...
Fuel Storage Applications:The New Westport™ LNG Tank System Proprietary Westport technology,                             ...
Global Automotive Market Approximately 14.9M1 natural gas passenger car & light commercial vehicles on the road Approxim...
NGV Components & Complete Solutions  off-engine     on-engine          complete industrial engines components     componen...
OFF-ROAD APPLICATIONS                        23
Significant Off Road Opportunities         target vehicles                                                  opportunity   ...
North America:Potential Off-Road Business Models                                  Fuel Delivery                           ...
INVESTMENT OVERVIEW                      26
Business Unit Realignment               Previous Structure                                                        Realignm...
Applied Technologies                              3 months                   12 months                            ended De...
On-Road Systems                              3 months                   12 months                            ended Dec. 31...
New Markets and Off-Road Systems                                 3 months                      12 months                  ...
Corporate and Technology Investments                            3 months                    12 months                     ...
Overcoming ChallengesPerception            ActualEmerging              Global patent portfolio protects our technology lea...
Pure-play global leader fornatural gas as a transportation fuel                               Capital                Valua...
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Westport 2012 AGM Presentation

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Westport 2012 Annual General Meeting presentation (for the year ending Dec. 31, 2012) given by David Demers, Westport Chief Executive Officer on April 11th, 2013. For more viewing options, visit www.westport.com/media/presentations/

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Westport 2012 AGM Presentation

  1. 1. The global leader in natural gas engines. Powering transportation. Driving change.Westport 2012 AGM stock symbols market capitalization TSX NASDAQ CAD USD WPT WPRT $1.6 billion $1.6 billion April 11, 2013 1
  2. 2. Forward Looking Statements 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
  3. 3. Westport Engineers Advanced Natural Gas Engines We are enabling the global shift to a cleaner, cheaper, more sustainable energy source for transportation and fundamentally changing the way the world travels the roads, rails and seas. market focus position opportunity Leading the Strong first mover global shift in advantage with Shifting products transportation unmatched from ―proof of from petroleum IP, relationships, concept‖ to fuels market widespread to methane coverage, product global adoption (natural gas) s, and capabilities 3
  4. 4. Westport at a Glance Through its market focus and position, Westport has moved from proof of concept to capture the global emergence of natural gas vehicles through a broad range of transport applications. 4
  5. 5. Investment Highlights1. ​Key markets are established – Westport is focused on rapid introduction of new products establishing technology standards and harvesting investment returns2. Aggressive price and performance improvements in all markets to encourage accelerated adoption3. Leverage key OEM partnerships allowing for fast and profitable scale up at low risk for all stakeholders4. Continue developing new markets and new partnerships 5
  6. 6. Accelerated Market Adoption Adoption rate in leading markets moving faster than the gasoline to diesel transformation Clean Energy Fuels, Shell, Encana, ENN, and others are leading the build-out of natural gas stations and fuelling infrastructure around the world 100% New sales of Class 8 diesel trucks, USA1 75% Share 50% New registrations New sales of natural gas of diesel passenger refuse trucks, USA3 cars, Europe2 25% 0% 1950 1970 1990 2010 2030 Data sources: 2. ACEA 1. MacKay & Co., & Wards Auto Group, a 3. Westport 6 division of Penton Media, Inc. 4. Westport
  7. 7. Westport is the Technology Leader Global patent portfolio pivotal to Top 10 Companies with Westport‘s market leading Natural Gas Engine Related Patents* position with OEMs Westport 325 Worldwide, Westport and its Toyota 218 affiliates have filed over 700 Fiat 191 patent applications relating to Bosch 169 over 180 inventions in: Ford 167  engine technologies GM 162  fuel system components CAT 158  control methods Honda 142  vehicle integration Siemens 141  other related technologies Daimler 121 Established strong development 0 100 200 300 400 lead times and barriers to entry * Based on the patent search results of publicly available data within the International Patent with over $390M in R&D and 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 not ("fuel cell" or "turbine"). This chart includes issued or granted patents from: Australia, Brazil, Canada, China, commercialization since 1995 European Patent Office Grants, France, Germany, India, Italy, Japan, Poland, Russia, Spain, UK, USA, USSR, and pending published patent applications from: the European Patent Office, USA, and the World Intellectual Property Office. as of January 22, 2013 7
  8. 8. Converting R&D to ROI  Proprietary technology enables latest diesel and gasoline engines to operate on natural gas (or other gaseous fuels)  Compatible with current and future engine technology; preservesProduct Commercialization Roadmap and improves performance, efficiency, emissions earlier 2011 2012 2013 2014 2015 Westport 2.4L Ford F-250/350 Ford F-450/550 Volvo 13L Cummins Westport Volvo V70 Industrial Engine Westport WiNG Westport WiNG Westport HPDI ISB6.7 G Cummins Westport Westport Westport JumpStart 5.9L & 8.3L LNG Tank System Cummins Westport Cummins Westport 8.9L ISL G ISX12 G Westport HPDI 15L Weichai Westport WP12HPDI Weichai Westport 6.8–11.6L Westport Product colour legend automotive urban trucking off-road fueling 8
  9. 9. URBAN COMMERCIAL FLEETAPPLICATIONS IN NORTH AMERICA 9
  10. 10. Historical Success:Urban Return-to-Base Fleets San Pedro Bay Ports Los Angeles Las Vegas Ontario 10
  11. 11. Cummins Westport Joint Venture 50:50 JV established in 2001,  Key recent growth driver: revised 2004 and 2012 (ten year deal)  refuse trucks in North America – approaching 50% natural gas market penetration 28% revenue CAGR from CY 2006–2012  medium truck applications Products ISL G ISX12 G ISB6.7 G 8.9L 11.9L 6.7L SEGR SEGR SEGR 250–320hp 320–400hp 660–1,100 lb-ft 1,150–1,450 lb-ft available now 2013 launch 2015 launch 11
  12. 12. Addressable Market:Urban Commercial Fleets in North America annual current future CWI Engines in North America by Segment market CWI CWI (cumulative)30,000 turnover engine engine 5,000 – Transit Bus ISL G n/a Truck 6,000125,000 Refuse Coach, 2,000 – ISB6.7 G Coach/Shuttle/Specialty Shuttle, ISL G 4,0002 (2015)20,000 Speciality School Bus School Bus 20,000 – ISB6.7 G Transit n/a Type C 30,0003 (2015)15,000 School Bus 3,000 – ISL G n/a Type D 6,000310,000 Refuse 5,000 – ISX12 G ISL G Truck 7,0004 (2013) 5,000 71,000 – ISB6.7 G Class 6 & 7 ISL G 97,0005 (2015) 110,000 – ISX12 G 0 Class 8 ISL G 199,0006 (2013) 1. New Flyer Annual Information Form March 2012 4. CWI analysis 2. CWI analysis 5. ACT Research of all OEMs’ sales in class 6 & 7 from 2009-2011 12 3. School Bus Fleet magazine annual market survey 6. ACT Research of all OEMs’ sales in class 8 from 2009-2011
  13. 13. Cummins Westport Financial Summary USD$MM 2007 2008 2009 2010 2011 2012 Revenue $ 66.4 $ 92.9 $ 101.5 $ 117.1 $ 163.9 $ 198.0 Cost of revenue 43.2 68.3 69.3 71.8 92.4 136.6 Expenses 13.1 14.8 16.3 18.1 22.1 26.1 Operating income* $ 10.1 $ 9.8 $ 15.9 $ 27.2 $ 48.4 $ 35.4 Operating income % 15.2% 10.5% 15.7% 23.2% 30.1% 17.9%** Capital expenditures - 0.2 - 0.4 0.3 0.2* Excludes foreign exchange effects and bank charges** The decrease in CWI operating income percentage for the year ended December 31, 2012 was primarily due to warranty adjustments as a result of fleets using smaller CWI 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. Excluding warranty adjustments and higher extended coverage claim impact, CWI operating income percentage would have been 26%. 13
  14. 14. INCREASE IN FUELLING INFRASTRUCTURETRUCKING & AUTOMOTIVE APPLICATIONS 14
  15. 15. Growth in LNG Fueling Infrastructure Public – open Built – not open 2013 – planned Source: Westport analysis January 2013, Clean Energy Fuels, Encana, Shell, and BLU., FortisBC, Gaz Metro 15
  16. 16. Market ForecastNorth American Class 8 Natural Gas Trucks 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 16
  17. 17. North America:Natural Gas Offerings for the Trucking Market regional haul long haul heavy haulEngine size 8–12L 13–15L 15–16LAnnual sales volume* 52,500 117,200 30,000Current engines CWI ISL G Westport 15L Westport 15LDevelopment engines CWI ISX12 G [2013] Volvo 13L (w/ Westport HPDI) [2014] Westport 15L Kenworth Freightliner Mack T440 T470 T660 T800B T800SH W900S M2 - 112 SD - 114 Cascadia Granite / Pinnacle legend 9 CWI ISL G 9L 9 9 12 15 12 9/12 9 9 12 12 12 CWI ISX12 G Navistar Peterbilt Volvo TranStar 320 382 384 365 367 386 388 VNM VNL 15 Westport 15L 9 9/12 9 9/12 9/12 15 15 15 9 12 *Polk database of new truck sales based on 2011 registrations, Westport analysis 17
  18. 18. Global Truck Market Opportunity China first, followed by India and Europe China LNGV Population Natural Gas Stations in China LNG Station 3,000 CNG Station 14 12 2,500 33% 350 118% 10 CAGR CAGR 2,000 (thousands) 8 1,500 123 20 6 13.3 15 2,500 1,000 4 1,604 1,477 1,329 500 2 3 4 7 5.8 293 355 410 480 537 3.1 0 0 0.3 0.7 0.9 2003 2004 2003 2004 2005 2006 2005 2006 2007 2008 2007 2008 2009 2010 2009 2010 2011 2011 Sources: China Automotive Technology and Research Center, www.chinaev.org, China Road Transport Association, Westport analysis 18
  19. 19. Strong Growth in China First announced Weichai Westport JV in 2008; formal JV commenced July 2010 Hong Kong Light-duty component business has >60% share in China* Peterson (CNG) Equipment 35% Existing NG engine business demonstrating strong growth in China 25% 40% Current priorities: launch Westport HPDI technology for Asian market in 2013 with broad LNG infrastructure Westport revenue model  Sale of components to JV and to vehicle OEMs  Participate in the JV‘s profitability Weichai Westport Financial Summary USD$MM 2008 2009 2010 2011 2012 Revenue $ 9.9 $ 19.0 $ 44.8 $ 109.8 $ 272.1 Cost of revenue 8.1 15.7 35.9 90.1 234.3 Expenses 1.6 2.5 6.4 14.1 28.1 Net income $ 0.1 $ 0.8 $ 2.4 $ 5.6 $ 8.2 Net income % 1.3% 4.2% 5.4% 5.1% 3.0% WPT 35% interest* - - $ 0.6 $ 1.9 $2.9 Engines sold 720 1,696 3,602 8,451 22,025 * Westport began reporting its income from WWI in July 2010 *Westport analysis 19
  20. 20. Fuel Storage Applications:The New Westport™ LNG Tank System Proprietary Westport technology, hydraulic optimized for spark-ignited power module engines, such as CWI The 120 or 150 gallon single-tank systems can run for ~350 to 450 miles, respectively, on cold (unsaturated) LNG tank LNG fuel – ranges double for and pump module dual-tank A single 150 gallon Westport LNG Tank System takes the place of 3 standard CNG tanks, lowering fuel storage costs, speeding up refueling, and reducing overall vehicle weight by 600 lbs Fuel-flexibility with either warm (saturated) or cold (unsaturated) LNG – increasing vehicle range by up to 10% when using cold LNG driver display westport.com/is/core-technologies/westport-lng-tank-system 20
  21. 21. Global Automotive Market Approximately 14.9M1 natural gas passenger car & light commercial vehicles on the road Approximately 79.5M2 passenger car & light commercial sales annually for all fuel types  Approximately 1.5M3 compressed natural gas vehicle sales annually including aftermarket Canada & USA4 Western Europe4 Eastern Europe4 Greater China4 Light Vehicles Light Vehicles Light Vehicles Light Vehicles Produced 12.6M Produced 12.8M Produced 6.3M Produced 18.7M Light Vehicles Light Vehicles Light Vehicles Light Vehicles Sold 16.2M Sold 13.2M Sold 5.1M Sold 19.2M Latin America4 India4 Australia & NZ4 Light Vehicles Light Vehicles Light Vehicles Produced 6.8M Produced 3.8M Produced 0.2M Light Vehicles Light Vehicles Light Vehicles Sold 6.8M Sold 3.3M Sold 1.1M ‗Light vehicle‘ refers to passenger cars, light passenger trucks & 1.NGVA Europe (2012) 3.NGV Global (2011) vans, minibuses, and light commercial vehicles usually less than 3.5 21 2.IHS (2012) 4.IHS (2012) tons and not more than 7 tons
  22. 22. NGV Components & Complete Solutions off-engine on-engine complete industrial engines components components complete systems designed to specific OEM platforms 22
  23. 23. OFF-ROAD APPLICATIONS 23
  24. 24. Significant Off Road Opportunities target vehicles opportunity OEM partners worldwide unitsMINING(RESOURCE EXTRACTION) mine haul 19,406 engine units 2bn gal of diesel consumed annually by (>127 ton)4 trucks the top 10 mining companies alone 13,890 engine units drill rigs and operating around the world1 (drill rigs & frac frac pumps pumps)5RAIL diesel mainline Rail industry consumes 9bn gal of freight diesel fuel annually, half of this in North 50,594 engine units locomotives America2 (mainline diesel Fuel represents approximately 24% of locomotives)6 passenger US railroad operating costs3 locomotivesMARINE ferries Marine industry consumes 13bn gal of diesel fuel annually2 tugboats Emissions reduction in sensitive coastal and inland waterways are a priority 25,000 engine units PSVs (small vessels)7 Some examples of LNG ferries and work and platform support vessels (PSV) in crew boats Scandinavia, but no widespread adoption yet 1. Morgan Stanley/Parker Bay, Westport analysis 2012, Westport Analysis by SCI Verkehr GmbH, Westport analysis 2. UN Energy Statistics Database 2008 5. Baker Hughes Rotary Rig Count Report, Westport 7. Diesel and Gas Turbine Magazine 2011 Marine 3. Burlington Northern 2008 Annual Report analysis Propulsion Order Survey, Westport analysis 24 4. Parker Bay Mobile Mining Equipment Database 6. Diesel Locomotives – Global Market Trends 2011
  25. 25. North America:Potential Off-Road Business Models Fuel Delivery proprietary cryogenic components deliver high pressure fuel Fuel Storage LNG fuel storage solutions Engines Apply Westport HPDI technology 25
  26. 26. INVESTMENT OVERVIEW 26
  27. 27. Business Unit Realignment Previous Structure RealignmentLight Duty Applied Technologies  OMVL and Emer (Italy) Westport (Sweden) - Volvo V70 bi-fuel system  aftermarket conversion kits, direct to OEM systems OMVL and Emer (Italy)  Westport (Australia)  aftermarket conversion kits, direct to OEM systems Wesport (Australia) On-Road Systems Westport™ WiNG Power System for Ford F-250/350/450/550  Westport (Sweden) - Volvo V70 bi-fuel system Westport™ 2.4L and Westport™ 3.8L Industrial engines  Westport™ WiNG Power System for Ford F-250/350/450/550  Mobile and stationary industrial applications incl. forklifts  Westport™ 2.4L and Westport™ 3.8L Industrial engines  Mobile and stationary industrial applications incl. forkliftsHeavy Duty  Westport™ 15L system with Westport™ HPDI technology Westport™ 15L system with Westport™ HPDI technology  Volvo 13L system with Westport™ HPDI technology Volvo 13L system with Westport™ HPDI technology  Westport™ LNG Tank System (North America) Weichai Westport HPDI 12L system  JumpStart mobile refuelling solutions Westport™ LNG Tank System (North America)  Products for On-Road Systems after development JumpStart mobile refuelling solutions New Markets and Off-Road SystemsCorporate including High-Horsepower  Weichai Westport HPDI 12L system CAT development program  Products for Off-Road Systems after development SDTC / EMD development program Corporate and Technology Investments Tata Motors development program  GM, CAT, Tata, and Volvo development programs GM development programs  SDTC / EMD development programJoint Ventures  2 new OEM development programs Cummins Westport and Weichai Westport Joint Ventures  Cummins Westport and Weichai Westport 27
  28. 28. Applied Technologies 3 months 12 months ended Dec. 31 ended Dec. 31 ($ in millions) 2012 2011 change 2012 2011 change Revenue $ 19.8 $ 19.5 2% $ 91.7 $ 62.1 48% Gross margin 5.3 3.7 43% 25.3 13.0 95% Gross margin percentage 26.8% 19.0% - 27.6% 20.9% - Operating expenses 3.8 4.1 (7%) 14.4 11.6 24% Segment operating 1.4 (0.4) 450% 10.8 1.4 671% income (loss) 28
  29. 29. On-Road Systems 3 months 12 months ended Dec. 31 ended Dec. 31 ($ in millions) 2012 2011 change 2012 2011 change Revenue $ 12.4 $ 13.6 (9%) $ 40.7 $ 24.5 66% Gross margin 0.4 0.8 (50%) 4.6 (0.5) 1,020% Gross margin percentage 3.2% 5.9% - 11.3% (2.0%) - Operating expenses 14.9 12.6 18% 47.9 35.1 36% Segment operating (14.5) (11.9) 22% (43.3) (35.6) 22% income (loss) 29
  30. 30. New Markets and Off-Road Systems 3 months 12 months ended Dec. 31 ended Dec. 31 ($ in millions) 2012 2011 change 2012 2011 change Revenue - - - - - - Gross margin - - - - - - Gross margin percentage - - - - - - Operating expenses $ 3.6 $ 1.3 177% $ 12.3 $ 3.1 297% Segment operating (3.6) (1.3) 177% (12.3) (3.1) 297% income (loss) 30
  31. 31. Corporate and Technology Investments 3 months 12 months ended Dec. 31 ended Dec. 31 ($ in millions) 2012 2011 change 2012 2011 change Service revenue $ 7.8 $ 9.8 (20%) $ 23.2 $ 14.3 62% Operating expenses 27.0 13.5 100% 73.4 43.0 71% Segment operating (19.2) (3.6) 433% (50.2) (28.8) 74% income (loss) 31
  32. 32. Overcoming ChallengesPerception ActualEmerging Global patent portfolio protects our technology leadership position and OEM relationshipscompetitionDependent upon OEM-centric business model allows Westport to grow quickly and minimize capital investmentsOEM partners Westport is an essential partner to help OEMs improve their competitive position, increase market share, and get to market faster with natural gas enginesProfitability is Westport is focused on long-term sustainable profits—establishing technology & market leadershipunclear Product launches will generate new investment returns while increasing economies of scale will drive cost reductions and enhance operational efficiencies Cummins Westport and Weichai Westport have proven our profitable business modelHigh average Westport 15L HPDI system ASP has decreased by 11% year over year (2012 vs. 2011)selling price (ASP) Westport WiNG Power System is priced at an industry-leading $9,500Limited fueling Clean Energy Fuels, Shell, ENN, Encana, Chesapeake, ConocoPhillips, and others have committedinfrastructure to build the natural gas infrastructure in N.A., China and EuropeAutomotive >90% of the vehicles sold globally are light-duty1 and >64% of transportation fuel is consumed bymarket is light-duty vehicles in the U.S.2unattractive Westport has relationships with 8 of the 10 largest automotive OEMs in the world Westport Applied Technologies business unit gross margin for the year ended December 31, 2012 was 27.6% Combustion technology development programs with GM highlight strong technology and competitive advantage 1.The Gas Vehicles Report, September 2012 2.NPC Future Transportation Fuels Study, August 2012 32
  33. 33. Pure-play global leader fornatural gas as a transportation fuel Capital Valuable Talented & Strong Efficient & Strategic & Experienced First-Mover Scalable Business Management Advantage Business Alliances Team Model www.westport.com 33

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