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Most of Westport Fuel Systems’ revenue comes from Cespira, its joint venture with Volvo Group. Cespira supplies engine and commercial-vehicle manufacturers with systems that let diesel engines run mainly on liquefied natural gas while retaining diesel-like power and fuel efficiency. These high-pressure direct injection systems, known as HPDI, primarily target heavy-duty long-haul trucks. Cespira is also developing applications for hydrogen and other alternative fuels.
Westport’s High-Pressure Controls business supplies GFI-branded components that regulate and control fuel delivery in vehicle and industrial propulsion systems. Equipment manufacturers and their suppliers pay for these products and related engineering work. Sales depend on lengthy engine-development and approval processes, followed by long-term supply programs; one distributor in Asia accounts for a substantial share of company revenue.
The HPDI business depends on Cespira’s production and customer uptake, as well as Volvo Group’s priorities and shared decisions. Wider adoption depends on access to natural-gas and hydrogen refueling infrastructure and whether alternative fuels offer attractive costs compared with diesel.
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Westport’s results depend heavily on bringing Cespira’s HPDI fuel systems to market through its joint venture with Volvo, which owns 45% of Cespira.
Cummins gives heavy-duty truck makers an alternative to engines equipped with Westport Fuel Systems Inc’s fuel systems: it sells complete natural-gas engines, while Westport supplies systems that let diesel engines run predominantly on gaseous fuels, known as HPDI.
China Yuchai competes for truck and bus makers’ engine choices, selling natural-gas and alternative-fuel engines against propulsion systems incorporating Westport Fuel Systems Inc’s fuel systems. Watch Yuchai’s sales of those engines to truck and bus manufacturers for a view of demand in the customer group both serve.
Power Solutions International, Inc. competes with Westport Fuel Systems Inc for vehicle and industrial manufacturers’ spending on alternative-fuel engines, fuel systems and components. Its fuel-system business for Class 2–7 vocational trucks and vans, school buses and transit buses is the part to watch for overlap with Westport’s transport customers.
Cummins Inc. earningsCMI
Cummins’ report will show how heavy-duty truck makers are responding to natural-gas engines, giving a market signal for Westport Fuel Systems’ HPDI systems.
Look for evidence of demand for Cummins’ natural-gas engines, while keeping in mind that these are complete engines, not Westport Fuel Systems’ HPDI systems. Stronger demand would suggest truck makers are showing greater interest in natural-gas power, a more supportive market for Westport but not proof that they chose HPDI. Weaker demand would point to a less supportive market for Westport’s heavy-duty systems.
Power Solutions International, Inc. earningsPSIX
Power Solutions International’s report will show whether vocational-vehicle and industrial makers are spending on alternative-fuel engines and fuel systems, a demand signal for Westport Fuel Systems’ overlapping transport markets.
Focus on Power Solutions International’s fuel-system business for vocational trucks, school buses and transit buses, rather than treating its whole business as a direct match. Stronger fuel-system demand would show that makers in these overlapping markets are still buying alternative-fuel equipment, supporting the market Westport Fuel Systems serves. Weaker demand would point to tighter customer spending and greater pressure on Westport to win sales.
Westport Fuel Systems Inc earningsThis company
Westport Fuel Systems’ report will show whether growth in Cespira’s business is bringing in more revenue and easing the company’s ongoing cash drain.
Read revenue alongside cash used in operating activities. Rising revenue with less operating cash use would show that growth, including at Cespira, is helping support the business. Revenue that fails to grow while operating cash continues to drain would show that the business has not eased its funding pressure and still needs additional financing to keep operating.
