Westport Fuel Systems (NASDAQ:WPRT) reported improving first-quarter 2026 results across its Cespira joint venture and high-pressure controls business, with management pointing to stronger demand for lower-emission heavy-duty transportation technologies and reduced funding needs for the joint venture.
Chief Executive Officer and Director Dan Sceli said Cespira, Westport’s joint venture with Volvo Group, posted a 33% year-over-year revenue increase in the quarter. He said the growth is becoming “increasingly material to Westport,” driven by stronger volumes, broader market adoption of HPDI technology and progress with a second original equipment manufacturer.
Cespira Revenue Rises as Losses Narrow
Chief Financial Officer Elizabeth Owens said Cespira generated total revenue of $22.2 million in the first quarter, up from $16.7 million in the same period last year. Product revenue rose 48% to $19.5 million from $13.2 million.
Cespira’s gross profit improved to $1.6 million from $0.4 million a year earlier, while gross margin increased to 7% from 3%. The joint venture’s net loss narrowed to $2.5 million, a 65% reduction from the $7.1 million loss reported in the prior-year quarter.
Owens said Westport’s capital contributions to Cespira declined to $2.9 million in the first quarter from $4.7 million a year earlier, reflecting improved financial performance at the joint venture. Sceli said Cespira’s scaling should continue to reduce Westport’s funding requirements.
“As Cespira continues to scale and improve operating performance, we expect our funding requirements for the joint venture to continue to decline,” Sceli said. “That creates a more direct link between commercial execution at Cespira and improved capital efficiency at Westport.”
Second OEM Trial Seen Progressing
During the question-and-answer session, Craig-Hallum analyst Eric Stine asked whether management’s tone had become more optimistic regarding a second OEM truck trial. Sceli said the trial was “going really well” and that discussions were continuing for the next phase, which would involve higher volumes.
Sceli said the initial truck trial involved roughly 200 trucks and that Westport expects “a determination on this project before year-end.” He added that the company is not yet able to disclose the OEM involved or provide additional details on timing.
Management also highlighted Volvo Trucks’ announcement that it has delivered more than 10,000 gas-powered trucks globally. Owens said those trucks are equipped with Cespira’s HPDI fuel system. Sceli also cited Cognitive Market Research’s projection that the European LNG heavy truck market will grow at a 12.5% rate through 2031.
Cash Position Improves Relative to Prior-Year Operating Use
Westport ended the quarter with cash and cash equivalents of $24.5 million, compared with $27.2 million at Dec. 31, 2025. Net cash used in operating activities from continuing operations was $3.4 million, compared with $8.6 million in the prior-year quarter, an improvement of $5.2 million that Owens attributed to changes in working capital.
The company reported total outstanding debt of $1.9 million, down from $2.9 million at year-end 2025. Owens said the remaining debt is expected to be retired in the third quarter of 2026.
High-Pressure Controls Business Posts Revenue Growth
Westport’s high-pressure controls segment also improved in the first quarter. Owens said revenue rose 21% to $2.3 million from $1.9 million a year earlier, driven by higher sales volumes. Gross profit was $0.5 million, consistent with the prior-year period.
Sceli said the business is benefiting from the company’s GFI Control Systems brand and AFS integration capabilities. He noted that production has begun at Westport’s expanded product development and manufacturing facility in Cambridge, Ontario, as well as GFI’s new China Hydrogen Innovation Center and manufacturing facility in Zhengzhou, China.
Asked by Lake Street Capital Markets analyst Rob Brown about margin trends in the controls business, Sceli said margins should improve as volume increases. He said Westport had moved manufacturing equipment out of Italy and into Cambridge and China, with the China facility focused on serving the local market.
Sceli also said there has been a “pause in hydrogen,” but that Westport is hearing from the Chinese government that activity is expected to move forward again. He said the underlying product is capable of producing good margins, but the business needs more volume.
North American Interest Builds After ACT Expo
Sceli devoted part of the call to Westport’s showing at the ACT Expo in Las Vegas, where the company displayed a fully integrated truck platform. He said the company built out a truck using a vehicle and engine provided by Volvo and drove it from Vancouver to Las Vegas.
Sceli described interest at the event as “overwhelming,” saying fleets, dealers and the OEM are now discussing next steps. He said Westport plans to conduct additional demos, including fleet-driven demonstrations, and begin planning for EPA certification to support a North American launch.
“This is not a concept,” Sceli said. “It’s a fully integrated platform that proves we can deliver diesel performance with cleaner, more cost-effective fuel today.”
Sceli said the company also sees opportunities developing in India and Brazil, calling them “two massive markets,” and noted that trucks are already operating in Peru and Chile. He said those markets are showing strong interest in alternative fuels.
Looking ahead, Sceli said Westport is focused on scaling commercial volumes, advancing high-pressure CNG solutions into North America and expanding into additional regions and applications. He said the company sees supportive fundamentals from fuel economics, tightening emissions regulations and demand for lower-emission heavy-duty transportation options.
About Westport Fuel Systems (NASDAQ:WPRT)
Westport Fuel Systems Inc is a Canadian-based company that designs, engineers and manufactures alternative fuel systems and components for transportation and industrial applications. Specializing in natural gas, propane and hydrogen technologies, the company develops complete fuel delivery systems, high-pressure direct injection solutions and fuel storage modules tailored for light-, medium- and heavy-duty vehicles. Its platforms are designed to reduce emissions and lower operating costs for original equipment manufacturers (OEMs) and fleet operators worldwide.
The company’s product portfolio includes compressed natural gas (CNG) and liquefied natural gas (LNG) fuel systems, electronic controls, injectors, pressure regulators and specialized fuel tanks.
