Q1 2026 Westport Fuel Systems Inc Earnings Call

May 15, 2026

Operator: Good day, and thank you for standing by. Welcome to the Westport's Q1 2026 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ashley Nuell. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star *11* again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Ashley Newell. Please go ahead. Good morning, everyone. Welcome to WESTPORT's conference call regarding the First Quarter 2026 Financial and Operational Results.

Ashley Nuell: Good morning, everyone. Welcome to Westport's conference call regarding the Q1 2026 financial and operational results. This call is being held to coincide with the press release containing our financial results that was issued yesterday after market close. On today's call, speaking on behalf of Westport will be our Chief Executive Officer and Director, Dan Sceli, and our Chief Financial Officer, Elizabeth Owens. Attendance on this call is open to the public, but questions will be restricted to the analyst community. You are reminded that certain statements made on the conference call and our responses to certain may constitute forward-looking statements within the meaning of US and applicable Canadian securities laws. As such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties.

Speaker #1: This call is being held to coincide with the press release containing our financial results that was issued yesterday after market close. On today's call, speaking on behalf of WESTPORT will be our Chief Executive Officer and Director, Dan Silay, and our Chief Financial Officer, Elizabeth Owens.

Speaker #1: Attendance on this call is open to the public, but questions will be restricted to the analyst community. You are reminded that certain statements made on the conference call, and our responses to certain questions, may constitute forward-looking statements within the meaning of U.S. and applicable Canadian securities laws. As such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties.

Speaker #1: With that, I will turn the call over to you, Dan. Thank you, Ashley, and good morning, everyone. I'll turn to our financial results. Suspira's momentum continues to build with revenue up 33% year over year in the first quarter.

Ashley Nuell: With that, I will turn the call over to you, Dan.

Dan Sceli: Thank you, Ashley, and good morning, everyone. I'll turn to our financial results. Cespira's momentum continues to build with revenue up 33% year over year in Q1. That growth is increasingly material to Westport, reflecting stronger volumes, broader market adoption of HPDI, and progress with a second OEM. Importantly, we expect this momentum to continue through 2026, supported by favorable fuel economics, tightening emissions regulations, and growing OEM and fleet interest in practical low carbon solutions. The significance for our investors is not only top line growth, but the financial read-through. As Cespira continues to scale and improve operating performance, we expect our funding requirements for the joint venture to continue to decline. That creates a more direct link between commercial execution at Cespira and improved capital efficiency at Westport. The broader market backdrop also remains supportive.

Speaker #1: That growth is increasingly material to WESTPORT, reflecting stronger volumes, broader market adoption of HPDI, and progress with a second OEM. Importantly, we expect this momentum to continue through 2026, supported by favorable fuel economics, tightening emissions regulations, and growing OEM and fleet interest in practical low-carbon solutions.

Speaker #1: The significance for our investors is not only top-line growth, but the financial read-through. As Suspira continues to scale and improve operating performance, we expect our funding requirements for the joint venture to continue to decline.

Speaker #1: That creates a more direct link between commercial execution at Suspira and improved capital efficiency at WESTPORT. The broader market backdrop also remains supportive. Volvo Trucks recently announced it has delivered more than 10,000 gas-powered trucks globally, highlighting growing adoption in key European markets.

Dan Sceli: Volvo Trucks recently announced it has delivered more than 10,000 gas-powered trucks globally, highlighting growing adoption in key European markets. While Cognitive Market Research projects the European LNG heavy truck market to grow at a 12.5% growth rate through 2031. Together, those indicators reinforce our view that Cespira is participating in a market with both near-term momentum and multi-year growth potential. Our high pressure controls business has also reflected improved results in Q1 2026, with a 21% increase in revenue compared with the same period last year. What makes it truly meaningful is how we delivered it. Our brand, GFI Control Systems, provides critical components that make this system viable. While AFS ensures that the technologies come together as a complete real-world solution, enabling the performance, reliability, and control our customers expect.

Speaker #1: While cognitive market research projects the European LNG heavy truck market to grow at a 12.5% growth rate through 2031. Together, those indicators reinforce our view that Suspira is participating in a market with both near-term momentum and multi-year growth potential.

Speaker #1: Our high-pressure controls business also reflected improved results in Q1 2026, with a 21% increase in revenue compared with the same period last year.

Speaker #1: What makes it truly meaningful is how we delivered it. Our brand, GFI, components that make this system viable. While AFS ensures that the technologies come together as a complete, real-world solution, enabling the performance, reliability, and control our customers expect.

Speaker #1: Adding to this result, we commenced production at the expanded product development and manufacturing facility in Cambridge, Ontario, and GFI's new China hydrogen innovation center and manufacturing facility in Zhengzhou, China.

Dan Sceli: Adding to this result, we commenced production at the expanded product development and manufacturing facility in Cambridge, Ontario, and GFI's new China Hydrogen Innovation Center and manufacturing facility in Zhengzhou, China. With production underway at all facilities, combined with strong demand from large industrial companies, we remain optimistic about its performance this year, building off this strong start. Moving on to some recent excitement at the ACT Conference in Las Vegas. I believe it provides some key insights into our experience. Getting this truck to Las Vegas on time, show ready, and performing was a complex, high-pressure effort, and the fact that we delivered it speaks volumes. At ACT, from the moment the show floor opened, we saw strong interest. Other exhibitors, fleets, and OEMs stopping to take a closer look and excited by what they saw because this is not a concept.

Speaker #1: With production underway at all facilities, combined with strong demand from large industrial companies, we remain optimistic about its performance this year, building off this strong start.

Speaker #1: Moving on to some recent excitement at the ACT Conference in Las Vegas, I believe it provides some key insights into our experience. Getting this truck to Las Vegas on time, show-ready, and performing was a complex, high-pressure effort, and the fact that we delivered it speaks volumes.

Speaker #1: At ACT, from the moment the show floor opened, we saw strong interest. Other exhibitors, fleets, and OEMs stopping to take a closer look and excited by what they saw.

Speaker #1: Because this is not a concept. It's a fully integrated platform that proves we can deliver diesel performance with cleaner, more cost-effective fuel today. A focused team brought this to life.

Dan Sceli: It's a fully integrated platform that proves we can deliver diesel performance with cleaner, more cost-effective fuel today. A focused team brought this to life. Their success reflects something bigger, our ability to execute, to integrate, and to lead. As we showcase this platform, we demonstrated what sets us apart. Not just innovation, but the ability to bring it to market where it matters most, and fleets and OEMs are starting to notice. It was clear from the volume of interactions this year compared to previous years that this is an exciting time for Westport. We are making clear steps forward in expanding our technology reach. What we see growing demand for high performance, lower emission alternatives.

Speaker #1: But their success reflects something bigger: our ability to execute, to integrate, and to lead. As we showcase this platform, we demonstrated what sets us apart.

Speaker #1: Not just innovation, but the ability to bring it to market where it matters most. And fleets and OEMs are starting to notice. It was clear from the volume of interactions this year compared to previous years that this is an exciting time for Westport.

Speaker #1: We are making clear steps forward in expanding our technology reach. What we see going—what we see is growing demand for high-performance, lower-emission alternatives. The conference success was a clear signal that we are advancing our high-pressure CNG storage solution into a North American market with real momentum.

Dan Sceli: The conference success was a clear signal that we are advancing our high-pressure CNG storage solution into a North American market with real momentum, positioning Westport to capture long-term growth opportunities in the global heavy-duty transportation market. I'll have Elizabeth run through some financial details, and then we'll come back. Elizabeth.

Speaker #1: Positioning WESTPORT to capture long-term growth opportunities in the global heavy-duty transportation market. Now, I'll have Elizabeth run through some financial details, and then we'll come back.

Speaker #1: Elizabeth? Thank you, Dan, and good morning, everyone. I'll highlight a few key milestones that Westport has achieved, the first of which remains our strong cash position through the first quarter of 2026.

Elizabeth Owens: Thank you, Dan, and good morning, everyone. I'll highlight a few key milestones that Westport has achieved, the first of which remains our strong cash position through Q1 2026. As of 31 March 2026, our cash and cash equivalence position stood at $24.5 million compared to $27.2 million at 31 December 2025. Net cash used in operating activities from continuing operations was $3.4 million for the quarter ended 31 March 2026, compared to $8.6 million in the prior year, an improvement of $5.2 million as a result of changes in working capital.

Speaker #1: As of March 31, 2026, our cash and cash equivalents position stood at $24.5 million, compared to $27.2 million at December 31, 2025.

Speaker #1: Net cash used in operating activities from continuing operations was $3.4 million for the quarter ended March 31, 2026, compared to $8.6 million in the prior year, an improvement of $5.2 million as a result of changes in working capital.

Speaker #1: Our capital contributions to the Suspira joint venture decreased from $4.7 million in the first quarter of 2025 to $2.9 million in Q1 of 2026, reflective of the improvement of Suspira's financial performance.

Elizabeth Owens: Our capital contributions to the Cespira joint venture decreased from $4.7 million in Q1 2025 to $2.9 million in Q1 2026, reflective of the improvement of Cespira's financial performance. Our total outstanding debt sits at $1.9 million, a reduction of $1 million from the $2.9 million reported at year-end 2025. This debt will be retired in Q3 2026. Our high-pressure controls business segment saw meaningful growth, with revenue for Q1 2026 increasing 21% to $2.3 million from $1.9 million reported in Q1 2025. Higher year-over-year sales volumes drove the revenue increase with gross profit of $0.5 million consistent with the prior period. As Dan highlighted, Cespira's revenue growth is accelerating as we enter 2026.

Speaker #1: Our total outstanding debt sits at 1.9 million, a reduction of 1 million from the 2.9 million reported at year-end 2025. This debt will be retired in the third quarter of 2026.

Speaker #1: Our high-pressure controls business segments saw meaningful growth, with revenue for Q1, 2026 increasing 21% to 2.3 million from 1.9 million reported in Q1, 2025.

Speaker #1: Higher year-over-year sales volumes drove the revenue increase, with gross profit of $0.5 million consistent with the prior period. As Dan highlighted, Suspira's revenue growth is accelerating as we enter Q1 2026.

Elizabeth Owens: In Q1 2026, total revenue generated was $22.2 million, compared to $16.7 million in the same period last year. Representing an increase of 33%, driven by higher sales volumes. Cespira product revenue of $19.5 million increased 48% compared to $13.2 million in Q1 2025. Cespira gross profit improved to $1.6 million compared to $0.4 million one year ago. Gross margin improved in Q1 2026 to 7% from 3% in Q1 2025. Cespira also significantly improved the bottom line with a net loss in Q1 2026 of $2.5 million, a 65% reduction from the $7.1 million net loss reported in the prior year quarter.

Speaker #1: In Q1, 2026, total revenue generated was 22.2 million, compared to 16.7 million in the same period last year. Representing an increase of 33%, driven by higher sales volumes.

Speaker #1: Suspira product revenue of 19.5 million increased 48%, compared to 13.2 million in Q1, 2025. Suspira gross profit improved to 1.6 million compared to 0.4 million one year ago.

Speaker #1: Gross margin improved in Q1, 2026 to 7% from 3% in Q1, 2025. Suspira also significantly improved the bottom line, with a net loss in Q1, 2026 of 2.5 million, a 65% reduction from the 7.1 million net loss reported in the This progress is supported by strong market adoption.

Elizabeth Owens: This progress is supported by strong market adoption, including Volvo reaching the milestone of more than 10,000 natural gas trucks on the road equipped with Cespira's HPDI fuel system. We are also encouraged by the continuing progress of a second OEM that is currently conducting truck trials. We're excited about the opportunities ahead as we target an improvement in Cespira's capital requirements. With that, I'll pass the call back to Dan.

Speaker #1: Including Volvo reaching the milestone of more than 10,000 natural gas trucks on the road, equipped with Suspira's HPDI fuel system. We are also encouraged by the continued progress of a second OEM that is currently conducting truck trials.

Speaker #1: And we're excited about the opportunities ahead as we target an improvement in Suspira's capital requirements. With that, I'll pass the call back to Dan.

Speaker #1: Thank you, Elizabeth. We are operating on where the fundamentals continue to strengthen. We are seeing solid year-over-year growth in our Suspira joint venture with Volvo Group, supported by increasing demand for LNG-powered heavy-duty trucks in Europe and other parts of the world, and favorable fuel economics that are driving adoption.

Dan Sceli: Thank you, Elizabeth. We are operating in more of the fundamentals continue to strengthen. We are seeing solid year-over-year growth in our Cespira joint venture with Volvo Group, supported by increasing demand for LNG-powered heavy-duty trucks in Europe and other parts of the world and favorable fuel economics that are driving adoption. At the same time, tightening emissions regulations and the need for practical lower emission solutions are reinforcing the role of technologies like ours in the transition of the heavy-duty sector. Against this backdrop, Westport is well positioned to capitalize on these trends. Cespira's HPDI fuel system takes diesel delivery-like performance with lower emissions, and we are seeing growing validation through increased volumes with both Volvo and an additional OEM undergoing testing as we speak.

Speaker #1: At the same time, tightening emissions regulations and the need for practical, lower-emission solutions are reinforcing the role of technologies like ours in the transition of the heavy-duty sector.

Speaker #1: Against this backdrop, WESTPORT is well-positioned to capitalize on these trends. Suspira's HPDI fuel system technology-like performance with lower emissions and we are seeing growing validation through increased volumes with both Volvo and an additional OEM undergoing testing as we speak.

Speaker #1: The momentum we demonstrated at ACT Expo highlights our ability to bring fully integrated solutions to market. And we are now focused on execution, scaling commercial volumes, advancing our high-pressure CNG solutions into North America, and expanding into new regions and applications.

Dan Sceli: The momentum we demonstrated at ACT Expo highlights our ability to bring fully integrated solutions to market, and we are now focused on execution, scaling commercial volumes, advancing our high-pressure CNG solutions into North America, and expanding into new regions and applications. Together, these efforts position us to build meaningful scale and capture long-term growth opportunities across the global heavy-duty transportation market. Thank you. That concludes the discussion.

Speaker #1: Together, these efforts position us to build meaningful scale and capture long-term growth opportunities across the global heavy-duty transportation market. Thank you. That concludes the discussion.

Operator: As a reminder, to ask a question, please press star 11 on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question will come from the line of Eric Stine of Craig-Hallum Capital Group. Your line is open, Eric.

Speaker #1: As a reminder, to ask a question, please press star 11 on your touch-tone telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #1: And our first question will come from the line of Eric Stein of Craig Halem Capital Group. Your line is open, Eric. Good morning, everyone.

Eric Stine: Good morning, everyone.

Speaker #1: Hey, good morning, Eric. Hey, maybe just starting with Suspira. So the second truck trial, I mean, it does I know we just connected with a couple of weeks ago.

Dan Sceli: Hey, good morning, Eric.

Eric Stine: Hey, maybe just starting with Cespira. The second truck trial, I mean, I know we just connected, what, a couple weeks ago, but it does feel like you're giving a more optimistic tone about that trial. Curious, I mean, am I reading that right? With that in mind, you know, can you remind us of next steps for that or the timeline we should look for, you know, over the remainder of 2026 and then in 2027?

Speaker #1: But it does feel like you're given a more optimistic tone about that trial. So curious, I mean, am I reading that right? And with that in mind, can you remind us of next steps for that or the timeline?

Speaker #1: We should look for over the remainder of '26 and into '27. Sure. Yeah. I do feel more optimistic. I mean, the truck trial is going really well.

Dan Sceli: Sure. Yeah, I do feel more optimistic. I mean, the truck trial is going really well. You know, discussions, negotiations continue for the next phase of this, which is a higher volume. The initial truck trial I think was around 200 trucks. Moving on to larger volumes and, you know, commercializing this is the discussion that's ongoing right now.

Speaker #1: So discussions on negotiations continue for the next phase of this, which is a higher volume. The initial truck trial, I think, was around 200 trucks.

Speaker #1: But moving on to larger volumes and commercializing this is the discussion that's ongoing right now. Okay. And timeline in terms of—I think last time you'd said that you expected a decision, and maybe it's a decision as part of the negotiations you mentioned, later this year.

Eric Stine: Okay. Timeline in terms of, I think last time you'd said that you expected a, you know, a decision and maybe it's a decision as part of the negotiations you mentioned later this year. Does that still hold?

Speaker #1: Does that still hold? It does. Yeah. Okay. Got it. A determination on this project before year-end. Okay. And then maybe anything you gave a lot of detail about Q4 and the end of '25 in terms of some of the new markets that Volvo and Suspira are seeing momentum.

Dan Sceli: It does. Yeah.

Eric Stine: Okay. Got it.

Dan Sceli: Expect a determination on this project before year-end.

Eric Stine: Okay. Maybe, you know, I mean, you talked, you gave a lot of detail about Q4 and the end of 2025 in terms of some of the new markets that Volvo, well, and Cespira are seeing momentum on a global basis. Obviously, North America a big focus. Just curious, I mean, are there any other contributors to Q1 that are worth highlighting, you know, as awareness of that product expands?

Speaker #1: On a global basis, obviously, North America a big focus, but just curious, I mean, are there any other contributors to Q1 that are worth highlighting?

Speaker #1: As awareness of that product expands. We do see beachheads opening up in India and Brazil. There's already trucks in Peru and Chile. India and Brazil are two massive markets.

Dan Sceli: We do see, you know, beachheads opening up in India and Brazil. There's already trucks in Peru and Chile. You know, India and Brazil are two massive markets and, you know, we're seeing strong interest in those markets to move to alternative fuel. We're very excited about that opportunity coming to us.

Speaker #1: And we're seeing strong interest in those markets to move to alternative fuels, so we're very excited about that opportunity coming to us. Got it.

Eric Stine: Got it. All right. Maybe last one for me. Just because of how things are trending with the joint venture and, you know, expectations that that momentum continues, can you just update us on maybe current thoughts on contributions needed to the joint venture here going forward?

Speaker #1: All right. Maybe last one for me. Just because of how things are trending, with the joint venture and expectations that that momentum continues, can you just update us on maybe current thoughts on contributions needed to the joint venture here going forward?

Dan Sceli: Yeah. Obviously, you saw that. The contributions are going down at a steady rate simply because volumes are going up at a steady rate. I mean, the product revenue alone, for the last 48 weeks, expecting it to have that rate even grow for that. As we approach, you know, 2027, mid-2027, the contribution reduced a lot more.

Speaker #1: Yeah, so obviously, you saw that we've been putting the contributions going down at a 60 rate, simply because volumes are going up at a steady rate.

Speaker #1: I mean, the product revenue alone is less. 48%. Expecting it to that rate and as we approach 2027, mid-2027, those contributions reduced a lot more.

Speaker #1: Okay. You were cutting in and out there, but I guess I'll take that clarify some stuff offline. Thank you. Okay. Thanks, Eric. And our next question will be coming from the line of Chris Dendrinos.

Eric Stine: Okay. You were cutting in and out there, I guess I'll take that, clarify some stuff offline. Thank you.

Dan Sceli: Okay. Thanks, Eric.

Operator: Our next question will be coming from the line of Chris Dendrinos of RBC Capital Markets. Your line is open.

Speaker #1: Of RBC Capital Markets, your line is open. Yeah. Good morning. Thank you. I mean, maybe just to follow up here a bit on Suspira here.

Chris Dendrinos: Yeah, good morning. Thank you.

Dan Sceli: Good morning.

Chris Dendrinos: Maybe just to follow up here a bit on Cespira here. You know, a good quarter with some solid gross margin there. You know, how are you thinking about gross margin for the remainder of the year? I guess what I'm kind of curious about is you highlighted some deliveries to the test OEM, and I'm curious what that volume looks like maybe for the rest of the year and how that's playing out in terms of gross margin. Thanks.

Speaker #1: A good quarter with some solid growth margin there. How are you thinking about growth margin for the remainder of the year? And I guess what I'm kind of curious about is, you highlighted some deliveries to the test OEM, and I'm curious what that volume looks like maybe for the rest of the year and how that's playing out in terms of growth margin.

Speaker #1: Thanks. Yeah. Sure. So I mean, as we've been talking about for the last year, Suspira is margins are going to continue to grow just simply based on volume.

Dan Sceli: Yeah, sure. I mean, as we've been talking about, you know, for the last few series, margins are gonna continue to grow just simply based on volume. You know, we built out this business completely. To be a tier 1 to a automotive OEM like Volvo, you need to have a completely built out and certified business. That was, you know, day 1 almost 2 years ago. You know, all disciplines, all departments, full certifications in IATF, all of that. The expense of building out the business was laid down. We're now, you know, structuring multiple audits to cover those product specs.

Speaker #1: We built out this business completely to be a tier one to an automotive OEM like Volvo. You need to have a completely built-out and certified business.

Speaker #1: So that was day one almost two years ago. All disciplines, all departments, full certifications in IETF, all of that. So the expense of building out the business was laid down.

Speaker #1: We're now structuring around to cover those costs and continue to build forward in time. In terms of what we can do Q2, Q4, Q4, Q4, Suspira and the business we have to accelerate through the rest of the year.

Dan Sceli: As we continue, you know, to build forward and talk to a lot of customers, in terms of what we see Q2 forward, Cespira and the business staying safe. I mean, the business we have plans going on obviously to accelerate through the rest of the year. In terms of the second OEM, you know, Fred, we're in discussion with them. As you can understand, I mean, we're not allowed to discuss who and where. That said, it's a very strategic move. Look at their marketing plans and understand their capabilities. We should be able to kind of feed back into that in the fall on the outcome of those conversations and where it leads.

Speaker #1: But in terms of 2027, we have we're in discussion with we're not allowed to be discussed about that. And understand that we should be able to have some piece of that on the outcome of where we reach.

Speaker #1: Got it. Thanks. And then maybe just as a follow-up here, there is the service segment, and I think that project rolls off at the end of this year.

Chris Dendrinos: Got it. Thanks. Then maybe just as a follow-up here, you know, there was the service segment, and I think that project rolls off at the end of this year. Is there anything that would potentially come in and replace that? Thanks.

Speaker #1: Is there anything that would potentially come in and replace that? Thanks. Yeah. I mean, that service is really two major projects. HPDI 3.0, which is in conjunction with Volvo launching its base engine at the end of this year.

Dan Sceli: Yeah, I mean, that service is really two major projects. HPDI 3.0, which is, you know, in conjunction with Volvo launching its gas engine at the end of this year. You know, it's an advanced HPDI system. It's an advanced Volvo engine. That's the first part that we'll be wrapping up. The second is we are still doing the development work for Volvo's hydrogen project. They've recently announced their, you know, perhaps on the road course what we could be. We are doing that development work over the next couple of years. That service work is gonna continue.

Speaker #1: And it's an advanced HPDI system. It's an advanced Volvo engine. That's the first part that will be wrapping up. The second is we are still doing the development work for Volvo's hydrogen project.

Speaker #1: And they've recently announced their on the road we are doing that development work over the next couple of years. So that service work is going to continue.

Dan Sceli: We're looking at additional service work, which engineering development work, on a couple of other projects that we're not allowed to talk about yet, as you can understand. We hope that we can announce them at further down the road.

Speaker #1: We're looking at additional service work, which engineering development work on a couple of other projects that we're not allowed to talk about yet because you can understand.

Speaker #1: And we hope that we can announce those further down the road. Got it. Thank you very much. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Chris Dendrinos: Got it. Thank you very much.

Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. Our next question will be coming from the line of Rob Brown of Lake Street Capital Markets. Your line is open, Rob.

Speaker #1: Our next question will be coming from the line of Rob Brown of Lake Street Capital Markets. Your line is open, Rob. Good morning, Rob.

Dan Sceli: Hey, good morning, Rob.

Rob Brown: Thank you. Morning. Just kind of at a high level, what are the next steps in the North American market? You had good kind of a good showing at the ACT Expo and good interest. What's sort of the next steps in the North American market development?

Speaker #1: Thank you. Good morning. Just kind of at a high level, what are the next steps in the North American market? You had good kind of a good showing at the ACT Expo and good interest.

Speaker #1: What’s, sort of, the next steps in the North American market development? Yeah. Rob, I’ve got to tell you, it was more than successful—it was overwhelming.

Dan Sceli: Yeah, Rob, I gotta tell you, it was more than, you know, successful. It was overwhelming. The excitement, the interest that we got at the ACT Show, we, you know, we built out a truck. Volvo got us a truck and an engine. We built it out and drove it down from Vancouver to Las Vegas. The funny thing was we had a chase car. The truck spent $280 on gas getting there, more than the chase or less than the chase car. The interest is just overwhelming. There's an awful lot of discussion right now between fleets, dealers, and the OEM on what's next. Certainly, you know, we are planning to do more demos, fleet-driven demos.

Speaker #1: The excitement, the interest that we got at the ACT show, we built out a truck. Volvo got us a truck and an engine. We built it out and drove it down from Vancouver to Las Vegas.

Speaker #1: The funny thing was we had a chase car. The truck spent $280 on gas getting there, more than the chase or less than the chase car.

Speaker #1: And the interest is just overwhelming. So there's an awful lot of discussion right now between fleets, dealers, and the OEM on what's next. And certainly, we are planning to do more demos—fleet-driven demos—to be done for the EPA certification to launch this.

Dan Sceli: There's planning to be done for the EPA certification to launch this. That's all activity that, you know, is picking up pace just coming out of the actual because of the interest from multiple fleets, multiple very large fleets. We're very excited about that.

Speaker #1: So that's all activity that is picking up pace just coming out of the ACT show because of the interest from multiple fleets, multiple very large fleets.

Speaker #1: So we're very excited about that. Okay. I think and then in the high-pressure controls business, you had a good step up in gross margin.

Rob Brown: Okay. Thank you. In the high pressure controls business, you had a good step up in gross margin. I assume that has a lot to do with getting China production running. How is the gross margin trends in the controls business going forward?

Speaker #1: I assume that has a lot to do with getting China production running. How is the gross margin trend in the controls business going forward?

Speaker #1: Yeah. We expect down the road as the volume because it is a volume issue. We shut down to move the manufacturing equipment out of Italy and move it to between Cambridge and China.

Dan Sceli: Yeah, we expect, you know, down the road as the volumes, because it is a volume issue. We shut down for a period to move the manufacturing equipment out of Italy and move it between Cambridge and China. The China piece was really built out to focus on the China market only for localized cost, localized management, geopolitics. Of course, we're gonna be, you know, localizing some of the components. We expect the margins to grow there, but we need the volume to pick up. There is still the pause in hydrogen. You know, we're hearing from the Chinese government it's going to get pushed forward again. The underlying product is a high-ground product that we can get good margins on.

Speaker #1: The China piece was really built out to focus on the China market only for localized cost, localized managed geopolitics. And of course, we're going to be localizing some of the components.

Speaker #1: So, we expect the margins to grow there, but we need the volume to pick up. There is still the pause in hydrogen we're hearing from the Chinese government that's going to get pushed forward again.

Speaker #1: So the underlying product is a very, very high and low ground product that we can get good margins on. What we need right now is volume.

Dan Sceli: What we need right now is volume, and that volume is starting to come. you know, we're seeing it already this year. you know, I'm sure you saw them as well, customers in that group who had their call earlier this week. you know, all over, volume is starting to go up for hydrogen. As that volume goes up, the margins are gonna be there.

Speaker #1: And that volume is starting to come, and we're seeing it already this year. And one of our—I'm sure you follow them as well.

Speaker #1: Their call earlier, this week, they're going to bring up. So all over volume is starting to go up for hydro. And as that volume goes up, they're going to be there.

Speaker #1: And I'm showing no further questions. I would now like to turn the call to Dan for closing remarks. Well, thank you for your time today.

Operator: I'm showing no further questions. I would now like to turn the call to Dan for closing remarks.

Dan Sceli: Well, thank you for your time today. Earlier in the quarter, we're very excited about where we're headed, lots of positive trends. You know, emphasize the both HPDI, several 100%, and of course, the American controls system. Look forward to the next.

Speaker #1: We're very excited about where we're headed. trends. I want to emphasize the HPDI system. Look forward to the next and this concludes today's conference.

Operator: This concludes today's conference. Thank you for participating. You may now disconnect.