Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
Introduction & Market Context
Westport Fuel Systems Inc. (NASDAQ:WPRT) presented its Q2 2025 results on August 11, 2025, highlighting its strategic transformation following the divestiture of its Light-Duty segment. The company’s stock reacted negatively to the results, dropping 9.38% during regular trading hours and falling an additional 13.94% in pre-market trading the following day, reflecting investor concerns despite management’s optimistic outlook.
The alternative fuel systems provider is repositioning itself to focus on commercial transportation solutions and high-pressure technology, operating in a global heavy-duty truck market expected to reach 1.95 million units in 2025. Westport’s presentation emphasized China’s position as the world’s largest LNG market and noted a revival of natural gas solutions in European and North American markets.
Quarterly Performance Highlights
Westport reported Q2 2025 revenue of $12.5 million, down from $14.1 million in the same period last year, representing an 11% decrease. However, the company highlighted that Cespira, its joint venture, generated an additional $12.0 million in revenue during the quarter.
As shown in the following financial results summary:
Despite the revenue decline, Westport achieved a gross profit of $0.8 million (6% of revenue) and improved its Adjusted EBITDA to -$1.0 million from -$2.0 million in Q2 2024. The company reported a net loss from continuing operations of $5.1 million.
The improvement in Adjusted EBITDA was primarily driven by reduced operating expenses, as illustrated in this breakdown:
Segment Performance Analysis
Westport’s High-Pressure Controls and Systems segment experienced a 19% revenue decline, dropping from $3.6 million in Q2 2024 to $2.9 million in Q2 2025. More concerning was the segment’s gross profit, which fell 91% to just $0.1 million, with gross margin plummeting from 31% to 3%. Management attributed this decline to a slowdown in the hydrogen industry and increased material costs.
The Heavy-Duty OEM segment also faced challenges, with revenue decreasing 9% year-over-year to $9.6 million and gross profit declining 46% to $0.7 million. The company noted that gross margin contracted from 12% to 7%, partly due to reduced manufacturing support to Cespira.
In contrast, Cespira showed significant revenue growth, increasing from $4.1 million in Q2 2024 (which only reflected one month of operations) to $12.0 million in Q2 2025. However, gross profit turned negative at -$1.9 million compared to $0.2 million in the prior year, with gross margin falling from 5% to -16%.
Strategic Initiatives & Outlook
Westport outlined its renewed focus on providing solutions for various applications using net-zero and lower-carbon fuels. The company’s strategic roadmap shows a progression from natural gas solutions in 2025 to cryogenic and high-pressure systems for hydrogen by 2035.
As illustrated in the company’s outlook presentation:
Key strategic initiatives include expanding Cespira’s market presence, leveraging high-pressure controls and systems to complement the energy transition, and implementing financial initiatives to maximize economic benefits for stakeholders. The company also announced plans to relocate manufacturing operations from Italy to Canada and China in Q3 2025 to simplify its supply chain.
Light-Duty Divestiture Impact
A central element of Westport’s transformation is the completed divestiture of its Light-Duty segment, which provided $62.5 million (€53.6 million) in net proceeds. The transaction breakdown shows:
The divestiture proceeds are expected to strengthen Westport’s balance sheet and fund strategic growth initiatives. Prior to the divestiture, the Light-Duty segment had generated $76.4 million in revenue in Q2 2025, a 10% increase from the previous year, with a gross profit of $15.1 million.
The company’s liquidity position shows the impact of recent operational changes:
Cash decreased from $14.8 million in Q4 2024 to $6.1 million in Q2 2025, primarily due to $5.6 million used in operating activities and a $4.2 million capital contribution to Cespira. However, debt also decreased from $6.8 million to $4.9 million during the same period.
Market Reaction & Analyst Perspectives
Despite management’s emphasis on strategic transformation and improved Adjusted EBITDA, investors reacted negatively to Westport’s results. The stock fell 9.38% during regular trading on August 12, 2025, with an additional 13.94% decline in pre-market trading, bringing the share price to $3.21.
According to InvestingPro analysis, Westport’s stock appears undervalued at current levels, trading at just 0.42 times book value and sitting 45% below its 52-week high of $6.20. However, the company’s overall financial health score stands at "FAIR," reflecting ongoing challenges in revenue growth despite operational improvements.
CEO Dan Sceli emphasized the company’s fuel-agnostic approach, stating, "HPDI is fuel agnostic, and the on-engine system can run on any one of the fuels, hydrogen, all the natural gases." He also highlighted the strategic benefits of divesting the light-duty segment, allowing Westport to "focus on solutions for hard to decarbonize mobility and industrial applications."
As Westport continues its strategic pivot, investors will be watching closely to see if the company can translate its operational improvements and strategic focus into sustainable revenue growth and profitability in the coming quarters.
Full presentation:
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