Thank you for standing by. This is the conference operator. Welcome to the Westport Fuel Systems Second Quarter 2022 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Ashley Nuell, Senior Director of Investor Relations. Please go ahead. Good morning, everyone. Welcome to Westport Fuel Systems Second Quarter 2022 Conference Call, which is being held to coincide with the press release containing Westport Fuel Systems financial results that were distributed yesterday. On today's call, speaking on behalf of Westport Fuel Systems is Chief Executive Officer David Johnson, and Chief Financial Officer Richard Orazietti. Attendance on this call is open to the public, but questions will be restricted to the investment community. You are reminded that certain statements made in this conference call and our responses to various questions may constitute forward-looking statements within the meaning of the 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. With that, I'll turn the call over to you, David. Thanks, Ashley. Good morning, everyone. I'm pleased to be with you today to discuss our second quarter. Once again, our team delivered strong top-line results as we continued to execute against our strategy amid a very challenging macro environment. Today, I'll be walking you through our HPDI growth story, including the regulatory environment and total cost of ownership analysis, which demonstrates that HPDI is the most affordable way and the most available way to reduce CO2 and meet CO2 standards. I'll also discuss our LPG business through both our light-duty OEM and Independent Aftermarket channels, where we're seeing improvements because of the increased price advantage of LPG compared to petrol. Finally, I'll walk you through our Indian business, where we're seeing growth today and expecting this growth to continue as CNG fuel station build-out continues towards 10,000 stations. Following that, I'll pass it over to Richard to cover the financials. Our business continues to deliver strong results quarter- over- quarter, despite the ongoing challenge our industry is facing. In the second quarter, we delivered revenue slightly up compared to Q2 last year, an achievement considering the combined impact of adverse foreign exchange rates and sanctions stemming from the Russia-Ukraine conflict, which combined can negatively impact the quarter by $13 million. Excluding these impacts, revenue would have increased by 16%. This is truly a testament to the strong results driven by our business units, where we saw increasing sales. That is in India, as well as in our Hydrogen and Electronics businesses, plus the addition of the Fuel Storage business we acquired in late May 2021. Although not a second quarter item, I want to take a moment to highlight the significant new business we announced last month to supply LPG fuel systems to a leading OEM. This deal is forecast to generate EUR 38 million in revenue through the end of 2025, with production expected to begin in Q4 next year. Cost-competitive alternative fuel solutions such as LPG are a compelling option to reduce greenhouse gas emissions in markets like Europe, where refueling infrastructure is well established. We're also developing fuel systems to respond to future regulations, including the proposed Euro 7 standards, and we look forward to updating the market on these developments. This new business highlights our industry position as a leading tier one supplier of alternative fuel systems that respond to current and future emission standards and to customers' needs for affordable transportation. This new business we've secured is a key step in our plan to grow to profitability. In May, at the ACT Expo in Long Beach, California, we unveiled our hydrogen HPDI fuel system for internal combustion engines for heavy-duty applications, and we did so in the form of a fully functioning heavy-duty demonstration vehicle. There was dramatic interest from all the different players in our ecosystem OEMs, fleets, fuel providers, and more. Increasingly, hydrogen is viewed as the zero carbon fuel we need for our industry, and we're helping the industry to understand that IC engines with HPDI will play a critical role in transforming from fossil fuels to clean, renewable fuels because HPDI is such an effective and affordable path to follow. Fundamentally, the outlook remains positive for our business as we continue to deliver solid results despite the various headwinds we in our industry are facing. In our heavy-duty OEM segment, despite a challenging LNG pricing environment, our European HPDI launch partner is continuing to gain market share over competitors that offer spark-ignited natural gas engines. We're seeing the market appreciating and valuing HPDI's superior performance and efficiency, and as a result, we continue to see order flow for HPDI systems despite headwinds from higher LNG fuel prices relative to diesel. HPDI volumes will be a significant driver to bring Westport to profitability as increased volumes drive economies of scale. We're in a good position now for HPDI growth. The 2025 European CO2 regulations will drive OEMs to act to decarbonize. European OEMs need to meet regulations that require a 15% reduction in fleet average CO2 with products that don't adversely impact the performance and reliability their customers demand. HPDI is the solution. A key reason HPDI is gaining in the marketplace comes down to superior fuel efficiency. In a recently published road test, HPDI enabled fuel savings of more than 25% when compared to other natural gas engines. 25% is a massive number in this industry. In the lifetime of a typical truck, about $700,000 worth of fuel is consumed. A 25% savings means $175,000 in lifetime savings. A very positive business case, and why HPDI has continued to prove its Economic and Environmental business benefits every day on the road in thousands of vehicles in Europe. HPDI, especially when using biogas, will be an important part of the solution, made even more compelling when the fuel price advantage of LNG versus diesel is reestablished. Looking to the wider policy climate, we continue to see a positive trend that supports our Heavy-duty business outlook. The Ukraine crisis has spurred a commitment to reducing reliance on Russian gas, resulting in additional biogas production plants in the EU, which is a huge positive for our sector. We're already seeing examples of this. In June, Scandinavian Biogas announced a $269 million bio-LNG delivery agreement. In Italy, Biomet announced receiving a $75 million investment to create Europe's largest plant for producing biomethane from waste. While it's unlikely that any single low carbon energy source can replace Russian gas, especially as the EU seeks to reduce reliance on fossil fuels and imported energy, the wider adoption of biogas and more investments into net zero fuels creates further growth opportunities and new markets for our clean, affordable products. To summarize, our Heavy-duty business remains strong in the face of industry-wide headwinds. There is growing recognition and appeal of our HPDI systems because of its low cost, clear performance advantages over spark-ignited engines, and carbon reductions that fleet operators are looking for and which OEMs require to respond to regulations. Hydrogen HPDI is going to play a pivotal role in the future of Westport, and we've demonstrated this through both analysis and engine testing, and now with our demonstration vehicles that HPDI works great with hydrogen. Unsurprisingly, we saw considerable interest in our hydrogen HPDI solutions at the ACT Expo in May. Our work with Scania continues this summer with their newest 13-liter state-of-the-art engine in our test facility in Vancouver. Hydrogen HPDI is compelling, with near zero greenhouse gas emissions, lower vehicle costs, and low industrialization costs as compared to fuel cells or battery electric vehicles, particularly for heavy-duty, long-haul trucking applications. We've demonstrated that power, torque, and efficiency using hydrogen HPDI is significantly better than the same engine running on diesel fuel. These demonstrations are changing the conversation right now. To be clear, OEMs can now see that HPDI has a long and bright future because it's successful on natural gas and biogas today and is the most economic way to use hydrogen in the future. Driving our conversations with both current and future OEM customers regarding our hydrogen HPDI solution is the potential to bring the product to market sooner through the straightforward application of existing HPDI componentry. The opportunity to continue using OEM's existing engine development capabilities and manufacturing facilities, avoiding large investments required to develop and industrialize other technologies, is very appealing. It makes good economic sense, good business sense, and is a real solution for the industry. Combining better economics with better performance is driving significant interest in our unique product offering. Hydrogen continues to gain significant traction and attention globally. The European Union has set a 2050 deadline to achieve its goal of becoming carbon neutral, and hydrogen fuel in the heavy-duty vehicle sector will play a substantial role in their decarbonization strategy. Following our success at the ACT Expo, we'll introduce hydrogen HPDI technology for the first time in Europe at the IAA Transportation Conference in Hanover, Germany, in mid-September. We're thrilled to continue to demonstrate to the global industry that our HPDI technology works brilliantly with zero carbon hydrogen and enables the most affordable way to use green hydrogen in long-haul, heavy-duty transportation applications and other important high-load applications. We're enabling HPDI's use by OEMs and fleets to long-haul trucking with natural gas, biogas, and with a clear path to zero carbon hydrogen. HPDI is a solution of the future that OEMs can access today. Just last week, on August 4th, we hit another milestone. The Westport hydrogen HPDI truck pulling Raley's Ozark trailer fueled with hydrogen for the first time in America at the West Sacramento station, the first hydrogen station in the world. Turning our attention to China. In light of LNG pricing that continues to negatively impact the market in China, Weichai has continued to work with HPDI so they'll be poised to launch as market fundamentals return. Discussions continue with potential Chinese partners, specifically around hydrogen HPDI. China now ranks first in the world for the number of hydrogen refueling stations with more than 250, accounting for about 40% of the global total. The China Hydrogen Alliance forecasts that demand for hydrogen will reach 35 million tons by 2030, with continued robust growth for decades to come. Light-duty vehicles fueled by LPG are a growing market trend that positively impacts our business through both our Aftermarket and OEM channels. High fuel costs create opportunities for our business as both industry operators and end customers look for lower cost options, lower cost to acquire, and lower cost to operate. Alternative fuels are part of the answer. What's happening currently with the price of LPG is a good example. For LPG, there's a clear price advantage that is growing part of our story. Fuel prices change, then customers react. It's in these price advantage environments where we gain market share and ultimately drive profitability. In important markets like Turkey, Italy and Poland, LPG is available and the price advantage over petrol has recently been increasing. In Italy, for example, historically the price advantage of LPG was about $0.60, rising to over $0.80 more recently, comparing petrol price per liter with LPG price per petrol liter equivalent. Drivers who drive on LPG are saving roughly EUR 50 every time they refuel their car. I'll say that again, drivers who drive on LPG are saving roughly EUR 50 every time they refuel their car. In addition to the pricing advantage, LPG refueling infrastructure in Europe is widespread, supporting further growth in the market itself. Our business in India continues to grow, has become a case study for the type of market where we can be competitive and as a result, gain market share with our clean, affordable solutions. Our revenues in India continue to grow, up more than 50% to $10 million this quarter. The market in India is transforming from a diesel petrol market to CNG, where we continue to see a price advantage. Natural gas fueled vehicles are taking the place of diesel in a real way and now represent more than 11% of sales for passenger cars and about 29% of commercial vehicles. We're seeing strong demand for our products from three wheelers and taxis, as well as heavy-duty trucks. India aims to have natural gas make up 19% of their overall energy mix in the coming years, alongside plans to build 10,000 natural gas refueling stations, which are expected to be installed by 2028. India is poised to play a significant role in the growing hydrogen economy as well. In June, Adani New Industries, one of India's largest energy companies, announced a $50 billion investment to develop green hydrogen ecosystem, representing India's largest commitment to green hydrogen from an individual company to date. In summary, industry represents a growth market for us, supported by strong fuel price advantage, a supportive policy backup, and a growing hydrogen economy. No question. We continue to face headwinds now, but we also have substantial tailwinds. Emissions regulations, government action, societal demand, economics and great products that respond to the call to action right now. We remain well positioned as a company. We have the right products for today and for the future. China, the world's top LNG buyer last year, is in the midst of one of the largest build outs the industry has ever witnessed. 10 new LNG import terminals are slated to come online in 2023 alone, and capacity will roughly double in the 5 years through 2025. In Europe, we're just 2.5 years out from the 2025 regulation, with penalties being implemented. I can tell you from discussions we're having with global OEMs around HPDI that light bulbs are going off as the cost significance and overall capability and reliability concerns of the newer technologies are being laid bare. The European Union has relaunched REPowerEU in the face of its energy challenges. REPowerEU's plans call for rapidly increased imports of LNG, replacing imported pipeline gas from Russia, the utilization of the significant untapped biomethane resource in Europe, and also green hydrogen production, all of which will require significant prioritization and build out of infrastructure. There's also been a quadrupling of the hydrogen targets originally set out in the Fit for 55 legislation. The ambition was 5 million tons, and now with REPowerEU plan, they target 20 million tons by 2030. This represents a significant growth opportunity for our company. All of this indicates increased interest in hydrogen HPDI as a game changer for heavy-duty transport. With that, I'd like to turn it over to Richard to go through our financials. Good morning, and thank you, David. Revenue for the second quarter of 2022 of $80 million was slightly up from the prior year quarter, despite the challenging headwinds from volatile fuel prices, inflationary pressures, and production input costs, continued supply chain challenges plaguing the automotive industry, and the negative impact from the Russia-Ukraine conflict on our sales volumes to the Russian market. Further, the weakening of the Euro against the U.S. dollar during the quarter has had a significant impact on the translation of our financial results due to our large Euro exposure. As David mentioned, the combined impact from the Russia-Ukraine conflict and the 13% decrease of the Euro against the U.S. dollar negatively impacted revenue this quarter by about $13 million. Despite what feels like a long list of headwinds, we are proud of the work that our team accomplished this quarter in our business units. Our OEM business continued to grow, primarily driven by the addition of our Fuel Storage business acquired in June 2021. As well as modest growth in our Hydrogen and Electronics businesses and increased sales of our light-duty OEM products in the Indian market. Offsetting the growth in OEM revenue, our Independent Aftermarket revenue was lower year over year due to reduced sales volumes, primarily a result of the impact of sanctions from the Russia-Ukraine conflict. Net loss was $11.6 million for the second quarter of 2022, compared to a net income of $17.2 million for the same prior year period. As a reminder, the second quarter of 2021 included two significant one-time items that bolstered earnings, namely the recognition of a $5.9 million bargain purchase gain related to the acquisition of the Fuel Storage business, and an $8.9 million tax recovery recognized for a COVID-19 tax relief ruling from the government of Italy. Besides these non-recurring items, the decrease in earnings was driven by lower year-over-year gross margins of $5.2 million and the loss of equity income from the termination and sale of the CWI joint venture. Adjusted EBITDA was negative $4.3 million compared to positive $6.2 million in the same prior year period. The $10.5 million decrease was mainly due to the loss of equity income from CWI and the lower gross margin, partially offset by decreased operating expenses. We are experiencing gross margin pressure due to higher material costs from the global supply chain shortage, general price inflation in our production input costs, and lower sales volumes related to the Russia-Ukraine conflict. We are also seeing pressure from volatile CNG and LNG prices, particularly in Western Europe on our sales volumes. Turning to our business segments. OEM revenue for the second quarter of 2022 was $54.3 million, up 15% compared to the prior year quarter. The operating loss from OEM was $5.6 million, up from a loss of $3.4 million for the prior year. The increase in revenue was primarily driven by the additional revenues of $5.1 million from our fuel storage business. We also saw increased light-duty OEM business sales volumes, specifically in India, as well as increased sales volumes in our Electronics and Hydrogen businesses. This was partially offset due to lower sales volumes to our European OEM customers caused by higher CNG fuel prices. Our Hydrogen components business continues to grow, with Europe, China, and North America being our primary markets. Our existing GFI branded Hydrogen business supplying components to Plug Power, Ballard, and others have seen average annual revenue growth of 50% over the last three years. In our Electronics business, we are seeing volume growth from a key customer and supported by overall demand increase across the business unit. Turning to Heavy Duty OEM. Our sales volume to our European OEM launch partner decreased slightly compared to the same prior period, but remains in line with year-to-date volumes from last year. The decrease in the quarter was a direct result of the softness in demand caused by unfavorable fuel price differential between LNG and diesel in many Western European markets. Higher LNG prices are causing a significant challenge to the demand for LNG trucks, which is expected to temper our expected volume growth to our OEM launch partner through 2022, and until relative LNG prices return to a more favorable equilibrium. Gross margin was $4.7 million, or 9% of revenues for the quarter, compared to $7.2 million or 15% of revenues in the prior year. We saw a decrease in gross margin in our light-duty OEM businesses due to lower sales volumes to our European OEM customers caused by the higher CNG fuel prices, which was partially offset by higher sales growth to emerging markets with lower gross margins. Gross margin in our heavy-duty OEM business decreased year-over-year due to lower comparative sales volumes, a contracted annual price discount to our OEM launch partner in the first quarter of 2022, and higher material and warranty costs. Further, we continue to incur higher production input costs from supply chain challenges and inflation in logistics, utilities, and other costs, which we have only partially been able to pass on to our OEM customers. Partially offsetting these pressures, gross margin increased by 1.1% from our Fuel Storage business. R&D expenses for the second quarter were $4.1 million, which were lower year-over-year due to foreign exchange. Our heavy-duty OEM R&D activities continue to focus on the development of next generation HPDI fuel system technology and demonstrations with potential OEM customers on our HPDI fuel systems, hydrogen and natural gas applications. Our light-duty OEM research and development is focused on development of new LPG systems in line for installations for potential OEM customers. Now turning to Independent Aftermarket. Our business continues to face significant challenge from reduced sales volumes in Eastern Europe due to the ongoing Russia-Ukraine conflict and volatile fuel prices. Revenue for the second quarter was $25.7 million, down 19% compared to the prior year period. Aside from the impact of Russian sanctions, sales volumes were lower to key markets of Turkey and Argentina. Softness in the Argentine market was specifically due to higher CNG prices, which have been a recent challenge for our CNG products due to the volatile fuel price. Further, the aforementioned foreign exchange impact of the weakening Euro had a significant impact on the comparative performance. Gross margin was $5.8 million, or 23% of revenues for the quarter, down $2.7 million compared with the same prior year period. The decrease in gross margin and gross margin percentage was attributable to lower sales volumes and increased material costs from the global supply chain shortages and inflation. On a positive note, the LPG price differential to gasoline is improving, which is providing some support for increased sales demand, which we are seeing signals in some of our key markets like Argentina, Italy, Poland, and Turkey. With this positive tailwind and other countermeasures to mitigate the impact of inflation and improve productivity, we are taking the necessary steps now to improve profitability in our Aftermarket business. Finally, I'd like to touch on liquidity. Our cash position decreased by $29.4 million during the second quarter to $98.2 million. Our net cash flows used in operating activities were $16.5 million in the second quarter of 2022, an increase of $7.8 million compared to the same prior year period, primarily driven by an increase in operating working capital, specifically a buildup of accounts receivable and inventory. We built up inventory to manage against supply chain risk, along with shortages of raw materials and components. Further, our inventory levels increased due to lower than expected sales volumes from Russia and other markets, and our growing Electronics business, which we are taking actions to monetize the existing inventory and optimize our inventory levels. Our net cash used from investing activities in the quarter was $3.5 million, primarily driven by capital investments in HPDI. Net cash flows used in financing activities were $8.5 million for the second quarter of 2022, primarily due to a net repayment of debt as we begin paying down our debt on a quarterly basis after a period of deferral from COVID-19 relief. Our main focus on our allocation of capital and resources in executing our strategic and operating plans, and as such, are focused on improving profitability and liquidity. We have also seen continued pressure on gross margin, a trend we are working to reverse. Currently, we are working with our customers in both OEM and Independent Aftermarket businesses to implement price increases and also taking productivity countermeasures to manage our profitability going forward. As the negative macroeconomic and uncertain geopolitical conditions continue to persist, the duration and severity of the impact on future quarters is currently uncertain. Having said that, we do see positive signals in the growth of our OEM businesses and a path to profitability as sales volumes grow in our heavy duty and light duty OEM businesses. We are also optimistic about a return to improved profitability of our Independent Aftermarket business from the current tailwind of favorable LPG prices. With that, I would like to turn it back to David. Thank you, Richard. Before we open up the call for questions, I want to close on a few key points. Westport Fuel Systems delivers market-ready transportation solutions that reduce emissions and save money, lower cost to OEMs to bring to market, and lower cost vehicles for fleets to operate. We remain encouraged by the outlook for our business, and here are just three reasons why. Our HPDI story, performance, efficiency, low cost, and even better with hydrogen. Second, the growth of our LPG business, and third, the growth we're seeing and we expect to see in our business in India. As a supplier of advanced fuel delivery components and systems for clean, low carbon fuels, I'm confident in our ability to capture the additional market opportunities we have in front of us. All these factors give us optimism in our ability to meet the needs of our customers and advance towards our financial objectives. With that, I'll turn it over to the operator to open the call for questions. Thank you. We will now begin the question and answer session. Analysts who wish to join the question queue may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question is from Colin Rusch with Oppenheimer. Please go ahead. Thanks so much, guys. Now, could you talk about what you're seeing right now in terms of the ecosystem developing to support the ramp of hydrogen with HPDI? Certainly there's a lot of action now, particularly in the U.S., but certainly in Europe as well, around some of the fueling and supply chain elements that are gonna be required to support that ramp. Yeah. Good morning, Colin. Good question on hydrogen. You know, it's, I would say it's a very exciting time in the industry, and developments around the world, primarily driven by a combination of government and industry action, are taking different approaches in, you know, different details, of course. Fundamentally, what we see, and I think the Russia-Ukraine crisis has really crystallized this in Europe, is that, there's like a renewed energy or an increased energy around, taking those actions and making those investments. There's investments in, building out, the capability to produce and make available green hydrogen, or, you know, incentives in the marketplace to for all elements of the ecosystem. I think this is a really important development. What we saw at ACT Expo in May was that, you know, there's a preponderance of, you know, or even a majority of the offerings out there are fuel cell based. Ourselves and Cummins were at the show with internal combustion alternatives. This, I think, is really what's new, kind of the recognition by the existing and mature industry that hydrogen is coming as a fuel, that it's going to be the fuel of the future, and it will have a place in the industry, and therefore we need to get ready. Now searching for what are those best ideas, best technologies, most practical and realistic to respond to the availability of hydrogen fuel in the future and the need to use that to decarbonize transportation. I really see this kind of as a really formative time in our industry. Actors like the Hydrogen Council, collaboration of industry and government, all the different players in the ecosystem, really having an important effect on catalyzing towards action of both generation of hydrogen, distribution of hydrogen, and use modes of hydrogen. Where we see HPDI playing is being this very practical and affordable way to use hydrogen very effectively for long-haul heavy-duty transportation. In addition to showing our demonstration vehicle, as we did at ACT Expo in Long Beach in May, and then just last week in Sacramento, and then in September at the IAA in Hanover, we're demonstrating this capability in dyno cells with customer engines. There's I would say a tremendous amount of increasing momentum to accept and understand this potential to use the existing internal combustion engine infrastructure, you know, existing plants, existing vehicles, all the existing infrastructure can be reused with HPDI and deliver a very effective product that uses green hydrogen in the future and therefore has a huge impact on decarbonization in a very affordable way. We think this is really important for Westport Fuel Systems and really promising for our industry. That's super helpful. Just in a more practical way, you know, given what we've seen in terms of raw material movement, and some rolling over of some of the metals baskets and other elements, recently, I'm just curious how quickly that might start flowing through some of your cost structure and what you're doing to kind of attend to that and start working down some of the component costs. Yeah. I think, as a general premise in our industry right now, not specifically to HPDI, but just thinking about the industry, you know, we have inflation in the world, you know, we have this huge inflationary pressure around the world. We're seeing that, you know, the key aspect for us is to manage our pricing in real time with the cost increases. This is super challenging. In the OEM business, for example, basically, our customers are, let's say, open, begrudgingly, of course, to price increases to reflect the inflationary cost pressures that we're seeing and they're seeing. It's a process whereby the costs go up and then you ask for the price increase and we're successful in getting those price increases. It's after the fact, not before the fact. That's different from our Aftermarket business, where basically, you know, the price goes on to a consumer, and the consumer's willing to pay that price if they can make it back up with fuel price savings. This is where we're very pleased about the movement we've seen in the price advantage of LPG versus gasoline and diesel, because that allows customers to pay back the cost of acquiring the hardware to put on their vehicles and allows us therefore to recover the cost increases we're seeing on our Aftermarket products with increased product pricing there. Yeah, in general, the key element is being able to pass those cost increases that we're seeing on to our customers. Fundamentally, with our HPDI business, probably the more important aspect is getting the volume up so we can access economies of scale, bringing the cost down and increasing our margins. That is a, you know, a path we're on, but not yet got to the point where we can declare that we've got to those appropriate margins for that product. It's still at relatively low volumes in total and needs more growth before we can get to a profitable standpoint. Perfect. Thanks so much, guys. Thank you, Colin. The next question is from Eric Stine with Craig-Hallum Capital Group. Please go ahead. Hi, David. Hi, Richard. Hey, Eric. Hey. You just mentioned some of the market developments. You know, as we think about hydrogen HPDI, I know we've got the introduction of the demo unit in Europe here in mid-September. As you think about the next, I guess, for the remainder of 2022 and into 2023, you know, without naming specifics, I know you can't do that, but just maybe some signposts that we should look for or expectations that you would have, you know, that say that you are on the right track here, you know, and in a timely fashion. I think there can be any number of developments that could get announced in the future, Eric, but obviously I can't, you know, forecast those or promise those. Fundamentally, you know, the business with respect to hydrogen is one that we've found so far, people are willing to talk about a bit more than perhaps our natural gas developments, as an example. I could expect that. We're looking forward to the chance to show that. For us right now, what's wonderful is this demonstration truck that we do have, because basically we can hand the keys to customers and government officials and other people that need to understand what the potential is of hydrogen HPDI. We can do that, you know, by showing the capability of the truck to pull a load, to drive just like trucks that they're used to. In all of my experience in the industry through the years, there's nothing better than handing someone the keys to a vehicle and saying, "Try this out, see what you think." That's what we're doing now. We did this past week in Sacramento. I think it really makes a big difference in the psychology of approaching what is essentially new technology, right? New technology of the industry to think, hey, we can run hydrogen through an internal combustion engine and have a not just a viable product, but a great product. You know, we're demonstrating more power, more torque, and more efficiency with hydrogen HPDI than you get with the base diesel engine that we apply it to. Really a great offering. We're looking forward to the chance that, one by one, we'll be able to make more announcements that will help the investor community understand the progress that we're making. Right. No, absolutely. Maybe a follow-up on that. I mean, do you feel like acknowledging, yeah, this is the OEM world, it takes quite a bit of time. But if you compare this to LNG, I mean, the fact that you now have Volvo in Europe, it, you know, you've got trucks in the market. The market knows HPDI. I mean, do you think that potentially hydrogen moves faster in its development? Or do you expect kind of a similar, you know, how it plays out, similar to LNG? Well, first of all, for sure, I expect that from our side as the fuel system provider, we can move faster with hydrogen than, let's say, the history of HPDI with natural gas. Just because we're taking existing components and system know-how and applying it to just basically connecting and using hydrogen instead of natural gas. So that development path looks quicker to us. It certainly looks quicker to us than you know, the full industrialization of a fuel cell path, for example, where you know, they've got to go build plants. You know, the componentry we're using comes off the same lines as the componentry for our natural gas solutions. That seems faster. I would say also that, you know, fundamentally, the economics are in the favor of HPDI with respect to the efficiency the engine delivers and the cost of the componentry versus the change that has to be made on a vehicle to adopt other technologies. I think, yeah, that can move faster. Perhaps most importantly, this view that we're helping our OEM customers and customer prospects understand that HPDI is a long-term solution to achieving low carbon, long-haul heavy transport. That, because hydrogen is a long-term solution with HPDI, and you can use natural gas and biogas today, there's a path forward that says you can act today with natural gas and access the hundreds of stations in Europe, the thousands of stations in China, the 1,000+, almost 2,000 stations in the U.S. There's this ability to use HPDI today and have a path forward with hydrogen, and that adds to the potential for an accelerant of our business, pulled by hydrogen in the future, but grounded in natural gas and biogas today. Yep, understood. Maybe last one for me, just on Weichai, thanks for the update there in China, and I know you've got the take or pay, but likely, just given the macro, you know, you're not gonna hit those timing targets. Is that something that, you know, potentially could be renegotiated to, in some way, include hydrogen, a mix of hydrogen and LNG, or how should we think about that? Yeah, as you've seen before, you know, we struck the agreement with Weichai back in 2018, and then we had a renegotiation of the terms and the volumes just last year. You know, everything's up for negotiation, I would say. Nonetheless, we do have some commitment, and it always should be an improvement on what we have today. Nonetheless, there are some practicalities. Today we see, you know, this adverse price condition in China with respect to natural gas that is really weighing on the marketplace and specifically the launch of our products with Weichai. As that is remedied, as that is fixed in the marketplace through market mechanisms and perhaps government action, then we would look forward to some action, and that could include some change in our contract. Who knows? That's all in the future. Okay. Thank you. Thank you, Eric. The next question is from Rob Brown with Lake Street Capital Markets. Please go ahead. Good morning. My first question's on the European HPDI product. I think it was a slight growth this year or this quarter. How do you see the order rates sort of in real time here? Are they continuing to slow down with the price spread, or are they sustaining sort of flat? Or just sort of directionally, how's the order flow given the current price situation? Yeah. It's a very interesting thing. You know, historically, we've talked about our product, HPDI and our other gaseous products being able to offer and unlock and give customers access to an economic advantage because of the price advantage that natural gas and LPG typically offer versus gasoline and diesel. Right now in Europe and China, we kind of have this parity or in some cases at the pump, LNG tends to be a bit more expensive than diesel. We have this adverse condition right now, which we don't expect to persist. That is really flattening the curve, if you will, in some fashion, in the near term, as we've looked at this year, right, our kind of volumes are on the flattish side with respect to HPDI as opposed to growth. Nonetheless, you know, we're really happy and we see that the CO2 standards are on the horizon. Our OEM customers and prospective customers face this regulatory requirement starting in 2025 with substantial penalties if they don't meet it. We think that becomes more of a driving force, that the driving force really in the marketplace is actually the OEM's requirement to reduce CO2 and our solution being one of the most effective ways to do that. You know, I mentioned earlier in the call that we've got this report, road test report showing 25% better fuel economy, quote-unquote, fuel economy, associated with doing HPDI versus spark-ignited engines. This really crystallizes and makes a glaring example of how HPDI really benefits. When you say, "Hey, I've got to get to a lower carbon fuel. Now what's the most effective one?" It's HPDI. Those are kind of the two forces in the marketplace. You know, we've got higher LNG prices, we've got this big economic benefit and the need to decarbonize. That's kind of flattening our growth curve in this moment. But we don't expect that to persist. Certainly as 2025 is on the horizon, we expect an acceleration of that volume as, because HPDI is that very cost-effective way to respond to the regulation. Okay. Thank you. On the LPG contract you announced with an OEM, is that a new contract or a new OEM or maybe just some color on what market it's in and is it an extension or is it a new contract? Thank you. Yeah, sure. This is a really important step for us. It is new business for us. We're really excited to have this new customer and have this new business. Obviously, it's a meaningful number for us in terms of our revenue outlook over the contract period of EUR 38 million. That's a big deal for us. You know, fundamentally, our path to profitability as a company is through growth. We can secure new business like this based on the technologies and the products that we offer and the services that Westport Fuel Systems offers to our OEM customers. It's a big deal, and we're really excited about it. We hope to add more to that, of course, and continue the growth trajectory. For us, as we look at LPG, the benefit of LPG is growing. The economic benefit, the environmental benefit, the huge installed infrastructure of refueling stations. You know, we're talking tens of thousands of stations across Europe where LPG, it's a very common fuel there, the most common in the world for transportation right now. That's a great development for us. We're excited about it, and we think it really demonstrates, that, Westport Fuel Systems is the leading OEM for supplying these kinds of systems to the OEM industry in total. Okay. Thank you. I'll turn it over. Thanks, Rob. The next question is from Amit Dayal with H.C. Wainwright. Please go ahead. Thank you. Good morning, everyone. Most of my questions have been asked, David. With respect to sort of the, you know, HPDI 2.0, sales environment, I know there are some near-term headwinds, et cetera, but have you seen any deals fall through or are customers just slowing down, adoption in this environment? Like, how should we think about, you know, that product over the next few quarters, sales for that product? Yeah. I think good to speak with you, Amit. I think generally, most of our activities with customers are now considering the opportunity that HPDI offers with both hydrogen and natural gas. This is really what's catalyzing our discussions with customers is the opportunity for HPDI to do both and to have that path to zero carbon hydrogen in the future. That's making the opportunities for HPDI with natural gas and biogas more accessible, more interesting for our customers. That, I would tell you, is probably the main ingredient that's really driving the discussions. We see this around the world, right? As an example, you know, we've spent a lot of time talking about our business with HPDI and looking to get that launch with natural gas, but there is a tremendous amount of opportunity for HPDI with hydrogen in China, and we're carrying on conversations with many OEMs there around that opportunity. They're building out hydrogen infrastructure. You know, we talk about Europe because it's very accessible to us, but in China, they're in the lead like they are with natural gas in terms of refueling infrastructure, and so we see a big opportunity there. That, to me, is really the catalyst for the discussions on HPDI in general across markets around the world, is this move to hydrogen in the future, natural gas and biogas now. Understood. To sort of bridge that, you know, so it's almost like we have to come out with a new offering, you know. It can support both these, you know, capabilities or, you know, you have the hydrogen capability provided. What would be the timeline to introduce a product like this? Are you already sort of working on developing it at an accelerated pace? Like, any color on sort of your thoughts strategically on how you can, you know, tap into this opportunity? Yeah. I should clarify that, you know, the fundamentals of our HPDI system, from the injector and the system architecture and the componentry and so forth are very, very similar. Basically today in our demonstration vehicle, we're using the same hardware. We do expect and are working on the various details of tuning that hardware and modifying it to make it fully validated and available for hydrogen. I do expect in the long run that the actual hardware will be different, right? It won't be exactly the same components for hydrogen and natural gas. Nonetheless, the fundamental technology and for example, how it fits on the vehicle, how it fits on the engine is the same. This is what really opens the door for those developments that are future hydrogen, natural gas now, and biogas too. That is the path that we see and the path that we're working with our customers on many fronts for many markets like China, Europe, and North America. Yes. I think I did see some of that at the ACT Expo. You showed me, you know, some of the models, alongside around this basically. With respect to the LPG systems, David, I think you mentioned production could begin in the fourth quarter next year. I don't know if I got that correct. No, no, that's exactly correct. Fourth quarter of next year is start of production for that project. Over the two-year period that unfolds after that, so EUR 38 million of revenue is our expectation. Okay. Understood. Near term sort of margin outlook, should we, you know, from a just a conservative standpoint, even though the macro environment could be improving to your favor, you know, from a supply chain perspective, et cetera, should we assume similar levels for margins in 3Q and 4Q? Generally, I would expect in the near term, you know, as mentioned about, I mean, the big levers going on with respect to pricing, excuse me, margins are three factors, cost pressure from inflation, pricing activity that we take on, and then with respect to HPDI, I read the volume curve to actually achieve the economies of scale and improve our margins there. I would expect not a big movement in the margin in the near term, as we work to pass along costs that we're seeing to our customers in terms of pricing. Looking for that improvement in the economic conditions of LNG in the marketplace to drive the recovery and then the resumption of growth in our volumes of HPDI. Okay, got it. Thank you. That's all I have for now. I'll take my other questions offline. Thanks, Amit. The next question is from Jeff Osborne with Cowen. Please go ahead. Hi, this is Jeff Rossetti on for Jeff Osborne. Thanks for taking our questions. I just wanted to see if I could ask on the O&M volume, OEM volume side, how to think about the headwinds on the LNG side for heavy duty with respect to the tailwind you're seeing for LPG for light duty. I know you called out that given LNG prices, you may see some slowdown with your HPDI 2.0 OEM launch partner. Our outlook right now is, I would say, for HPDI is flattish with some upside potential. Certainly, we've seen in global markets some moderation of the LNG prices. The condition in Europe is really quite challenging with respect to trying to forecast fuel prices with the ongoing Russia-Ukraine war. I think, you know, someone who's got a crystal ball on that should be super valuable at this juncture. Fundamentally, in the long run, I do believe that the LNG flows around the world, natural gas availability will continue to grow. Certainly with high LNG prices, we have more and more biogas coming online and that will help. Fundamentally, until there is, you know, some kind of, let's say, reestablishment of an LNG price advantage versus diesel, and then the implications associated with the CO2 standards in Europe, I would expect, you know, some flattish and modestly upward trend with some luck. When the price is reestablished and CO2 standards come in place, we expect a big change and big growth potential as HPDI continues to demonstrate that it is the most cost-effective way for OEMs to respond to the regulations and for customers to access cleaner transportation. Got it. Okay. Another one that's probably difficult to sort of postulate on, but one large tier one provider talked about potential gas supply disruptions in the back half of the year in Europe, and I was just thinking if you had contemplated any scenarios around that or if you had any thoughts around that potential. Yeah. No, I think as a general premise, you know, we don't have an oar in the water with respect to controlling availability or prices of fuel. So, it's an external factor that we respond to. One of the things that I think is very positive for our company in this, let's say, dynamic market or volatile market or unknowable market of the future, is the fact that we do have a diversity of markets, a diversity of products, and a diversity of fuels that we support. So as an example, you know, we're seeing growth in our Hydrogen business right now in our markets in North America and in China. We're seeing growth in our Electronics business. Our LPG business sees growth. We're, you know, working in markets around the world. It's not all about Europe, LNG, and HPDI. There are other elements of our business which are having those tailwinds supporting us. That's where I think, you know, fundamentally looking at our results just this past quarter, coming off flat in the context of, you know, really constraining the business in Russia that was important to our P&L historically, and hopefully in the future will be important again, but right now is super impacted by the conflict and then the foreign exchange. You know, to think that we would have been up, you know, more than 10%, had we not had those factors, I think is indicative of where the company is going in the long run. Okay, thanks for that. Just one last one, if I could. I think Richard talked about the working capital build. I just wanted to see if there was any thoughts on if there was gonna be any kind of release, near term on the working capital side. Thanks. Yeah, for sure. You know, we did build up some inventories specifically with respect to the Electronics business. I think everybody around the world understands the challenges this business has faced. We didn't have much choice in the matter. Basically, suppliers of chips in the marketplace said, "If you ever wanna get chips again, you better place orders." In this context, we didn't have a lot of flexibility and so we have built up those inventories. Certainly, we expect to get those inventories down as a function of time as we use them up and perhaps and hopefully, the markets from our suppliers specifically become more stable and predictable and ones that we can return to normal terms and normal order cycles, as opposed to having to hold inventory to protect our sales. Thank you. Thanks, Jeff. The next question is from Mac Whale with Cormark Securities. Please go ahead. Hi, good morning. In terms of when there's a truck sales downturn, we usually see fleets drive their vehicles longer, and that builds up some pent-up demand. When you finally do launch or when your partner is actually ramping up, do you have any insight from, say, new OEM projections about whether that will play a role in the ramp-up phase? Yeah. Good morning, Mac. The view I have in this regard is that, you know, our business right now is still sub 5% of the marketplace, right? It's a very small fraction of the total market. If the market declines by 10, 15, 20%, you know, the reality is that I expect that we've seen this historically and the market's moved around, and we've been growing through the years after the launch in 2018, despite the ups and downs of the marketplace, because we're the small percentage and the focus of our customers, the OEMs, and of their customers, the fleets, is in accessing lower carbon fuels for their trucks and being able to offer a lower carbon solution to the marketplace. I don't think that affects us so much. Of course, it can't be viewed as positive that the volume goes down, and it can be viewed as positive as the volume of the market goes up in total. I would say the impact is not nearly as important as the impact of the growth of market share of our products. Historically, just a couple of years ago, you know, gaseous fueled products in the European truck market were, you know, sub 1%, and now they're on the order of, you know, 3%. It's tripled, right? We've seen that in our volume, which has gone up dramatically during this time, but still it's relatively low volume, even though the growth has been good. Yeah, overall, I don't see the market volume in total as having such a big impact, but rather the growth trajectory of our products, and that's driven by the economics that we talked about and the regulations that we talked about. Just so I understand that, like, so you have a market share, but you also have the market rebounding. Like, there's normally a big pent-up demand. Are you saying that the adoption will be for natural gas regardless, and so your market share growth might actually slow because the adoption will just be based on this sort of niche? Or are you saying the opposite, saying, "No, the market will grow, and it'll raise all boats including alternative fuels, so your growth rate would actually be faster"? I'm not quite sure. Yeah. Understood your answer. Yeah. I think there's two percentages, right? There's, what's the percentage growth of the marketplace? Is it going from? If you think about Europe, is it going from 300,000 trucks a year to 400,000 trucks a year, or 350 down to 250 a year? What is that movement? Then there's the market share of our product in the market. That to me is the more important growth factor. I see. As we, as LNG, so you know, what's primary, what's secondary? For us, what's primary is that movement of our market share in the market. If you compare it, if you will, to like, you know, diesels right now are 97% of the market, 98% of the market. If the market goes down by 10%, diesel volume goes down by 10%. Yeah. In our case, it doesn't move that way because we're expecting and we've seen that our market share is growing dramatically. That's the more important effect. Okay. I have a bunch of other questions, but we will take it offline this afternoon. I have a call at 11 I have to jump on. Sorry I was late in the queue, but we'll talk later. Thanks. Okay. Sounds good, Mac. Thanks so much. The next question is from Bill Peterson with JP Morgan. Please go ahead. Yeah. Hi. Thanks for taking my questions. Wanted to come back to hydrogen. We know you've done some work with TUPY and AVL. I believe Cummins was supposed to happen this year. I just want to get an update on that one in particular. Do you still expect that? I believe you talked about the potential fourth partner. Just trying to understand how the interest in hydrogen should play out with these specific partners. Yeah. Good morning, Bill. Thanks for your question. It's right. We have these projects. We have a project with Scania that we mentioned earlier in this call. We have a project with AVL and TUPY also working. That activity is actually taking place at AVL in Graz, Austria. We have work going on with Cummins that was announced as part of our announcement earlier this year on the share sale that we did. These projects are all running, and we'll look forward to sharing some information about them when our partners agree that's okay to do, when we hit certain milestones and so forth. We do expect to have new customers added to the queue as we work with customers around the world, including China, Europe, and North America, to demonstrate as we are doing with our demo vehicle. All those are progressing, and we look forward to sharing updates when they're available and approved by our customers. Okay, thanks for that. Secondly, on the cost side, specifically for OpEx, I guess, how should we think about the OpEx trajectory for the remainder of the year? Presumably, you know, probably belt-tightening, but also you might get some, who knows what's gonna happen with exchange rates, but just try to help us understand, you know, what you're doing on the cost side. Bill, you know what? I'm here. Yeah, good. Bill, I think you'd estimate that we're gonna be comparable going towards the back end of the year. In terms of OpEx, like, the R&D, our program is expected to spend, you know, approximately about $30 million this year. G&A, it might be a little bit lighter. We're investing more money for sure within business development. Sales and marketing is something that, as we're getting, you know, the hydrogen truck on the road and more activity in terms of development in North America. These are just small numbers. The bigger issue, John, you know, Bill, was actually within our gross margins, and that's something that, you know, we'll call it a mix change that's happening. I mean, we could talk about on our call a little bit later, but we're looking for upside in our Independent Aftermarket, so we should see margins improve there. Our OEM business is as we've talked about in our notes, it's been challenged by, you know, the higher CNG prices. There's a little bit of a mix change where we're seeing really great growth in India that has a slightly lower margin. You know, very promising. With regards to our Heavy-duty business, you know, we'll see sort of flattish year-over-year growth is kinda where we're sorta estimating right now. You know, I would say that, you know, margins will be more or less kinda what you saw in the second quarter. They might improve a little bit with regards to, you know, we had some additional warranty costs that were a little bit higher than normal, but that are being sorted out by our Engineering department. Great. Thank you. Good luck. You're welcome. This concludes the question and answer session. I would like to turn the conference back over to Mr. David Johnson for any closing remarks. Yeah. Thanks, everyone, for your time and attention this morning. In the grand scheme of things, appreciate the chance to review our results with you. Feel guardedly optimistic in this really challenging time that we continue to deliver the products that the marketplace needs to both economically and environmentally improve transportation. There's work to be done ahead, and we look forward to reviewing with you in upcoming Investor Conferences. Thanks again for your time. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.